The Onus of “On-Us” Checks An “on-us” check is one that is drawn on an account held at the same bank at which it is presented. That is, the bank is both the depository bank and the payor bank. In simple terms, the opposite of an on-us check is a transit check. A transit check is presented at another financial institution and subsequently sent to the payor bank through a clearing process for settlement. On-us checks carry different risks than transit checks, creating distinct responsibilities, particularly regarding wrongful dishonor and funds availability. No federal requirement obliges banks to pay on-us checks “over the counter.” If a non-customer physically presents an on-us check to “Bank of Snow,” there is no explicit requirement for the bank to pay that item (at least from a federal standpoint). Of course, most banks contractually agree to pay duly presented and properly payable items, so refusing an on-us check may incur legal risk from the drawer. That’s not to say the bank is prohibited from dishonoring this type of check for a valid reason, such as insufficient funds in the drawer’s account or failure of the payee to provide reasonable identification; but wrongful dishonor may occur in the absence of a valid reason (UCC 3-501, 3-502 and UCC 4-402). Theodore Kelly, JD, MBA, CCEP, Associate General Counsel Compliance Alliance 26 NEBRASKA BANKER
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