Proposed Rule2026-06996
Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers Through the Fedwire Funds Service and the FedNow Service; Regulation J
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Published
April 10, 2026
Issuing agencies
Federal Reserve System
Abstract
The Board is proposing amendments to subpart C of Regulation J (governing the FedNow[supreg] Service) to permit FedNow participants to use intermediaries, other than Reserve Banks, to send funds transfers through the FedNow Service. The Board believes this change could support private-sector cross-border payment solutions by allowing FedNow participants to leverage an intermediary (for example, a correspondent bank) for the international portion of a cross-border transaction and use the FedNow Service for the U.S. domestic portion.
Full Text
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<title>Federal Register, Volume 91 Issue 69 (Friday, April 10, 2026)</title>
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[Federal Register Volume 91, Number 69 (Friday, April 10, 2026)]
[Proposed Rules]
[Pages 18330-18333]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06996]
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FEDERAL RESERVE SYSTEM
12 CFR Part 210
[Docket No. R-1891]
RIN 7100-AH23
Collection of Checks and Other Items by Federal Reserve Banks and
Funds Transfers Through the Fedwire Funds Service and the FedNow
Service; Regulation J
AGENCY: Board of Governors of the Federal Reserve System (Board).
ACTION: Proposed rule, request for comment.
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SUMMARY: The Board is proposing amendments to subpart C of Regulation J
(governing the FedNow[supreg] Service) to permit FedNow participants to
use intermediaries, other than Reserve Banks, to send funds transfers
through the FedNow Service. The Board believes this change could
support private-sector cross-border payment solutions by allowing
FedNow participants to leverage an intermediary (for example, a
correspondent bank) for the international portion of a cross-border
transaction and use the FedNow Service for the U.S. domestic portion.
DATES: Comments must be submitted by June 9, 2026.
ADDRESSES: You may submit comments, identified by Docket No. R-1891 and
RIN 7100-AH23, by any of the following methods:
<bullet> Agency Website: <a href="https://www.federalreserve.gov/apps/proposals/">https://www.federalreserve.gov/apps/proposals/</a>. Follow the instructionsfor submitting comments, including
attachments. Preferred Method.
<bullet> Mail: Benjamin W. McDonough, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
<bullet> Hand Delivery/Courier: Same as mailing address.
<bullet> Other Means: <a href="/cdn-cgi/l/email-protection#8bfbfee9e7e2e8e8e4e6e6eee5fff8cbedf9e9a5ece4fd"><span class="__cf_email__" data-cfemail="bfcfcaddd3d6dcdcd0d2d2dad1cbccffd9cddd91d8d0c9">[email protected]</span></a>. You must include the
docket number in the subject line of the message.
Comments received are subject to public disclosure. In general,
comments received will be made available on the Board's website at
<a href="https://www.federalreserve.gov/apps/proposals/">https://www.federalreserve.gov/apps/proposals/</a> without change and will
not be modified to remove personal or business information including
confidential, contact, or other identifying information. Comments
should not include any information such as confidential information
that would not be appropriate for public disclosure. Public comments
may also be viewed electronically or in person in Room M-4365A, 2001 C
St. NW, Washington, DC 20551, between 9 a.m. and 5 p.m. during Federal
business weekdays.
FOR FURTHER INFORMATION CONTACT: Curtis M. Blair, Financial Institution
Policy Analyst II, (202) 913-2169, Division of Reserve Bank Operations
and Payment Systems; or Corinne Milliken Van Ness, Senior Counsel,
Legal Division, Board of Governors of the Federal Reserve System: (202)
452-3000. For users of text telephone systems (TTY) or any TTY-based
Telecommunications Relay Services, please call 711 from any telephone,
anywhere in the United States.
SUPPLEMENTARY INFORMATION:
I. Background
On July 20, 2023, the Reserve Banks launched the FedNow Service.\1\
The FedNow Service is an interbank real-time gross settlement service
that supports instant payments in the United States 24x7x365.
Currently, under Regulation J, FedNow participants may not use
intermediaries, other than the Reserve Banks, for a funds transfer sent
through the FedNow Service. This means that a funds transfer sent
through the FedNow Service can include only two U.S. banks other than a
Reserve Bank. Practically, this has meant that the service can be used
only for domestic payments because participating banks located in the
United States have been unable to send payments to additional banks
outside the United States (such as correspondents).
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\1\ ``FedNow'' and ``Fedwire'' are a registered service mark of
the Reserve Banks. A list of marks related to financial services
products that are offered to financial institutions by the Reserve
Banks is available at <a href="http://FRBservices.org">FRBservices.org</a>[supreg].
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[[Page 18331]]
When the Board announced the details of the FedNow Service in 2020,
the Board stated that, ``[i]n line with prioritization of a timely
launch, the FedNow Service will only support domestic instant payments
initially.'' \2\ The Board noted, however, that it would evaluate
whether to expand the FedNow Service in the future to allow cross-
border payments.\3\
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\2\ 85 FR 48522, 48527 (August 11, 2020).
\3\ Id.
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II. Proposed Regulation J Amendments
Since the launch of the FedNow Service, participants have expressed
interest in using the service to initiate or receive cross-border
instant payments as a means of improving the speed and efficiency of
cross-border payments. In response, the Board is proposing to amend
Regulation J to allow FedNow participants to use intermediaries other
than Reserve Banks, which is currently prohibited under Regulation J.
The Board believes this change could support private-sector cross-
border payment solutions, among other potential use cases, by allowing
FedNow participants to leverage an intermediary (for example, a
correspondent bank) for the international portion of a cross-border
transaction and use the FedNow Service for the U.S. domestic
portion.\4\ This would make available a second real-time gross
settlement payment rail to private-sector providers in addition to the
Fedwire Funds Service.
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\4\ Correspondent banking generally consists of a bilateral
arrangement under which one bank (the correspondent) holds deposits
owned by other banks (respondents) and provides payment and other
services to those respondent banks. Through such relationships,
banks can access financial services in different jurisdictions and
provide cross-border payment services to their customers. Bank for
International Settlements, Correspondent Banking (2016), <a href="https://www.bis.org/cpmi/publ/d147.pdf">https://www.bis.org/cpmi/publ/d147.pdf</a>.
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The proposed amendments would align the FedNow Service with the
Fedwire Funds Service, which has permitted intermediaries for decades.
The changes would not alter the payment flow between FedNow Service
participants or change which entities can connect to the service. Like
the Fedwire Funds Service, the amendments would simply allow additional
transfers before and after funds are sent through the FedNow Service,
enabling participants to settle the U.S. domestic portion of larger
cross-border transactions. The Board believes these proposed amendments
do not create material new money laundering, sanctions evasion, or
payment system integrity risks, as the correspondent payment model is
substantially similar to how the Fedwire Funds Service operates today
and has functioned successfully for years.
A. Reliance on Numbers Identifying Beneficiary and Intermediary Banks
Currently, section 210.42(a) only permits a Reserve Bank to rely on
the number in the payment order identifying the beneficiary's bank.
Under the proposal, a Reserve Bank would also be permitted to rely on a
number identifying the intermediary bank, consistent with Article 4A of
the Uniform Commercial Code (UCC). Specifically, a Reserve Bank, where
it acts as receiving bank, would be able to rely on the routing number
of an intermediary bank specified in a payment order as identifying the
appropriate intermediary bank, even if the payment order identified
another bank by name.\5\ The proposed language would mirror the
corresponding rules governing the Fedwire Funds Service in subpart B of
Regulation J.
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\5\ A Reserve Bank may rely on the routing number, provided the
Reserve Bank did not know of any inconsistency between the routing
number and the name of the bank identified. The proposed amendments
would not change the language in section 201.42(a) permitting
Reserve Banks to rely on a number identifying a beneficiary bank.
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B. Permitting Designation of Non-Reserve Bank Intermediary Banks
Currently, a FedNow participant may not send a payment order to a
Reserve Bank that requires the Reserve Bank to issue a payment order to
an intermediary bank other than another Reserve Bank. The Board is
proposing to amend section 210.45(b) to permit a FedNow payment order
to designate an intermediary bank other than a Reserve Bank.
Additionally, the Board is proposing to make conforming amendments to
the commentary to section 210.45.
C. Application of Regulation J's Funds-Availability Requirements
Currently, under section 210.44(b)(1), ``[a] beneficiary's bank
(other than a Federal Reserve Bank) that accepts a payment order over
the FedNow Service is obliged to pay the amount of the order to the
beneficiary of the order immediately after its acceptance of the
payment order, by crediting an account of the beneficiary in accordance
with section 4A-405(a) of Article 4A.''
The Board is not proposing to amend section 210.44(b)(1).
Accordingly, Regulation J's immediate funds-availability requirement
would apply only to funds transfers in which a beneficiary's bank--not
an intermediary bank--accepts a payment order over the FedNow Service.
For example, in an outbound cross-border funds transfer, an
intermediary bank (rather than the beneficiary's bank) would accept a
payment order over the FedNow Service, and the beneficiary's bank
(which would be located outside the United States) would not be obliged
under Regulation J to make funds available immediately to the
beneficiary. Conversely, if an originator outside the United States
initiates a cross-border funds transfer in which the beneficiary's bank
accepts a payment order over the FedNow Service, then the beneficiary's
bank (which would be located in the United States) would be obliged to
make funds available immediately to the beneficiary.
Finally, the Board is proposing a clarifying revision to section
210.44(b)(3). Currently, where a FedNow Service participant, acting as
a beneficiary bank, has reasonable cause to believe that the
beneficiary is not entitled to or permitted to receive the payment, the
beneficiary bank may notify its Reserve Bank that it requires
additional time to determine whether to accept the payment order. With
the proposed amendment to Regulation J to permit the use of non-Reserve
Bank intermediary banks, the Board is also proposing to amend section
210.44(b)(3) to clarify its applicability only to FedNow Service
participants.
III. Request for Comment
The Board requests comment on all aspects of the proposed
amendments to Regulation J.
IV. Competitive Impact Analysis
The Board conducts a competitive impact analysis when it considers
an operational or legal change, if that change would have a direct and
material adverse effect on the ability of other service providers to
compete with the Federal Reserve in providing similar services due to
legal differences or due to the Federal Reserve's dominant market
position deriving from such legal differences. All operational or legal
changes having a substantial effect on payment system participants will
be subject to a competitive impact analysis, even if competitive
effects are not apparent on the face of the proposal. If such legal
differences exist, the Board will assess whether the same objectives
could be achieved by a modified proposal with less competitive impact
or, if not, whether the benefits of the proposal (such as contributing
to payment system efficiency or integrity or other Board objectives)
outweigh the
[[Page 18332]]
materially adverse effect on competition.\6\
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\6\ Federal Reserve Regulatory Service, 7-145.2.
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The Board does not believe that the proposed amendments to
Regulation J will have a direct and material adverse effect on the
ability of other service providers to compete effectively with the
Reserve Banks in providing similar services due to legal differences.
The proposed amendments do not govern similar services provided by
private-sector providers and, accordingly, would not preclude a
private-sector provider of similar payment services from facilitating
cross-border payments. Therefore, the Board does not believe that the
proposed amendments would affect the competitive position of private-
sector providers vis-[agrave]-vis the Reserve Banks.
V. Administrative Law Matters
A. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (PRA) of 1995 (44
U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board may not conduct
or sponsor, and a respondent is not required to respond to, an
information collection unless it displays a valid Office of Management
and Budget (OMB) control number. The Board reviewed the proposed rule
under the authority delegated to the Board by the OMB and determined
that it contains no collections of information under the PRA.\7\
Accordingly, there is no paperwork burden associated with the proposed
rule.
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\7\ See 44 U.S.C. 3502(3).
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B. Regulatory Flexibility Act
The Regulatory Flexibility Act (the RFA) (5 U.S.C. 601 et seq.)
requires agencies either to provide an initial regulatory flexibility
analysis with a proposed rule or to certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities.\8\ In accordance with section 3(a) of the RFA, the Board has
reviewed the proposed amendment. In this case, the proposed amendment
would apply to all depository institutions that choose to use the
Reserve Bank's FedNow Service, but the Board does not believe it will
have a significant economic impact on a substantial number of small
entities. Nevertheless, this initial regulatory flexibility analysis
has been prepared in accordance with 5 U.S.C. 603 for the Board to
solicit comment on the effect of the proposal on small entities. An
initial regulatory flexibility analysis must contain: (1) a description
of the reasons why action by the agency is being considered; (2) a
succinct statement of the objectives of, and legal basis for, the
proposed rule; (3) a description of, and, where feasible, an estimate
of the number of small entities to which the proposed rule will apply;
(4) a description of the projected reporting, recordkeeping, and other
compliance requirements of the proposed rule, including an estimate of
the classes of small entities that will be subject to the requirement
and the type of professional skills necessary for preparation of the
report or record; (5) an identification, to the extent practicable, of
all relevant Federal rules which may duplicate, overlap with, or
conflict with the proposed rule; and (6) a description of any
significant alternatives to the proposed rule which accomplish its
stated objectives and minimize any significant economic impact of the
proposed rule on small entities.\9\ The Board will, if necessary,
conduct a final regulatory flexibility analysis after consideration of
comments received during the public comment period.
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\8\ Under regulations issued by the U.S. Small Business
Administration (``SBA''), a small entity includes a depository
institution, bank holding company, or savings and loan holding
company with total assets of $850 million or less. See 13 CFR
121.201. Consistent with the SBA's General Principles of
Affiliation, the Board includes the assets of all domestic and
foreign affiliates toward the applicable size threshold when
determining whether to classify a particular entity as a small
entity. See 13 CFR 121.103. As of the second quarter of 2025, there
were approximately 2,796 small bank holding companies and
approximately 157 small savings and loan holding companies, and
approximately 443 small state member banks.
\9\ 5 U.S.C. 603(b)-(c).
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1. Statement of the Need for, Objectives of, and Legal Basis for, the
Proposed Rule
The proposed amendments are intended to allow FedNow participants
to initiate and receive cross-border payments. The proposed amendments
are designed to accommodate FedNow participants' existing
correspondent-respondent relationships and encourage innovative cross-
border payment solutions.
The following sections of the Federal Reserve Act provide the Board
with the legal basis for these amendments: section 13 (12 U.S.C. 342),
paragraph (f) of section 19 (12 U.S.C. 464), paragraph 14 of section 16
(12 U.S.C. 248(o)), and paragraphs (i) and (j) of section 11 (12 U.S.C.
248(i) and (j)).
2. Small Entities Affected by the Proposed Rule
The proposed amendments would apply to all depository institutions
that choose to participate in the FedNow Service regardless of their
size. Pursuant to regulations issued by the Small Business
Administration (13 CFR 121.201), a small banking organization includes
a depository institution with $850 million or less in total assets.\10\
Based on call report data, there are approximately 7,040 depository
institutions that have total domestic assets of $850 million or less
and thus are considered small entities for purposes of the RFA.
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\10\ For example, the SBA defines a commercial bank as small if
it has $850 million or less in assets. See 13 CFR 121.201.
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3. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
Given that the proposed rule consists only of limited new service
terms, there are no new projected reporting, recordkeeping, or other
compliance requirements associated with the proposal.
4. Identification of Duplicative, Overlapping, or Conflicting Federal
Rules
The Board has not identified any likely duplication and/or
potential conflict between the proposed regulatory amendments and any
other Federal rule. Some overlap exists between existing subpart C of
Regulation J and the Expedited Funds Availability Act (implemented in
Regulation CC). Specifically, Regulation CC provides that funds
received by a bank via an electronic payment shall be available for
withdrawal not later than the business day after the banking day on
which such funds are received. Existing subpart C of Regulation J
establishes a faster--i.e., immediate--funds-availability requirement,
but only for payments in which the beneficiary's bank accepts a payment
order over the FedNow Service. The regulatory overlap does not create
conflicting federal rules and would not be changed by this proposal.
5. Significant Alternatives to the Proposed Rule
The Board has not identified any regulatory burden associated with
the proposed amendments to Regulation J, nor has the Board identified
any significant alternatives that would reduce the regulatory burden on
small entities.
Therefore, the Board believes that the proposed rule will not have
a significant economic impact on a substantial number of small entities
supervised by the Board.
The Board welcomes comment on all aspects of its analysis. In
particular, the
[[Page 18333]]
Board requests that commenters describe the nature of any impact on
small entities and provide empirical data to illustrate and support the
extent of the impact.
C. Solicitation of Comments on Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113
Stat. 1338, 1471, 12 U.S.C. 4809) requires the federal banking agencies
to use plain language in all proposed and final rules published after
January 1, 2000. The Board has sought to present the proposal in a
simple and straightforward manner and invites comment on the use of
plain language and whether any part of the proposal could be more
clearly stated.
D. Providing Accountability Through Transparency
The Providing Accountability Through Transparency Act of 2023 (5
U.S.C. 553(b)(4)) requires that a notice of proposed rulemaking include
the internet address of a summary of not more than 100 words in length
of the proposed rule, in plain language, that shall be posted on the
internet website under section 206(d) of the E-Government Act of 2002
(44 U.S.C. 3501 note).
The Board of Governors of the Federal Reserve System is proposing
to amend subpart C of its Regulation J, which governs the Federal
Reserve Banks' FedNow Service, to permit participants to use
intermediary banks in addition to Federal Reserve Banks. This change
would enable participants to leverage their correspondent banking
networks for the U.S. domestic portion of cross-border transactions.
The proposal and the required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a> and <a href="https://www.federalreserve.gov/supervisionreg/reglisting.htm">https://www.federalreserve.gov/supervisionreg/reglisting.htm</a>.
List of Subjects in 12 CFR Part 210
Banks, Banking, Federal Reserve System.
For the reasons set forth in the preamble, the Board proposes to
amend 12 CFR part 210 as follows:
PART 210--COLLECTION OF CHECKS AND OTHER ITEMS BY FEDERAL RESERVE
BANKS AND FUNDS TRANSFERS THROUGH THE FEDWIRE FUNDS SERVICE AND THE
FEDNOW SERVICE (REGULATION J)
0
1. The authority citation for part 210 continues to read as follows:
Authority: 12 U.S.C. 248(i), (j), and 248-1, 342, 360, 464,
4001-4010, and 5001-5018.
0
2. Amend Sec. 210.42(a) to read as follows:
(a) Reliance by a Federal Reserve Bank on number to identify an
intermediary bank or beneficiary's bank. A Federal Reserve Bank that
receives a payment order from a sender containing a number that
identifies the intermediary bank or beneficiary's bank may rely on the
number, even if it identifies a bank different from the bank identified
by name in the payment order, if the Federal Reserve Bank does not know
of such an inconsistency in identification. A Federal Reserve Bank has
no duty to detect any such inconsistency in identification.
0
3. Amend the first sentence of Sec. 210.44(b)(3) to read as follows:
(3) In circumstances where the beneficiary's bank (other than a
Federal Reserve Bank) that has received a payment order over the FedNow
Service has reasonable cause to believe that the beneficiary is not
entitled or permitted to receive payment, the beneficiary's bank may
notify its Federal Reserve Bank that it requires additional time to
determine whether to accept the payment order.
0
4. Amend Sec. 210.45(b) to read as follows:
(b) Selection of an intermediary bank. For an interdistrict
transfer through the FedNow Service, a Federal Reserve Bank is
authorized and directed to execute a payment order through another
Federal Reserve Bank. A sender shall not send a payment order to a
Federal Reserve Bank that requires the Federal Reserve Bank to send a
payment order to an intermediary bank (other than a Federal Reserve
Bank) unless that intermediary bank is designated in the sender's
payment order. A sender shall not send to a Federal Reserve Bank a
payment order through the FedNow Service that instructs use by a
Federal Reserve Bank of a funds-transfer system or means of
transmission other than the FedNow Service, unless the Federal Reserve
Bank agrees with the sender in writing to follow such instructions.
0
5. In Appendix A of Subpart C of part 210 under ``Section 210.45--
Payment Orders'', amend paragraph (b)(2) to read as follows:
Appendix A of Subpart C of Part 210--Commentary
* * * * *
Section 210.45--Payment Orders
* * * * *
(b) * * *
(2) This section provides that in an interdistrict transfer, a
Federal Reserve Bank is authorized and directed to select another
Federal Reserve Bank as an intermediary bank. A sender may, however,
instruct a Federal Reserve Bank to use a particular intermediary bank
by designating that bank as the bank to be credited by that Federal
Reserve Bank (or the second Federal Reserve Bank in the case of an
interdistrict transfer) in its payment order, in which case the Federal
Reserve Bank will send the payment order to that bank if that bank
receives payment orders through the FedNow Service. A sender may not
instruct a Federal Reserve Bank to use its discretion to select an
intermediary bank other than a Federal Reserve Bank or an intermediary
bank designated by the sender. In addition, a sender may not send a
payment order through the FedNow Service that instructs a Federal
Reserve Bank to use a funds-transfer system or means of transmission
other than the FedNow Service, unless the sender and the Federal
Reserve Bank agree in writing to the use of that funds-transfer system
or means of transmission.
* * * * *
By order of the Board of Governors of the Federal Reserve
System,
Benjamin W. McDonough,
Secretary of the Board.
[FR Doc. 2026-06996 Filed 4-9-26; 8:45 am]
BILLING CODE P
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