Regulation CC (Ch. 2) Flashcards
When are funds considered deposited? Does anything change based on how something is deposited (i.e., by mail, lockbox, branch)?
› Funds deposited at a staffed facility, ATM or contractual branch are considered deposited when they are RECEIVED at the facility, ATM or contractual branch (or a proprietary ATM of the contractual branch).
- If the credit union has a drop box in its lobby where members may place deposits, such deposits are generally considered deposited when placed in the box.
- However, the credit union may treat deposits to lobby boxes the same as deposits to night deposit boxes if it provides a notice on the lobby box that states when the deposits will be considered deposited.
› Funds mailed to the credit union are considered deposited the day they are RECEIVED by the credit union.
› Funds deposited to a night depository, lock box or similar facility are considered deposited on the day on which the deposit is REMOVED from such facility and is available for processing by the credit union.
› If funds normally are removed from the ATM not more than two times each week, funds deposited at an ATM that is not on, or within 50’ of, the premises of the depositary bank are considered deposited on the day the funds are REMOVED from the ATM.
› Funds may be considered deposited on the next banking day, in the case of funds that are deposited:
› On a day that is not a banking day for the depositary bank; or
› After a cut-off hour set by the depositary bank for the receipt of deposits of 2:00pm or later, or, for the receipt of deposits at ATMs, contractual branches, or off-premise facilities, of 12:00pm or later. Different cutoffs may be established for different types of deposits.
What are the permissible cutoff times for the receipt of deposits? Do these timeframes change based on where an item is deposited?
- After a cut-off hour set by the depositary bank for the receipt of deposits of 2:00pm or later
- For the receipt of deposits at ATMs, contractual branches, or off-premise facilities, of 12:00pm or later.
How does Regulation CC relate to state law funds availability policies?
- The EFA Act indicates that any state law that provides for availability in a shorter period of time than required by federal law is applicable to all federally insured institutions in that state, including federally chartered institutions.
- State laws that went into effect after 1 September 1989 are preempted by Regulation CC.
What is the various check exception holds and under what circumstances may they be invoked?
- New accounts - Account is considered “new” for the first 30 days. Next-day availability applies to cash, electronic deposits and the first $5,525 of most other next-day items; the remaining funds of the next day
items must be made available on the ninth business day. The credit union may choose its availability schedule for on-us checks and local checks. - Large Deposits - The credit union may extend the hold periods when funds, other than cash or electronic deposits, over $5,525 are deposited by a member in any one banking day. The extended hold may be placed on funds in excess of $5,525, and the credit union may
aggregate deposits made by that member to any of his or her accounts, even joint accounts. - Redeposited Checks - The credit union can place an extended hold on a check that had previously been deposited and returned unpaid. This exception does not apply to checks that were returned because they were post-dated and are no longer post-dated or to checks that were returned due to a missing endorsement and the endorsement is no longer missing.
- Repeat Overdrafts - If the member’s account(s) has been repeatedly overdrawn, the availability rules for checks do not apply for 6 months after the last overdraft
Considered overdrawn when:
- On six or more banking days within the preceding six months, the account balance is negative, or the account balance would have become negative if checks or other charges to the account had been paid
- On two or more banking days within the preceding six months, the account balance is negative, or the account balance would have become negative, in the amount of $5,525 or more, if checks or other charges to the account had been paid
- Doubt of collectibility - Exception can apply when
the credit union has reasonable cause to believe the check is uncollectible - Emergencies - Permits the credit union to place an extended hold on deposits in cases of emergencies beyond the credit union’s control
What are the funds availability disclosure requirements (specific policy disclosures, initial disclosures and additional disclosures)?
Disclosures to be clear and conspicuous, in writing, and except for disclosures posted where employees accept deposits, at ATMs or on preprinted deposits slips, be in a form the consumer may keep. If disclosures are contained in a document that sets forth other account terms, they must be highlighted in some way (i.e., under a separate heading).
Specific Availability - Requires credit unions to provide members with a disclosure, before an account is opened, that describes the funds availability policy followed by the credit union in most cases. The disclosure should include:
› A summary of the availability policy;
› A description of the categories of deposits or checks used to determine a delay in availability; when funds from those categories will be available; and an explanation of how to determine the category to which a deposit belongs;
› A description of any exception holds the credit union may impose;
› A description of any case-by-case hold policy; and
› A description of how a member may differentiate between a proprietary and non-proprietary ATM.
Where must a credit union post its funds availability policy?
The notice need not be posted at each teller window, but the notice must be posted in a place where consumers seeking to make deposits are likely to see it before making their deposits.
What is required to be preprinted on deposit slips versus lobby notices?
Preprinted deposits slips must include a notice that deposits may not be available for immediate withdrawal.
Next Day Availability
- Cash
- Electronic payments (ACH transfer)
- US Postal Service money orders
- Federal Reserve Bank and Federal Home Loan Bank checks
- State or local government checks deposited at an institution in the same state as the payor
- On-us checks
- Cashier, teller or certified checks
- Lesser of $225 not already subject to next day availability (does not apply to ATMs)
- To qualify for next-day availability these checks must be deposited in person at a staffed teller station to an account held by the payee
- For next-day availability, Treasury checks must be deposited to an account held by the payee, but do not need to be deposited in person
Second Day Availability
Local checks must be made available for withdrawal no later than the second business day following the banking day on which the checks are deposited.
- This would be the amount in excess of the first $225 discussed above.
- In addition, checks that do not satisfy the requirements for next-day availability must be made available on the second business day following the day of deposit.
Nonproprietary ATMs
Must be made available no later than the fifth business day after the day of deposit
Nonproprietary ATM is one that: a) is not owned or operated by the credit union, b) is not located on the credit union’s premises and c) is not located within 50 feet of the credit union’s premises and is identified as being owned or operated by a third party.
When may a credit union invoke the exception for reasonable cause to doubt collectability and how long may a hold last?
Can apply when the credit union has reasonable cause to believe the check is uncollectible.
A “reasonable period of time” as one additional business day for on-us checks, five additional business days for local checks and six additional business days for deposits at nonproprietary ATMs. Can be longer but must prove the period is reasonable.
Exceptions - Reasonable Period
For all exceptions other than new accounts, normal availability can be extended by a reasonable period of time.
What is reasonable?
– One business day for on us checks.
– Five business days for local checks.
– Six business days for checks deposited in nonproprietary ATMs
Exceptions - New Accounts
Account has not been established for 30 calendar days.
• Schedules for local checks do not apply.
• For Treasury checks, USPS money orders, Federal Reserve/FHLB checks, state and local government checks, cashier’s checks, certified checks, teller checks, and traveler’s checks usually subject to next‐day availability, first $5,525 must be made available on the first business day following deposit.
• Remainder must be made available by the NINTH business day following deposit.
