Important Information for Clients with U.S. Dollar Accounts

DO YOU HAVE A U.S. DOLLAR ACCOUNT?

Beginning October, 28, 2004, if you issue U.S. cheques that are negotiated in the United States, your account statement could include paper reproductions of cancelled cheques in place of original cheques. These paper reproductions are referred to under U.S. law as “substitute checks,” and are also commonly described as an “Image Replacement Document,” or IRD. A substitute check/IRD contains an image of the front and back of the original cheque and bears a legend that identifies it as the legal copy of the original cheque.

WHICH U.S. ACCOUNTS WILL BE AFFECTED?

Business Accounts: the MICR encoding at the bottom of your cheque starts with 026004093, followed by your 10 digit number beginning with 0. Personal Accounts: the MICR encoding at the bottom of your cheque starts with 026004093, followed by your 10 digit account number beginning with 9. Sample of Cheque / IRD Source: American Bankers Accociation

WHY THE CHANGE?

A new U.S. federal law, called the “Check Clearing for the 21st Century Act,'” or Check 21 Act, gives U.S. financial institutions the option of processing substitute cheques instead of original cheques. This new Act gives a substitute check/IRD that meets the requirements of the Act the same legal status as an original paper cheque and requires financial institutions to accept substitute checks/IRDs.

While this is a new U.S. law, it affects financial institutions and their clients across North America. Once this new law takes effect, RBC Financial Group will begin receiving substitute checks/IRDs from U.S. financial institutions.

The Check 21 Act is designed to make the cheque clearing process more efficient. For more information, visit www.federalreserve.gov/paymentsystems/ truncation/default.htm or www.cdnpay.ca/news/check_21.asp

HOW CHECK 21 WILL AFFECT YOU.

While you may receive a substitute check/IRD, this change will not impact the way your account is set up.

• Among your cancelled cheques, you may begin to see some substitute checks/IRDs in your account statements after October 28, 2004. The substitute check/IRD will replace the original cheque
• No changes will be required to your account or the printing and ordering of your USD cheques
• If you are negotiating a USD cheque which is drawn on a bank in the United States and the cheque is subsequently returned to you unpaid (i.e. Insufficient Funds, Stop Payment), you may receive a substitute check/IRD in place of the original cheque.