Indorsement and Payment of Checks Drawn on the United States Treasury

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The Financial Management Service (FMS) is publishing for comment an interim rule amending 31 CFR part 240 (part 240) in order to permit financial institutions to present Treasury checks for payment by providing an electronic image of the check in lieu of a paper check. The rule establishes the procedures that the U.S. Department of the Treasury (Treasury) will follow to invoke an indemnity arising under the Check Clearing for the 21st Century Act for a breach of warranty or in situations in which the receipt of a substitute Treasury check rather than the original check results in a loss to the Federal Government. The rule also establishes a similar indemnity and procedures when an electronic image of a Treasury check is utilized. In addition, the rule requires that financial institutions that create substitute Treasury checks or electronic images of Treasury checks prevent unauthorized access to the underlying paper checks until they are destroyed.