LBP, COA officials discuss new check image clearing system

Published: 11 April 2016

Land Bank of the Philippines Assistant Vice President Reynaldo C. Copa explains the features of the new Check Image Clearing System at a presentation before COA officials and auditors on April 7, 2016.

Officials of the Commission on Audit (COA) and representatives from the Land Bank of the Philippines (LBP) discussed the various features and issues relating to the new Check Image Clearing System (CICS) to provide faster movement of funds and reduce or eliminate fraud at a presentation held at the COA CP Boardroom on April 7, 2016.

In the new CICS, a deposited check will be scanned and its electronic payment information and image will be transmitted throughout the entire clearing cycle. The original physical check will be removed from the clearing process. The new system is part of the Philippine Clearing House Corp. (PCHC)’s automated clearing system that integrates the CICS with the Electronic Fund Transfer Network.

LBP Assistant Vice President Reynaldo C. Copa, in his presentation, said the system will address geographical limitation by eliminating movement of physical paper, streamline the process and create a faster & more secured payment exchange environment.

 “This new system will reduce the number of days for a check to be cleared. For instance, if a check deposited within cut-off time or 3 pm today, funds will be made available for withdrawal by 3 pm the next day. There will also be controls put in place to protect the integrity of the scanned checks,” Mr. Copa said.

The six minimum mandatory check security features are: security fibers (visible & invisible), embedded watermark of the PCHC logo, microprint of bank initials along the signatory line, microprint of the security printer’s name along the date line, “Copy” pantograph, and erasable ultraviolet (UV) ink/UV security features. To protect the payee, a drawer’s conformity statement will be included. The new checks will be launched by July 2016.

COA officials, for their part, expressed concern regarding the legality of the scanned checks as evidence, other requirements of investigating bodies and additional security features of the new check clearing system. COA officials said the rules of evidence should catch up with this new development in the banking system.

The LBP representatives also asked COA to revisit COA Circular No. 2012-005 on Prescribing the use of Punong Barangay Certification (PBC) and COA Auditor’s Advice (CAA) which provides, among others, the preparation of the CAA to a Government Servicing Bank holding further payment of checks issued by a barangay that has not submitted a copy of the PBC and other required documents. LBP and COA officials discussed various ways by which barangays can avoid being penalized a hefty amount for stop payments but must still be able to comply with the required documents.

Other LBP officials who attended the presentation were Vice President Ma. Eloisa C. Dayrit (Head, Banking Services Group), Vice President Ana S. Concha (Head, System Implementation Dept.), Mr. Raymond Santos of the System Implementation Dept. and COA-LBP branch manager Lourdes E. Flor. #