Clearing a check involves several steps that banks use to ensure funds are properly transferred from the check writer’s account to the recipient’s account and to verify the legitimacy of the transaction.

Steps in the Check Clearing Process

• The payee deposits the check at a bank—this can be done through a teller, ATM, or mobile app.

• The depositing bank performs preliminary checks, ensuring details like date, signature, and amounts are correct and that the check is not stale or post-dated.

• The check is scanned, and its data—such as account and routing numbers—are captured electronically.

• The depositing bank sends the check image and information through the central clearing system, which may be a clearinghouse or similar network.

• The check writer's (payer’s) bank receives the item and verifies the existence of sufficient funds, legitimacy of the check, and absence of fraud markers.

• If valid and funds are available, the payer’s bank debits their customer’s account for the check amount and transfers these funds to the recipient bank.

• The recipient (payee) gains access to the funds, though full access may be subject to hold periods or bank policies to ensure final settlement.

• If the check is not valid or funds are insufficient, the check is returned to the depositor as “dishonoured” or “bounced,” and may incur fees for the writer.

Timing and Modernization

• The process usually takes one to five business days but can be quicker for checks drawn on the same bank.

• Modern check clearing frequently uses digital images rather than physical checks, streamlining settlement and security.

Compliance and Fraud Prevention

• During clearing, banks also screen for potential fraud, ensure regulatory compliance, and confirm the check’s format and security features.

In summary, clearing a check is a detailed process ensuring both parties’ security and the legal transfer of funds, involving multiple verification and settlement stages.