Use of Image-Based Cheques

The Canadian Payments Association (CPA) is in the process of implementing a new image-based cheque-clearing system throughout Canada. Image-based cheque clearing will eliminate paper cheques from the clearing process. Therefore, it will no longer be possible to have paper cheques returned once they have cleared. Some trustees have expressed concern that they will no longer be in compliance with paragraph 4 of Directive 5R2, "Estate Funds and Banking," as a result of the new changes. Specifically, some financial institutions have advised their clients that front-of-cheque images will now be provided instead of paper cancelled cheques.

The CPA has published information on the new cheque-imaging standards on its website, including answers to "Frequently Asked Questions". According to the published information, images of both sides of physical cheques will be captured by financial institutions. Trustees should contact their financial institution to arrange for receipt of front-and-back images of cheques in order to remain in compliance with Directive 5R2. One common method of providing these images for business clients, including trustees, is by CD-ROM.

It is also noted that cheque images are admissible in court under the federal Canada Evidence Act and similar provincial statutes, and that pursuant to amendments to the Bills of Exchange Act, which came into force in April 2007, cheque images captured by CPA member financial institutions under the new standards are legally equivalent to the original cheques and may be used for all purposes.

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