Check Clearing for the 21st Century Act Law and Legal Definition

Check Clearing for the 21st Century Act is a federal law that took effect on October 28, 2004. It gives banks and other organizations the ability to create electronic image copies of consumers' checks. These copies are known as substitute checks. The images are then sent to the relevant financial institutions to be processed, where money from a consumer's account is transferred to the receiving party's account. This law aims to make use of technology to reduce or eliminate the costs involved with paper check processing. After a predetermined holding period has elapsed, banks may destroy the original paper check. However, not all banks do this and in some cases, consumers may be able to ask for their cashed checks back for record-keeping purposes.

Check Clearing for the 21st Century Act is also known as Check 21 Act.