Check 21 Act Law and Legal Definition

The Check 21 Act or the Check Clearing for the 21st Century Act (Act) is a U.S. federal law allowing a recipient of an original paper check to create a digital version of the original check. The digital version is known as a substitute check. After making a substitute check, banks need not maintain the original paper check. The Act enables banks to handle more checks electronically. The Act intents to make check processing fast and efficient. The Act went into effect on October 28, 2004. Truncation is the process of removing the paper check from its processing flow. Banks need not return the checks to consumer with monthly statement after the passing of the Check Act21.