Banking Interpretations

NYSBL 9-m; 372

June 11, 2002
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Dear [ ]:

Your e-mail of May 18, 2002, which was addressed to Edward Valdes, has been referred to me for reply. In your letter you inquire whether: (1) it is for permissible for a State-chartered bank to return to the holders of business accounts images of checks written on such accounts in lieu of the physical checks; and (2) a licensed check casher is required to have the physical checks available for examination by Banking Department examiners.

With respect to your first question, the only applicable provision of the Banking Law which governs the return of physical checks by a State chartered bank is Section 9-m of the Banking Law. Section 9-m, which is a consumer protection statute, and thus not available to businesses, requires a banking institution which offers consumer accounts, meaning accounts established by natural persons primarily for personal, family or household purposes, which can be accessed by check, negotiable order of withdrawal, or other similar written instrument, to offer a consumer account on which the cancelled checks, negotiable order of withdrawal, or other similar instruments drawn on that account are returned to the customer with a periodic statement of the account. As I noted, Section 9-m is a consumer protection statute and the Banking Law contains no comparable provision applicable to checks drawn on the accounts of business entities. Thus, the banks you have spoken with are correct in that they are not required under the Banking Law to provide their business clients with the physical cancelled checks as opposed to images of the checks.

With respect to your second question, I am assuming that you are referring to checks which are drawn on the checking account of the check casher, and not the checks cashed by the check casher which are, of course, returned to the bank on which they are drawn. In the case of checks drawn on the check casher's own account, there is no requirement under either the Banking Law nor the Department's Rules and Regulations which requires a check casher to make available to examiners of the Banking Department original cancelled checks. Should a Banking Department examiner request to see the cancelled checks of a check casher, I have been assured by the Licensed Financial Services Division that images of checks will suffice.

I trust the foregoing is responsive to your questions.

Sincerely yours,

Jay Kane
Assistant Counsel

cc: Edward Valdes