TN 31 (01-08)

A payment for an account in Canada that does not arrive at the endpoint FI may have been rejected and returned by the processor bank.

Before sending any payments to the endpoint FIs, the processor bank for Canada matches SSA's payment files (one for Canadian dollar accounts and one for U.S. dollar accounts) against a file of bank routing numbers and depositor account number formats provided by the FIs.

If a payment contains an invalid bank number, an invalid depositor account number, or a depositor account number for the wrong currency, the processor bank removes the payment from the file, returns the payment to FRBKC, and sends FRBKC a reject listing. FRBKC faxes a copy of the listing to Office of Earnings and International Operations (OEIO) and OPRP. After the scheduled payment date, FRBKC returns the payment to SSA.

The most common reasons for rejected Canadian IDD payments (other than typing errors) are:

• The account is coded for the wrong currency. There are three ways to code direct deposit for different accounts in Canada: Canadian dollar accounts, U.S. dollar accounts at most banks, and U.S. dollar accounts at Royal Bank of Canada. See GN 02402.300D., GN 02402.300E., and GN 02402.300F.

• The institution number contains an extra zero at the front. All institution numbers must be coded with only 3 digits. FRBKC's system reads the first 3 digits of the DAN field as the institution number and formats the record accordingly before passing it to the processor bank in Canada. An extra zero before the institution number for a payment that should go to Canadian Imperial Bank of Commerce (010), for example, will be read as a payment for Bank of Montreal (001). An extra zero before the institution number for a Bank of Montreal payment will mean that the institution number will be read as 000, an invalid institution number.

• The institution number is not coded as the first part of the DAN. When the institution number is missing, FRBKC's system reads the first 3 digits of the account number as the institution number and the remainder of the digits as the account number. If the DAN field contains only 7 digits, the institution number is almost certainly missing. On a Canadian check, the institution number follows the branch number, with a dash between the two numbers. The dash should not be coded.

• A “C” is coded as the first character of the DAN. If you receive coded Canadian IDD information containing a “C” at the beginning of the DAN, it is meant to be an indication that you should choose “Checking” as the type of account when keying the information. The “C” should not be keyed in the DAN field, even though it is shown at the beginning of the DAN on the MBR. When the DAN is coded incorrectly, the contractor bank receives an invalid institution number that begins with “C” instead of a numeric character. If you are passing information to another person for keying, it is better to show only the correct DAN information and write “checking,” instead of coding a “C.” Outdated forms should not be used for coding information for keying.

• The beneficiary did not give the interviewer all the numbers from the bottom of the check. Many Canadian banks include all or a portion of the transit (branch) number at the beginning of the account number. The beneficiary reads the transit number and the institution number, and then encounters the transit number again. Knowing the actual account number, the beneficiary skips over the transit number and reads only the actual account number. If you know that the account number for a certain Canadian bank usually contains more digits than the beneficiary is telling you, you should ask if there are any numbers between the institution number and the “account number.”

• A dash is coded after the institution number, making the account number longer than allowed. The Canadian banking system allows up to 12 characters for the account number. If the account number already contains 12 characters and a dash is keyed after the institution number, the account number is read as 13 characters. FRBKC sends the processor bank only the first 12 characters after the 3-digit institution number. Any remaining characters are dropped. To avoid this problem, it is better to code without inserting an extra dash.

• The check serial number is included in the DAN coding. The number of the check is coded at the bottom of the check, along with the routing and account number information. If the interviewer suspects the beneficiary has given the check number over the phone, the interviewer can ask for the number of the check at top right.

Coding instructions for Canadian IDD are at GN 02402.300. To improve the accuracy of coding for Canadian IDD, OEIO personnel now ask for the entire MICR Line at the bottom of a check and the Check Number at top right, especially if the payment rejects.