Canadian Check Collection Service User's Guide

Thank you for choosing the Federal Reserve Bank of Cleveland Canadian Check Collection Service.

The purpose of this User's Guide is to assist you in using the Canadian Check Collection Service. We hope you will find the handling of Canadian items to be a simpler process by using this guide.

Basic procedures for preparing and receiving Canadian work are outlined in this manual. If you have further questions concerning our Canadian service, we ask that you refer to the contact list.

Contents

1. Preparation

First verify that all items bear only eight digits for the routing and transit number.

Sort the Canadian checks into the proper category according to whether they are denominated in U.S. or Canadian dollar.

According to the Canadian Payment Association, Canadian Postal Money Orders and other Canadian Government checks are not eligible to be deposited as a photocopy in lieu of the original item. Please see the adjustments section for more instructions on submitting Candian Postal Money Orders and Government Items.

The Canadian Vendor does not accept Postal Money Orders in excess of $999.99. PMO items greater than $999.99 will be returned to you by the Reserve Bank.

U.S. Funds Items

"U.S. FUNDS" or "U.S. DOLLARS" must be on the face of the item. This can be typed, preprinted or handwritten on the item. List the item on the U. S. Funds Canadian Items cash letter form; retain a copy of the cash letter for your records. Cash letter forms are available for printing on-line:

Canadian Funds Items

If an item does not state that it is in U.S. funds, you assume that it is drawn in Canadian funds. List the item on the Canadian Funds cash letter form; retain a copy of the cash letter form for your records. Cash letter forms are available for printing on-line:

Please verify the sorting of your work. The most common error made by a depositor is a Canadian funds item included in a U.S. funds cash letter, or the reverse.

Any item sent in the wrong cash letter type will be subject to a Cash Letter Correction fee or may be sent back to you as a return item with a return item fee charged.

Please provide a tape listing of the items along with your cash letter. A separate cash letter form must be submitted for Canadian fund items equal to or greater than $250,000.

*Both U.S. and Canadian funds items must be encoded for the face value. For Canadian funds items, credit is given for the full amount, followed by a debit for the discount.

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2. Packaging and Forwarding to FRB Cleveland

Send all Canadian item cash letters directly to the Federal Reserve Bank of Cleveland at the following address. 

For regular mail deliveries:
Federal Reserve Bank of Cleveland
Check Department
Attn: Canadian
P.O. Box 94583
Cleveland, OH 44101

For deliveries that require a signature:
Federal Reserve Bank of Cleveland
Check Department
Attn: Canadian
1455 East Sixth Street
Cleveland, OH 44114

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3. Deadlines and Availability*

The deposit deadline for processing all incoming Canadian cash letter deposits is 3:00 a.m. EST.

U.S. funds Canadian cash letters receive one-day deferred credit for the face value of the cash letter.

Canadian funds cash letters receive same-day (immediate) credit based on the total appearing on the cash letter and a debit entry reflecting the rate of exchange. This is calculated by using the current weekly Canadian exchange rate.

*On Canadian holidays, all cash letters will be deferred an additional day.

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4. Fees

Refer to the latest fee schedule.

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5. Exchange Rate

Weekly Canadian Exchange Rate

A weekly discount rate is updated every Friday morning by 8:00 a.m. EST. This rate is in effect for deposits received the following Sunday through Friday. The rate could change during the week if the Canadian economy fluctuates dramatically. This is very rare, but it does happen occasionally. Although Canadian fund items are deposited for the “face” value, the charge will reflect the exchange rate was applied. .

Obtain the current weekly exchange rate online or call 1-800-929-2435 and select the option for Canadian Exchange Rate.

The exchange rate is only applied to Canadian funds cash letters.

Large Dollar Canadian Fund Items

The dollar amount which qualifies as a Large Dollar Canadian Fund Item is of value equal to or greater than $250,000. As a result, each Canadian fund item equal to or greater than $250,000 must be submitted in a separate cash letter. Additionally, these items will receive a separate exchange rate that may differ from the weekly exchange rate published by the Reserve Bank. To receive a separate quote, please call the Cleveland Canadian Check Collection Department at 1-800-929-2435 and select the Canadian option. .

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6. Cash Letter Correction

To aid in the collection of Canadian checks and to reduce the number of avoidable returns and adjustments, FRB Cleveland will make every effort to correctly process forward items deposited in mismatched cash letters.

A Cash Letter Correction fee of $15 per item will be charged in addition to the appropriate forward collection fees.

FRB Cleveland will make every effort to assist in expediting the collection of Canadian items and avoid return items through the Cash Letter Correction service. However, FRB Cleveland is under no obligation to correct cash letters and may, at its discretion, return such items. The Reserve Bank will not be liable if an item deposited in a wrong fund cash letter is not corrected for any reason.

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7. Adjustments

A common error made by a depositor is a Canadian funds item included in a U.S. funds cash letter, or the reverse. Please verify the sorting of your work. Resolving these types of errors can be a lengthy process as we may have to deal directly with our Canadian vendor on a case-by-case basis.

Important: When submitting a cash letter adjustment on Canadian items, please supply the following information:

  • A brief note explaining the error
  • A copy of your Canadian cash letter forwarded to us for processing
  • The cash letter credit date
  • A copy of your statement
  • Two copies of the front and the back of each item in question

Be certain to date your Canadian adjustment request and include a contact at your financial institution for us to call in case we have questions.

Photocopies in lieu of lost originals for Canadian Postal Money Orders and Canadian Government Items cannot be included in forward collection cash letters. The original check must be located and deposited in a separately sorted Canadian Cash Letter. If all options to locate the original check have been exhausted, then:

  1. File a paper adjustment or a FedLine adjustment with FRB Cleveland.
  2. Log the adjustment as FRN (Foreign) without entry basis
  3. Make the adjustment an information request
  4. n the comments write:
  5. Need credit for Indemnified Canadian PMO Photocopy

We will then submit this to our Canadian vendor who will present it to the government office for reimbursement. If it has not been paid, we will pass the credit to the depositor when credit is received from our Canadian vendor.

All other lost originals can be indemnified and forwarded back in your cash letter. Please place them in a carrier envelope.

See the below sample of a properly formatted indemnity statement:

Indemnity Statement Example
"This is a photographic facsimile of the original check which was endorsed by the undersigned and reported missing or destroyed while in the regular course of bank collection. All prior and any missing endorsements and the validity of this facsimile are hereby guaranteed, and upon payment hereof in lieu of the original check, the undersigned will hold each collecting bank and the payor bank harmless from any loss suffered, provided the original check is unpaid and payment is stopped thereon."
Signed ______________________________________
Bank Name __________________________________
Routing Number ______________________________

All adjustments are done on a without-entry basis.

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8. Return Items

Returns received from the Canadian vendor are returned directly to the endorsing financial institution or to their District Federal Reserve office for forwarding to the depositing financial institution.

When accepting Canadian items for deposit, it is important to keep in mind that Federal Reserve Operating Circular No 3 and Regulations CC and J do not apply to Canadian Banks. For example, provisions regarding off premises presentment, payment, return, notice of nonpayment, adjustments and photocopies are not binding on Canadian banks. For more information, see Federal Reserve Operating Circular No. 3, Appendix D.

You will receive Canadian returns in one return letter containing both U.S. funds and Canadian funds. Please note that Canadian funds items will be returned at the current discounted value.

How your institution handles returns depends on the following reasons for return:

  • Endorsement missing: Process the correct endorsement and re-deposit.
  • NSF: Contact the drawee. Canadian, NSF items cannot be re-deposited.
  • Canadian funds item sent to the FRB Cleveland in a U.S. funds cash letter: The endorsing bank should reprocess the item on a Canadian Funds cash letter.
  • U.S. item included in a Canadian funds cash letter: Discount was charged when the item was originally received and processed. The Canadian vendor will return the item at a discounted value, using the Canadian exchange rate in effect on the date of the return. The endorsing financial institution should redeposit the item in a U.S. funds cash letter.
  • Photocopies without indemnity statement: The endorsing bank should locate the original item or indemnify the Canadian Photocopy and re-deposit the item.
  • Converted Canadian Item: Canadian checks are not eligible to be cleared as check 21 items- re-deposit the original item or an indemnified photocopy.
  • Photocopy of a Canadian Postal Money Order or other Canadian Government Item: Photocopies(s) of Canadian Postal Money Orders or Government Items are not eligible to be processed through normal deposit options. If the original item(s) has been destroyed or is unable to be located, the item(s) must be handled through Adjustment channels.

The Cleveland office will not adjust your institution's account for discount rate differences when the deposit and return discount rates differ.

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9. Cleveland Contacts

If you have any questions, concerns or problems about the Cleveland Canadian Check Collection Service, you may contact an individual listed below:

Contacts
Canadian Check Processing
Questions about the service, adjustments or return items
Check Customer Support

(800) 929-2435

Option #3
Michael Lanzarotta, Department Manager (216) 579-2447
Cyndi King, Department Manager (216) 579-3108
Officer in Charge of Check Processing
Timothy Rachek, Assistant Vice President (216) 579-2405

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