Proposal would require banks to verify U.S. Treasury checks

The Treasury Department’s Bureau of the Fiscal Service issued a proposed rule to amend its regulations governing the payment of checks drawn on the U.S. Treasury.

Proposed Rule: The bureau’s proposal would:

• Require financial institutions to use the Treasury Check Verification System, or other similar authorized system, to verify that Treasury checks are authentic and valid.

• Require Federal Reserve Banks to decline payment of a Treasury check to include prior cancellation of the check, so the Fiscal Service may place a “true stop” on Treasury checks.

Impact: The proposal is designed to prevent Treasury checks from being negotiated after cancellation by Treasury or a payment certifying agency, also known as payments over cancellation, or POC.

Deadline: Comments are due by April 3.