The Law is reformed to allow check truncation

By: Rodolfo Ramírez, Corporate and International Manager

Yesterday, the incorporation of a chapter into the Commercial Code to admit check truncation (digitization) in commercial legislation was approved.

Traditionally, funds from checking accounts are accessed by issuing checks which can be cashed at the respective bank branches or deposited into accounts opened at other banks. In the latter case, the compensation process begins which takes time for funds to become available.

The reform fundamentally aims to lay the groundwork for modifying compensation processes to reduce fund availability periods, using check images instead of exchanging original checks.

The Central Reserve Bank of El Salvador has been tasked with developing corresponding regulatory frameworks within 90 days from the effective date of the reform, and the Financial System Superintendence will supervise market participants in these processes. The reform will take effect eight days after its publication in the Official Gazette.

For more information, you can contact me at rramirez@romeropineda.com