Tag: banking system

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The Next Wave of Fintech Investors: Banks!
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U.S. Regulation CC amendments reallocate risks for remote deposit check payments

The Next Wave of Fintech Investors: Banks!

By: Judie Rinearson

While global investment in fintechs has slowed, interest in fintech investments from the banking sector has actually increased. What’s particularly intriguing is that this is not coming just from the big banks (who have been involved in the fintech sector for years) but frequently many smaller banks are starting to recognize the opportunity presented by investing in the fintechs — especially those fintechs that the banks already work with. Boston partners, Stan Ragalevsky and Rob Tammero have analyzed this development, which looks to be a true win-win for both the banks and fintechs involved. Click here to read more.

U.S. Regulation CC amendments reallocate risks for remote deposit check payments

By John ReVeal

More than three years after proposing amendments to the Regulation CC to add new indemnities for remotely deposited checks (cheques), new warranties for electronic checks and electronic returned checks and new indemnities for electronically-created items, the U.S. Federal Reserve has at last issued final rules. These new rules also modify the expeditious return rules, including by making electronic returned checks subject to those requirements. The final rules were issued on May 31, 2017, and will take effect on July 1, 2018.

Perhaps the rules of most importance to the banking and emerging payments industries are those providing for indemnities for remotely deposited checks. An inherent problem with remote deposits is that the person depositing the check retains the original paper check and can negligently or intentionally deposit or cash it again. The bank on which the check is drawn will usually refuse to pay it twice, as it should. This leaves the writer of the check, the bank that accepted the remote deposit, and the bank or check cashing store that accepted the original paper check arguing over who should take the loss. Under current rules, unless the parties have entered into side agreements to allocate losses, the bank or check store paying the original check can normally bring a Uniform Commercial Code (UCC) holder-in-due-course claim against the check writer and that person has no remedy unless recovery is possible from the negligent or crooked payee that cashed the item twice.

To read the full alert, click here.

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