4 FAM 350
UNITED STATES GOVERNMENT DEPOSITARIES
(CT:FIN-476; 06-28-2021)
(Office of Origin: CGFS/FPRA/FP)
4 FAM 351 GENERAL
4 FAM 351.1 Scope
(CT:FIN-476; 06-28-2021)
This subchapter describes Department-wide requirements governing U.S. Government depositaries established and utilized at posts abroad. It gives directions to State Department U.S. disbursing officers (USDOs) (and Class B cashiers authorized to maintain a checking account) for reporting transactions in checking accounts maintained with designated depositaries, either in U.S. dollars or in foreign currencies, and other related matters concerning checks drawn on these accounts. More detailed policies and procedures associated with the requirements in this subchapter are available in 4 FAH-2 H-420, Checks; 4 FAH-2 H-610, U.S. Government Bank Accounts; and 4 FAH-2 H-620, Reconciling U.S. Government Bank Accounts.
4 FAM 351.2 Authorities
(CT:FIN-476; 06-28-2021)
The authorities are:
(1) 31 U.S.C. 1322;
(2) Treasury Financial Manual (TFM) Volume I, Part 4, Chapter 7000 Cancellations, Deposits, and Claims for Checks Drawn on the U.S. Treasury;
(3) Treasury Financial Manual (TFM) Volume I, Part 4A, Chapter 3000 Requirements for Scheduling Payments Disbursed by the Bureau of the Fiscal Service; and
(4) Treasury Financial Manual (TFM) Volume III, Part 3, Depositaries and Financial Agents in Foreign Countries, U.S. Territories or Insular Possessions, Chapter 1000 Maintaining Treasury General Account.
4 FAM 351.3 Definitions
(CT:FIN-476; 06-28-2021)
Confirmed deposit: A deposit transaction evidenced by a bank deposit ticket, slip or other deposit receipt, which has been officially approved by the designated depositary showing the date on which the deposit will be credited to the designated depositary checking account.
Current designated depositary check: A check unpaid and outstanding against the designated depositary checking account for any time less than one full year from date of issue or the period designated by the issuing bank on the face of the check if less than one year.
Designated depositary: A United States or foreign commercial bank or banking institution which has been designated by the Secretary of the Treasury as an official depositary to hold U.S. Government funds for the account of the United States.
Designated depositary account: The checking account maintained with the designated depositary by a U.S. Government disbursing officer or Class B cashier.
Designated depositary check: A check drawn on the designated depositary payable from the designated depositary checking account. Also, this includes a check remotely printed and distributed by the designated depositary to a payee.
Stale dated designated depositary check: A check drawn on the designated depositary which is unpaid (issued but not paid by the U.S. Treasury) and outstanding against the designated depositary checking account for at least one full year after the check was issued, except where the local laws provide that the negotiable period of a check is shorter.
4 FAM 351.4 Establishing an Account
4 FAM 351.4-1 Criteria for the Selection of Banks
(CT:FIN-476; 06-28-2021)
a. Factors to be used in the selection of a new bank. Services will be evaluated in descending priority order in the following three categories:
(1) Category A—Services relative to maintenance of the operating account. Examples:
(a) Processing of checks, including checks remotely printed by a local bank, electronic fund transfers (EFT), and deposits;
(b) Submission of bank statements, and statement of bank charges (monthly or daily as required by USDO);
(c) Where possible and/or customary, return of all canceled checks;
(d) Providing daily bank balance;
(e) Stop payments fees if any;
(f) Overdraft fees if any;
(g) Providing report of remote check issuance, remote check paid, remote check outstanding, and stale dated remote checks. When a remote check becomes stale dated, the check is automatically cancelled by bank and the funds are credited back to the USDO account; and
(h) Providing daily EFT rejection report;
(2) Category B—Other services desired by the embassy. Examples:
(a) Providing accommodation exchange at the embassy;
(b) Providing automated teller machines;
(c) Services which are customary locally; and
(3) Category C—Percentage of American ownership. Example: Preference will be given to American owned banks unless a local bank’s arrangement is more advantageous to the United States.
b. Operating account balances, or forfeiture of potential interest earnings on the account, will not be used to subsidize banking services that would otherwise be funded through the appropriation process, e.g., cashier services. Minimum balances requested by the bank are to be avoided. The level of the account balances will be determined solely by the disbursing requirements. To meet this criteria, if the bank proposes or the embassy requests, special services under this category, and/or minimum account balances are proposed by the bank, the evaluation process must include a finding that the balances are consistent only with disbursing requirements, and are not set to produce extra bank income to support the services rather than interest payments to the U.S. Government (see 4 FAH-2 H-614, paragraph c).
c. A review of the arrangement with the designated depositary should be performed at least once every three years but at any point within three years consideration should be given to changing a bank account when the following occur:
(1) When the bank is failing to meet USDO standards relative to the maintenance of the operating account;
(2) When unstable conditions in the country could affect current banking arrangements;
(3) When the embassy receives an unsolicited request for the embassy bank account from a bank and that bank:
(a) Offers a more beneficial banking arrangement than currently received; or
(b) Reflects a higher level of American ownership than the present depositary.
4 FAM 351.4-2 Solicitation, Review and Designation Procedures
(CT:FIN-476; 06-28-2021)
a. When it has been determined that a bank solicitation will be initiated, the servicing USDO will provide the embassy with a questionnaire to be completed by the bank. This questionnaire can be further developed and refined to reflect the embassy’s particular needs.
b. The post management officer or financial management officer (FMO) will send a letter or other method of communication in accordance with local business practices, along with a USDO provided questionnaire, to all American-owned, as well as leading local banks, advising the banks that the embassy is soliciting banking services. The communication method appropriate for local banks (e.g., letter) and the questionnaire should contain particulars about the account, such as the average balance estimated to be maintained, how it will be funded, the number of payments processed each month, any special banking services required (with reference to the restriction on minimum balances from 4 FAM 351.4-1, paragraph a), etc. If this information is not available at the post, the post should obtain it from the servicing USDO. The letter should explain that the questionnaire will be evaluated on the basis of the bank’s response (using criteria outlined in 4 FAM 351.4-1, paragraph a) in comparison with responses from other local banks. The correspondence (e.g., letter) must request the bank to be prepared to enter into a written agreement regarding the services the bank will provide. If the bank will not enter into a written agreement and it has been determined the bank's general terms and conditions are insufficient to cover all services expected of the bank, the post FMO should submit a letter to the servicing USDO stating the written agreement was delivered and discussed with the bank.
c. If special services are requested, such as providing accommodation exchange on post/embassy premises, the written agreement should contain disclaimer statements similar to the following:
(1) The U.S. embassy will not make good any dishonored checks which have been accepted and negotiated by the bank. The embassy will provide the best information available, or attempt to obtain the information, on the current whereabouts of the makers of such checks, consistent with applicable laws and regulations; and
(2) Although the embassy exercises diligence in maintaining security of property on embassy premises, the U.S. Government does not accept liability for loss or damage to bank personal property kept on the embassy premises for the purpose of providing these services.
d. Post management must establish a deadline for responses which should take into consideration the urgency of the need. If there is no immediate need to change banks, a 30-day deadline is recommended.
e. Post management may wish to advise the banks that the maintenance of the disbursing officer’s operating account may lead also to the eventual transfer of nonofficial account(s) to the bank, if any exist at the post. Post management has the option to provide necessary background information on the unofficial account(s), such as the number of account(s), etc. Should the post management elect to provide this information, it should be made clear to the banks that the post has no control over the account(s), and that the unofficial account(s) may or may not move with the embassy account. The bank should also be made aware that these accounts are not in any way linked to the USDO’s official account, and that the bank may not charge the USDO’s account for uncollectible items originally credited to or drawn on other unofficial accounts.
f. In the process of selecting a depositary to maintain the disbursing officer’s operating account, there are at least two times when the management officer or FMO as appropriate must communicate with the disbursing officer who services the post. Post management must:
(1) Coordinate letters and questionnaires to be sent to the financial institutions with the disbursing officer servicing the post before canvassing financial institutions is initiated; and
(2) Send the servicing USDO the original responses with post management recommendation of a banking institution for the USDO to review the responses and comment on the post’s selection.
Along with the responses, post management must prepare and forward to the disbursing officer for review a memorandum that provides any additional information helpful in making a selection. Preferences should be stated with explanations. Special services required should be discussed, including reasons and a statement that proposed balances are consistent with disbursing requirements and should not result in forfeiture of interest or extra income to the bank to support the services. A copy of the communication (e.g., letter) sent to the financial institution should also be forwarded. The USDO may request additional information from post management before submitting the responses/recommendations to the Department.
g. Upon receipt of the bid package, the USDO will review the bank bids to determine if the selected banking institution’s bid is the most beneficial bid, and if so, the USDO or assistant USDO will request CGFS/DO to seek U.S. Treasury approval to designate the selected banking institution a depositary of U.S. Government funds, including in the request a statement that the proposed depositary and the account meet the criteria of TFM Vol. III Part 5 1000.
h. Treasury Department will then prepare correspondence designating the selected banking institution as a depositary of U.S. Government funds. Treasury Department will send the correspondence to CGFS/DO for the USDO or assistant USDO. The Treasury Department designation will be permanently maintained as an USDO official record.
i. Consistent with 4 FAH-2 H-615, paragraph d, the USDO will transmit the Treasury approval to the submitting post and the responsible post official will present the designation letter to the selected bank.
4 FAM 351.4-3 Actions Necessary After a New Bank is Designated
(CT:FIN-476; 06-28-2021)
After a new bank is designated, the USDO must do the following:
(1) Request opening documents and sign signature cards (normally the USDO will make an imprint of their signature die on the bank’s signature card);
(2) Obtain new bank checks if necessary and determine if the bank will accept a USDO universal check or if a special size and formatted check is required;
(3) Establish Swift EFT processing where possible. Banks and the Federal Reserve Bank of Kansas City (FRBKC) must sign a bilateral agreement; and
(4) Coordinate all changes to insure the system reference tables and software are accordingly adjusted.
4 FAM 351.5 Monthly Bank Statements
(CT:FIN-476; 06-28-2021)
Upon selection of a Treasury designated bank, the USDO will receive monthly bank statements electronically and/or in hardcopy for the full calendar month supported by paid checks and associated references to electronic fund transfers (EFT) if required by the USDO or automatically provided by the local depositary.
4 FAM 352 RECONCILIATION
(CT:FIN-476; 06-28-2021)
The USDO will have the responsibility for performing monthly reconciliations of each general depositary account under the USDO’s accountability. The reconciliation will be performed in accordance with the instructions and internal controls in 4 FAH-2 H-620. In addition to the instructions in 4 FAH-2 H-620, the USDO will review the account balances which appear on the bank statements to insure that balances are being maintained only at levels consistent with disbursing requirements.
4 FAM 353 NEGOTIABILITY OF DEPOSITARY CHECKS
4 FAM 353.1 Description of Voided and Spoiled Depositary Checks
(CT:FIN-476; 06-28-2021)
a. Voided checks: Original serially numbered checks which are not to be released to the payee due to withdrawal of the voucher or voucher items by the administrative office and consequently not reported as checks issued in the check reports of the disbursing office, will be rendered nonnegotiable by placing the words “Void—Not Negotiable, No Check Issued Under This Number” on the face of the checks in prominent size to avoid unauthorized negotiation.
b. Spoiled checks: This classification of checks will apply to those instances where the original serially numbered checks must be rewritten due to the checks being (1) mutilated or spoiled in preparation, or (2) incorrectly prepared. Under either of the above circumstances, disbursing offices will issue replacement checks as described below.
4 FAM 353.2 Replacement Checks for Voided or Spoiled Depositary Checks
(CT:FIN-476; 06-28-2021)
Replacement by Alternate Serially Numbered Check. Disbursing offices not using control checks will use the next available serially numbered check as a replacement; such replacement checks will bear the current date of issue. All original checks so replaced, will be rendered nonnegotiable by placing the words “Spoiled—Not Negotiable, Replacement Issued Under Check No. __ dated __” on the face of the checks. The serial number of the new check will in no way be altered or changed, and such number will be recorded on the original check being replaced as provided above. In the lower left-hand corner of the face of all replacement checks, will be noted the information “Issued to Replace Check No. ____.” The disbursing office must make an appropriate notation on the related copies or detailed list of checks drawn.
4 FAM 353.3 Reporting and Disposition of Voided and Spoiled Checks
(CT:FIN-476; 06-28-2021)
At the close of each monthly accounting period, a separate listing in numerical sequence for the void checks and a separate listing for the spoiled checks will be prepared for the USDO staff performing bank reconciliations. The check listings should be plainly identified as to class of checks (voided or spoiled), accounting month, name of depositary, and account number, if any.
4 FAM 354 UNDELIVERABLE DEPOSITARY CHECKS
(CT:FIN-476; 06-28-2021)
The procedures prescribed in this section relate to undeliverable checks, the proceeds of which are still due the payee or estate.
4 FAM 354.1 Safeguarding Undeliverable Checks
(CT:FIN-476; 06-28-2021)
a. Undeliverable checks must be safeguarded in the same manner as blank check stock. The requirements of 4 FAM 340 apply.
b. Upon return of a check to the USDO or cashier because it is undeliverable, the USDO or cashier must notify the applicable certifying officer and request a corrected address so that the check may be delivered properly and promptly.
4 FAM 354.2 Replacement Checks for Defaced Undeliverable Checks
(CT:FIN-476; 06-28-2021)
If the safekeeping procedures with respect to undeliverable checks results in defacing the check prior to when action will be taken to credit the proceeds of the checks to the agency’s accounts, and it is necessary to issue a replacement check to the payee if the check is claimed before credit action is taken, the defaced undeliverable check will be treated as a spoiled check and processed under the procedures set forth in 4 FAM 353.2.
4 FAM 354.3 Disposition of Undeliverable Checks and Bank Rejected EFT Payments
(CT:FIN-476; 06-28-2021)
a. If a check remains undeliverable after confirming the last known correct address, the post FMO or other official holding undeliverable checks must prepare a Form SF 1098, Schedule of Canceled or Undelivered Checks, and/or any USDO required documentation and forward the actual undeliverable checks to the USDO who will then provide for the scheduling of undeliverable checks for credit to the appropriation or fund charged with the disbursement. The USDO will dispose of the undeliverable but still available check or checks in accordance with 4 FAH-2 H-427.2-1. If an actual check is not available to submit then it becomes an unavailable check cancelation and will be handled in accordance with 4 FAH-2 H-427.2-2, which requires a stop payment be placed and confirmed with the bank prior to cancelation. The policies and procedures for unavailable check cancelations are located at 4 FAM 356.2.
b. When an EFT payment is rejected by a bank, the voucher is canceled and payment is credited back to the original line of accounting in accordance with 4 FAH-2 H-427.3. For EFT payments, excluding a check remotely printed by a bank, there is no requirement to transfer the funds to 20X6045, Proceeds and Payment of Certain Unpaid Checks pending any claim for payment. If an EFT payment is subsequently needed for a bank rejected payment it must be reprocessed by the post FMO or responsible agency official under a new certified voucher.
4 FAM 354.4 Establishment of Liability for Payment of the Proceeds of Undeliverable Checks Credited to Government Accounts
(CT:FIN-476; 06-28-2021)
Liability must be established in the accounts for the amounts of all undeliverable checks or bank rejected EFT payments credited to the accounts to provide for subsequent claims for the proceeds and payment to the payee. This is accomplished by the obligation or accounts payable established in 4 FAM 354.3 above.
4 FAM 354.5 Vouchering Claims for the Proceeds of Undeliverable Checks Credited to Agency Accounts
(CT:FIN-476; 06-28-2021)
In processing claims for the proceeds of undeliverable checks which have been credited to agency accounts, the payments must be supported by a regular disbursement voucher signed by a duly authorized certifying officer. Each basic voucher should cite a reference to the original undeliverable check, showing the check serial number, amount, and disbursing symbol number.
4 FAM 355 UnnegoTiated DepositAry Checks
4 FAM 355.1 Checks Current as to Issue Date
(CT:FIN-476; 06-28-2021)
Checks drawn on designated depositaries which are current and delivered, and there is information that shows the checks will not be negotiated as to date of issue, will be scheduled for credit to the appropriation or fund account charged with the disbursement or to the appropriate succeeding account. The unnegotiated checks will be forwarded in the same manner as voided and spoiled checks (see 4 FAM 354.3). Based on the information requested and provided by post management, the USDO will process the credit to the appropriation or fund account and will adjust the checkbook balance and the record of outstanding checks to reflect the action taken on the checks.
4 FAM 355.2 Unnegotiated Checks Drawn on Designated Depositaries Involving Deceased or Incompetent Payees
(CT:FIN-476; 06-28-2021)
Unnegotiated checks which are still current as to date of issue that are returned to an administrative agency or a USDO, the proceeds of which are still due a deceased or incompetent payee, must be scheduled for credit to the appropriation or fund account originally charged, simultaneously establishing a liability for the subsequent payment of the proceeds of such checks pursuant to a claim and settlement.
4 FAM 356 STALE DATED DEPOSITARY CHECKS
4 FAM 356.1 General
(CT:FIN-476; 06-28-2021)
a. Designated depositary checks which have remained outstanding and unpaid in the checking account under which they were drawn for one full year from the date issued, are classified as “stale dated” under the U.S. law. The amount of such checks must be transferred from the depositary checking account against which they were drawn to an account on the books of Treasury (31 U.S.C. 1322).
b. The servicing USDO will be responsible for making the necessary transfer from its depositary checking account to the account 20X6045, “Proceeds and Payment of Certain Unpaid Checks,” when the checks become “stale dated.”
c. When depositary checks become stale dated in a shorter period of time due to the banking laws of the country concerned, the checks are revalidated and returned to the payees. If it is not possible to revalidate the checks, the procedures in section 4 FAM 356.2 are followed.
d. The transfer of proceeds of stale dated checks, as appropriate, may be made by:
(1) The servicing USDO which issued the checks;
(2) The successor USDO; or
(3) The USDO designated by the CGFS/DO.
4 FAM 356.2 Disposition of Stale Dated Checks
4 FAM 356.2-1 Timing, Scheduling, and Notification of Stale Dated Checks
(CT:FIN-476; 06-28-2021)
a. The USDO will complete transfers identified in 4 FAM 356.1 on a regular basis and as soon as possible after the close of each fiscal year.
b. Upon completion of the transfers, the USDO must prepare, a list of stale-dated checks with an appropriate heading showing the name and location of the disbursing office and the name and location of the depositary. The checks will be listed in numerical order. The following information will be shown for each check:
(1) Date of check;
(2) Number of check;
(3) Name of payee;
(4) Amount of check—foreign currency; and
(5) Amount of check—U.S. dollar equivalent at time of issue.
The list must show the total amount of foreign currency units and the total U.S. dollar equivalent. The total U.S. dollar equivalent at the time the checks were issued, must be the amount of the U.S. dollar transfer to account 20X6045.
c. The USDO or the post as appropriate under local conditions will immediately furnish one copy of the list of stale-dated outstanding checks to the depositary to place a stoppage of payment on all checks listed thereon. The depositary will be instructed to advise all claimants presenting stale dated checks for payment, to submit a claim with the post or office where the original invoice or request for payment was submitted.
d. When an individual presents a stale dated check or a claim because the original check has become stale dated, the FMO or management officer, if no FMO is assigned to the post, should contact the USDO for guidance regarding how to proceed (see 4 FAM 357.2 and 4 FAH-2 H-427.5-3, paragraph a).
4 FAM 356.2-2 Stale Dated Checks Paid by Bank
(CT:FIN-476; 06-28-2021)
a. Although stop payment action in relation to stale dated checks is requested of banks, in accordance with 4 FAM 356.2-1, occasionally a payment is inadvertently made. When this occurs, the disbursing officer’s bank balance is less than the checkbook balance by an amount equal to the check amount.
b. When a bank has confirmed that a stale dated check has been inadvertently paid even though the bank was notified that the check had become stale dated and should not have been paid, post management should inform the servicing USDO as soon as practical. The resulting communication must contain a factual statement showing that there is nothing of record to indicate that the payee was not or is not entitled to the proceeds.
c. For the circumstance described in 4 FAM 356.2-2, paragraph b, the servicing USDO will advise post management of any tasks and documentation that must be completed to properly account for the payment that the bank inadvertently paid for a stale dated check that should not have been honored.
4 FAM 356.3 Effecting Transfer of Stale Dated Checks Pertaining to Closed Accounts
(CT:FIN-476; 06-28-2021)
When outstanding, unpaid checks become stale dated in a closed designated depositary checking account, and it is necessary to accomplish the transfer of the U.S. dollar equivalent of the stale dated checks to the account 20X6045, the servicing USDO having jurisdiction over the account will arrange for the necessary transfer and advise post management whether supporting documentation is required.
4 FAM 357 CANCELLATION OF DEPOSITARY CHECKS
4 FAM 357.1 Request for Cancellation
(CT:FIN-476; 06-28-2021)
When there is a need to cancel a depositary check for the circumstances covered by this subchapter, post management must send an official communication to the servicing USDO and provide any supporting documentation requested by the USDO. Cancelation of the check will be in accordance with procedures in 4 FAH-2 H-427.5-2.
4 FAM 357.2 Claims Against a Canceled Check
(CT:FIN-476; 06-28-2021)
When a claim is submitted for a check that has been canceled for being stale dated and the liability to pay has been established, the servicing USDO will be responsible for reviewing the list of stale-dated checks canceled to 20X6045 to determine if the submitted check was canceled to this account. If there is a match, the USDO will authorize post financial management personnel in a formal communication to document and certify a check payment against the 20X6045 account (see 4 FAH-2 H-427.5-3, paragraph a).
4 FAM 358 THROUGH 359 UNASSIGNED