Check Clearing for the 21st Century Act
A federal law, known as Check Clearing for the 21st Century Act (Check 21), makes it easier for financial institutions to electronically transfer check/share draft images, called substitute checks, instead of physically transferring paper checks.
Check 21 is a federal law that is designed to enable credit unions and banks to handle more checks electronically, which should make check processing faster and more efficient. Today, financial institutions often must physically move original paper checks from the financial institution where the checks are deposited to the financial institution that pays them. This transportation can be inefficient and costly. Check 21 became effective on October 28, 2004.
