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Canada – cheque imaging 3/4 afponline.org Canadian Payments Association updated information about cheque imaging requirements. The transition to image-based clearing is an industry-wide initiative in which all Canadian FIs are participating. To prep for this major overhaul, FIs, which traditionally have offered a service to return cancelled cheques, have now introduced image-based services. Phased in gradually, the clearing process takes full effect in late 2008. Before putting the transition in motion, the CPA consulted with interested stakeholders, the auditing community, cheques printers & software providers, & the legal & law enforcement communities. Speaking of the judicial system, these cheque images will be able to be used as evidence in court. Gleaning legal authority from the federal Evidence Act, most jurisdictions will soon have well-established business & banking record provisions that could be utilized for admitting an image in evidence as proof of a cheque. Parallel legislation in most provinces has been amended to make explicit reference to the admissibility of electronic records in court proceedings. Amendments to the Bills of Exchange Act, more federal legislation that went into effect 4/07, will significantly reinforce the legal framework for cheque images. Confirming that an image of a cheque or other bills of exchange that is captured by a CPA member financial institution (or on its behalf), these new provisions of an image of a cheque will be legally equivalent to the original item & may be used for all purposes. & cheques are not the only type of payment that will be imaged. Most paper payment items, including bank drafts, inter-member debits, money orders, settlement vouchers, & Canadian & provincial savings bonds, will be converted electronically. For more information on particular payment methods, specifications have been published in the CPA’s Standard 006; all items should comply with the new specifications by 9/2/08. Given the lengthy transition period provided since the new cheque specifications were published in 1/05, the CPA & its members expect that the vast majority of cheques will comply with Standard 006 by the 9/2. This is when the grace period for ‘old format’ cheques ends. For business cheques, this date is of particular importance. They represent Canada’s largest volumes, & until now there have been significant variations in the formats businesses use. A company not adopting Canada’s new cheque specifications may risk its cheques not properly imaging in accordance with CPA requirements. If this occurs, it could mean that such cheques could not be cleared using the new process. Once this program is fully implemented, non-imageable cheques would only be handled on a collection basis outside of the clearing system, which could significantly delay the availability of funds. By making the transition to the new cheque format before Canada’s clearing process is implemented, businesses avoid potential problems. They will be ready to reap the benefits of cheque imaging.