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Home >> Special Situations >> Foreign Customers
U.S. Rules and International Checks
I gave a personal check, drawn on a London Bank, to my bank for conversion to US dollars and clearing. Approximately two and a half weeks later I was told the check cleared and the funds were deposited to my account. Now, two weeks after the deposit was made to my account, the bank told me the Federal Reserve has notified them that the check is being returned due to stop payment.
When I questioned the length of time that had elapsed since I was credited for the check, I was told by my bank that normal US banking regulations do not apply because the check was international. I've been in business for 28 years and have always believed that once a check cleared, the funds were available. Do the US banking regulations apply, and can they reverse my deposit?
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 The problem here seems to be semantic, and the pivotal word is "cleared." It is possible that your bank gave you credit and access to the deposit before the check was finally paid by the London bank, or at least before it had learned that the London bank was returning it. Your bank may have mentioned the word "cleared" in providing you credit, or you may have inferred that the check had cleared.
British law governs when a check is considered cleared and payment cannot be reversed. If the return of the stopped check was legal and timely by U.K. law and regulations, your bank really had no choice but to charge the check back to your account when it was notified the credit for the check had been reversed, whether or not you had been given access to the funds earlier.
Published on BankingQuestions.com 9/29/09
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