CAYMAN ISLANDS AUTOMATED CLEARING HOUSE FAQS

Changes are being adopted country-wide to support the digitisation of Cayman’s cheque clearing system. Cheques must be image-friendly so that all Participating Banks are able to exchange data electronically instead of physically exchanging the cheques between banks. Additional details for clients on the changes, are available directly from your bank. Once the new standards are adopted, interbank processing of cheques using the Automated Clearing House (ACH) service will be faster and more efficient.

An Automated Clearing House (ACH) is an electronic payment network that facilitates the exchange of financial transactions. In the Cayman Islands, the ACH is used to facilitate the exchange and settlement of Electronic Funds Transfers (EFT) and Electronic Cheque Images across Participating Banks.

No. The institutions participating in ACH processing are the local Class A retail banks: Butterfield Bank (Cayman) Limited, Cayman National Bank Ltd., CIBC FirstCaribbean International Bank (Cayman) Limited, Fidelity Bank (Cayman) Limited, RBC Royal Bank (Cayman) Limited and Scotiabank & Trust (Cayman) Ltd.

The new image-friendly cheques will enable Participating Banks to exchange data electronically. This will result in more efficient cheque settlement times, resulting in faster access to funds by depositors.

To ensure that the correct cheque production standards are used, please contact or visit your branch for guidance on the new standards. You will be required to provide a small sample of any new cheques to your bank for approval, prior to issuing these cheques. The new standards include but are not limited to;

  • Date field population in one of two specified formats (MMDDYYYY or DDMMYYYY).
  • A mandatory serial number (cheque number) within the Magnetic Ink Character Recognition (MICR) line encoded at the bottom of each cheque.
  • Adoption of minimum length and depth for cheque sizes
  • Standardised positions for key fields on the cheque, e.g. date field, the amount in figures, currency identifier
  • Guidance on the type of elements that may hinder the capture of clear images of, or data on, the front or the rear of the cheque.
  • Ensuring that custom cheque security features do not interfere with key data, or “areas of interest” on the cheque, either prior to or after imaging. In particular, if pantographs are used, they must not be visible on images captured from original cheques.
  • Adherence to print layout requirements for the reverse side of cheques
  • Adherence to specifications (e.g. Print contrast Signal) to ensure high-quality images can be captured. For example, complex or colorful backgrounds currently used on your cheque paper may interfere with image quality and may need to be changed or discontinued.

Clients with a supply of “old format” cheques can continue to use them until they need to reorder, provided that a compliant image can be captured from them. If a compliant image cannot be captured, your cheques will need to be replaced immediately. If presented, your bank will make you aware if a compliant image cannot be captured and advise you of the procedure to be followed to immediately replace your cheques.

A compliant cheque image is a clear digital capture taken by the bank of deposit of a cheque, on which all information required to allow its negotiation has either been written or printed on secure cheque paper and which adheres to the cheque production standards agreed by the Participating Banks.

Yes. Clients will now be required to use black or blue colored ink when writing cheques and also should not issue cheques to payees where alterations have been made in material fields (date, payee name, words and figures, signatures), as these will make a cheque ineligible for electronic processing.

No. Post-dated cheques will continue to be processed once their value date is reached and provided that a compliant image can be captured of them and they are written in black or blue ink and do not carry alterations to material fields.

The new standards are mandated for all Cayman (KYD) dollar cheques and for USD dollar cheques that are drawn against a local bank.

Cheque transactions will be exchanged across Participating Banks between the hours of 6:00am and 7:30pm (Cayman Time) Monday to Friday. Cheque processing will not be conducted on Bank Holidays. Please contact your bank to discuss hold periods that may apply to cheque deposit transactions.

With the passing of the Bill of Exchange Act amendment in April 2019, an electronic image of a cheque is now a legally accepted replacement for a physical cheque document. Physical cheques that have been settled, will no longer be stored by Participating Banks and will be destroyed in keeping with the destruction policy of the bank at which they were negotiated/deposited. The images of all cheques negotiated/settled will now be electronically stored by Participating Banks for the required retention period.

Electronic Funds Transfer (EFT) refers to transactions that take place over an electronic payment network, either among accounts at the same bank or among accounts at participating banks. EFTs may include direct-debit transactions, direct deposits and other branch and online banking initiated transactions.

An EFT transaction Originator must first make arrangements with a Participating Bank to transmit payments by signing up for an EFT origination product. Please contact your bank to learn more about their EFT origination product offerings and how to access and use them.

An Originator is any client of a Participating Bank who wishes to either credit funds to, or debit funds from, a bank account of another client or a bank account of their own, held at another Participating Bank.

The EFT process is secure, fast and convenient. This service will provide clients with the ability to transfer and settle funds locally among Participating Banks within the same day, subject to the exchange timelines agreed among the Participating Banks.

Credit or debit transactions between personal and/or business accounts held at other banks can be processed using EFT. For example, payment of utility bills, insurance premium payments, payroll transactions, invoice payments and sundry transfers between accounts.

No. Account owners have to give an EFT transaction Originator signed instructions to allow their accounts to be debited. It is the responsibility of the Originator’s bank to ensure that such instruction has been obtained and is being stored for reference by the EFT transaction Originator.

No. There is no need for you to notify your bank in advance that you will be receiving EFT transactions. Arrangements for EFT transactions to be conducted against your account need to be agreed with the EFT transaction Originator to ensure that they are provided with accurate banking information for you, to allow them to successfully submit an EFT transaction to your account.

The information required can vary based on the receiving bank’s requirements for processing an EFT transaction. These requirements will be advised when you make contact with your bank about using EFT. Examples of key information are Receiver’s Account Number, Receiver’s Account Type, Receiver’s Transit Number, Receiver’s Branch Number, Receiver’s Routing Number, Receiver’s Name, Transaction Amount, Transaction Type, Transaction Currency and Transaction Description.

The ACH system is accessed through a secure connection provided to the Participating Banks only. The network over which the ACH system works is well-protected from multiple types of threats. Note, customers will not connect directly to the ACH, only the Participating Banks will have the ability to access the ACH system.

All transaction files exchanged across the ACH network will be encrypted. Participating Banks’ access to the ACH system is restricted; allowing them to only view, receive and or process the files sent to, or by their bank.

The ACH system has no limit to the volume of transactions that can be submitted, but there is a maximum value of US$500,000.00 or its equivalent in KYD, per any single transaction. Please contact your bank to discuss any other EFT Origination product level limits which may be required.

ACH Participating Banks will agree with, and advise their clients, of the legitimate methods for communicating any information related to the use of the EFT service facilitated by the ACH. Please always ensure that you are safeguarding your banking information by not providing these details to an unknown or unreliable source. If you receive any suspicious or unexpected communications, do not follow any of the instructions provided within them and immediately contact your bank for further instructions.

EFT transactions will be exchanged across Participating Banks between the hours of 6:00am and 2:30pm (Cayman Time) Monday to Friday. Transactions received during these hours will be applied the same day to the receiver’s account by the end of their bank’s business day. EFT processing will not be conducted on Bank Holidays. Please contact your bank to discuss other internal cut-off times that may apply to originating EFT transactions.

EFT transactions will be allowed in USD or KYD currency only. Cross Currency foreign exchange transactions between USD and KYD currencies will be completed by receiving banks as necessary. Please discuss with your bank any restrictions or charges that may apply to foreign exchanges resulting from EFT transactions.

Yes, EFT transactions are subject to all normal compliance and regulatory requirements, just like any other electronic transaction.