Business and Personal Finance Dictionary

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• CHECK 21
  
  The Check Clearing for the 21st Century Act —which was signed into law on October 28, 2003, and went into effect a year later — makes substitute checks the legal equivalent of original checks. A substitute check is a paper reproduction of an electronic image of an original paper check. Under Check 21, the bank of first deposit (where the check is deposited) may present substitute checks instead of original checks to the paying bank (where the check is drawn). The law applies to virtually all check types. Check 21 seeks to: 1. Increase the efficiency of check clearing in the United States 2. Lower check processing costs 3. Reduce the vulnerability of the check processing system to disruptions in air and ground transportation. Check 21 does not require that banks send or receive checks electronically, it simply makes substitute checks the legal equivalent of original paper checks and requires that banks accept and process them.
  
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