What is the purpose of IRDs in banking?
Since passage of the Check Clearing for the 21st Century Act of 2003 (Check 21), the Federal Reserve Board has encouraged check truncation (the replacement of a paper check with a digital image) earlier in the processing cycle by removing the need to transport the original check from the bank of first deposit to the check processor, and from the check processor to the paying institution. Check 21 allows a new negotiable document – a substitute check or Image Replace Document (IRD) – and gives it the same legal status as the original paper check. Financial institutions have the option of either storing or destroying the original document once it has been captured electronically.
