Duplicate Item Negotiated At 2 Banks

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Question:

A duplicate item was negotiated at two banks. Both of the banks hold the physical item. Which bank would take the loss for the item, Bank 1 or Bank 2?

Answer:

The payor bank would take the loss if they didn't return the duplicate presentment within their midnight deadline. The payor bank should determine which check was presented first and return the duplicate item to the respective bank.

Editor's Note: Under Federal Reserve policies, depending on the type of duplicate payment involved, an adjusting entry may be permitted later than the payor bank's midnight deadline. Review the specific circumstances of the payments and consult the FRB's Operating Circular No. 3 for guidance.