
A piece of paper check is really no different than an electronic check. All checks clear through federally controlled clearing houses (I forget the exact terminology). Here is a link to a good article which explains in simple terms the process of checks and how they move through the various financial networks.
It is my understanding that the only things that are processed are the routing #'s on the bottom of the check, the amount, and the receiving party. It would be a monumental and bankrupting task to identify the "payee" on the checks, and creat soem sort of blacklist or rejected payees. The system just isn't setup to handle it. The recent legislation that passed even made reference to the banking system being unable to adapt to the requirments of the new law, and the banking lobbyists spent a lot of time complaining (rightfully so) about the financial burden that would be placed on banks. I might be wrong but I believe I read that there is a provision in the new Anti-Gambling act that makes an exception for checks.
Someone please correct me if I misspoke.
Jason
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