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Expedited Funds Availability Act (Regulation CC)

Expedited Funds Availability Act (Regulation CC)

Overview

Regulation CC (12 CFR Part 229) implements two laws—the Expedited Funds Availability Act (EFAA), which was enacted in August 1987 and became effective in September 1988, and the Check Clearing for the 21st Century Act (Check 21), which was enacted in October 2003 and became effective on October 28, 2004.

Regulation CC sets forth the requirements that credit unions make funds deposited into transaction accounts available according to specified time schedules and that they disclose their funds availability policies to their members.  It also establishes rules designed to speed the collection and return of unpaid checks.  The Check 21 section of the regulation describes requirements that affect credit unions that create or receive substitute checks, including requirements related to consumer disclosures and expedited re-credit procedures. 

NCUA has enforcement authority for Regulation CC violations for both federal credit unions and federally insured, state-chartered credit unions.

You can find the full text of the Expedited Funds Availability Act here.  You can find the full text of Regulation CC here.

Associated Risks

Transaction risk can occur when proper “holds” are not enforced, resulting in a loss to the credit union.

Compliance risk can occur when the credit union fails to implement the necessary controls to comply with Regulation CC.

Reputation risk can occur when the credit union incurs fines and penalties or receives decreased member confidence as a result of failure to comply with Regulation CC.

Examination Objectives

  • To determine that the credit union’s funds availability policies are in compliance with Regulation CC.
  • To determine that the credit union has established internal controls for compliance with Regulation CC’s provisions relating to funds availability.
  • To determine that the credit union has established a training program for applicable employees addressing Regulation CC responsibilities.
  • To determine that the credit union maintains records of compliance with Regulation CC for a period of two years.
  • To evaluate the credit union’s compliance with content and timing requirements.

Examination Procedures

The procedures below cover all aspects of Regulation CC.  Examiners may select from the procedures below to test aspects of Regulation CC compliance during a risk-focused examination.

Subparts A and B

A credit union may delay funds availability for some deposits on a case-by-case basis and for other deposits on an automatic basis. In addition, the credit union may make decisions concerning holds and maintain records at branches as well as at the main office. Therefore, to check on the credit union’s compliance with its holds policies, the examiner must determine not only the types of holds policies the credit union has, but how decisions are made and where records are maintained. If a branch makes its own decision and maintains its own records, such as in a decentralized structure, sampling may be done at the branch. If decisions to delay availability are either centralized or made at a regional processing center and records are maintained there, sampling for compliance may be made at that location.

General

  1. Determine the types of transaction accounts, as defined in Regulation D, 12 CFR § 204.2(e) (demand deposits, NOW accounts, and ATS accounts), offered by the credit union.
  2. Obtain copies of the forms used by the credit union for transaction accounts, as applicable:
    1. Specific availability policy disclosures
    2. Exception hold notices
    3. Case-by-case hold notices
    4. Special deposit slips
    5. Change-in-terms notices
  3. Determine, by account type, the credit union’s specific funds availability policies with regard to deposits.
  4. Determine which individuals actually perform the various activities necessary to comply with the provisions of Regulation CC, subpart B, including, for example, personnel engaged in
    1. Distributing disclosure statements
    2. Employee training
    3. Internal reviews
    4. Computer program development for deposit accounts (not necessarily a computer programmer)
    5. Deposit operations
    6. Overdraft administration
    7. ATM deposit processing
    8. Determining case-by-case holds or exceptions
  5. Review the credit union’s training manual, internal audit or similar reports for Regulation CC, written procedures given to employees detailing their responsibilities under the regulation, and similar materials.
  6. Determine the extent and adequacy of the instruction and training received by those employees to enable them to carry out their assigned responsibilities in conformance with Regulation CC.
  7. Verify that the credit union provides each employee with a written statement regarding the credit union’s procedures that pertain to that employee’s function. (§ 229.19(f))

Initial Disclosures and Subsequent Changes

  1. Review the credit union’s specific availability policy disclosures. Determine if the disclosures accurately reflect the credit union’s funds availability policies and meet the requirements for content under § 229.16.
  2. Determine if the credit union provides the initial disclosure statement prior to accepting funds to open a new transaction account. (§ 229.17)
  3. Determine if the credit union provides its funds availability policy upon an oral or written request within a reasonable time period. (§ 229.18(d))
  4. Determine if the credit union has made changes to its availability policies since the last examination.  If it has, determine whether depositors were notified in accordance with § 229.18(e), usually 30 days before implementing the change.

Automatic (or Automated) Hold Policies

  1. Review the credit union’s schedules or other materials relating to its funds availability time periods for the following types of deposits:
    1. Cash (§ 229.10(a))
    2. Electronic payments (§ 229.10(b))
    3. U.S. Treasury checks (§§ 229.10(c)(1)(i) and 229.12(b)(2))
    4. U.S. Postal Service money orders (§§ 229.10(c)(1)(ii), 229.10(c)(2), and 229.12(b)(3))
    5. Checks drawn on Federal Reserve Banks and Federal Home Loan Banks (§§ 229.10(c)(1)(iii), 229.10(c)(2), 229.12(b)(4), and 229.12(c)(1)(ii))
    6. State or local government checks (§§ 229.10(c)(1)(iv), 229.10(c)(2), 229.12(b)(4), and 229.12(c)(1)(ii))
    7. Cashier’s, certified, and teller’s checks (§§ 229.10(c)(1)(v), 229.10(c)(2), 229.12(b)(4), and 229.12(c)(1)(ii))
    8. On-us checks (§§ 229.10(c)(1)(vi) and 229.12(c)(1)(ii))
    9. Local checks (§ 229.12(b)(1))

  2. Determine that the credit union’s policy for providing funds availability is in accordance with regulatory requirements.

  3. Determine the credit union’s procedures for placing holds.

  4. Selectively sample each of the types of deposits listed in item 1 above and verify the funds availability time frames. Determine, for each deposit category, whether the credit union’s procedures provide funds availability within the required time periods. Determine that the procedures and disclosed policy are the same.

Deposits at Nonproprietary ATMs)

Determine that the credit union makes funds deposited in an account at a nonproprietary ATM by cash or check available for withdrawal not later than the fifth business day following the day of deposit. (§ 229.12(f), 229.19(a)(4) and 229.19(a)(5)(ii) and comments 229.19(a) and

  1. 229.19(b))

Availability Rules—$225 and $450

  1. Determine the credit union’s procedures for complying with the $225 availability rule and, if applicable, the $450 cash withdrawal rule. (§§ 229.10(c)(1)(vii) and 229.12(d))
  2. Review records that detail holds placed on accounts. Determine if holds are in accordance with the regulation.
  3. Sample deposit accounts with deposits subject to the $225 availability rule and the $450 cash withdrawal rule and verify the credit union’s compliance with the rules. Verify that actual practices and policies match.

Extended Holds

Case-by-Case Holds

  1. Determine if the credit union places holds on a case-by-case basis. If it does, review the credit union’s procedures for placing case-by-case holds.
  2. Review the credit union’s specific availability policy disclosures to determine whether the case-by-case hold policy has been disclosed.
  3. Review any physical records or reports generated from holds placed. (Sample should include records from the main office as well as branch offices, depending on the type of branch system operated.)
  4. Sample a few of the case-by-case holds and determine whether the credit union makes the funds available for withdrawal within the required time frames.
  5. Determine whether the credit union provides the customer with a notice of the case-by-case hold as required by § 229.16(c)(2). Determine if the notices meet the timing and content requirements.
  6. If the credit union does not provide the notice at the time of deposit, determine whether it either discloses the availability of refunds of overdraft and returned-check fees or does not assess these fees when the requirements of § 229.16(c)(3) are met.

Exception Holds (§ 229.13)

  1. Determine whether the credit union places holds on an exception basis. If it does, review its procedures for placing exception holds.
  2. Review the credit union’s specific availability policy disclosures to determine whether it has disclosed its exception-holds policy.
  3. Review any physical records or reports generated from holds placed. (Sample should include records from the main office as well as branch offices, depending on the type of branch system operated.)
  4. Sample a few of the exception holds and determine when the credit union makes the funds available for withdrawal. Determine that the credit union does not add more than one business day for on-us checks and five business days for local checks (there are no more nonlocal checks) to the maximum time periods in the federal availability schedule for the deposit unless it can show that a longer delay is reasonable. (§ 229.13(h))
  5. With the exception of new accounts, determine whether the credit union provides the customer with an exception-hold notice as required by § 229.13(g).
  6. Review hold notices. Determine if the notices meet the timing and content requirements for each type of exception hold. (Note: Credit unions are required to retain copies of reasonable cause hold notices.)

New Accounts

  1. Review credit union policies for new accounts.
  2. Determine how the credit union defines a new account relationship. Determine if the credit union’s definition is in compliance with Regulation CC.
  3. Review the credit union’s specific availability policy disclosure to determine whether the credit union has disclosed its availability policy regarding new accounts.
  4. Review a new-account report or listing of new account holders. Determine if any holds were placed on the accounts.
  5. Sample deposit accounts, and ask the credit union to provide documentation concerning the composition of the opening deposit or the most recent deposit.
  6. Review holds placed and determine if they are within regulatory limits with respect to time and amount. (Note: No regulatory time limits are set forth for funds availability for local check deposits into new accounts.) (§ 229.13(a)(1))

Large Deposits

  1. Determine whether the credit union has procedures and a special hold policy for large deposits. If it does, determine whether the credit union considers a large deposit, for purposes of the large-deposit exception, to be a day’s aggregate deposit of checks exceeding $5,525. (§ 229.13(b)) 
  2. Determine that the credit union does not invoke the large-deposit exception for cash or electronic payments.
  3. Review at least one account deposit on which a large-deposit hold was placed and ensure that the hold was placed only on the amount by which a day’s deposits of checks exceeded $5,000.
  4. Determine if the credit union provided the customer with a written exception notice that meets the requirements of § 229.13(g)(1) or 229.13(g)(2).
  5. Determine if the notice was provided within the time frames prescribed in § 229.13(g)(1) or 229.13(g)(2).

Redeposited Checks

  1. Determine if the credit union has procedures and a special hold policy for redeposited checks.
  2. If it does, determine if the credit union refrains from imposing this exception solely because of a missing endorsement or because the check was postdated. (§ 229.13(c)) 
  3. Determine if the credit union provided the customer with a written exception notice that meets the requirements of § 229.13(g)(1) or 229.13(g)(2).
  4. Determine if the notice was provided within the time frames prescribed in § 229.13(g)(1) or 229.13(g)(2).

Repeated Overdrafts

  1. Determine whether the credit union has procedures or a special hold policy for customers with repeated overdrafts.
  2. If it does, review the credit union’s definition of accounts ‘‘repeatedly overdrawn’’ and determine whether it meets the regulatory definition in § 229.13(d).
  3. Determine that the credit union returns the account to the credit union’s normal account status when the account has not been repeatedly overdrawn for a six-month period following the time the account was characterized as repeatedly overdrawn.
  4. Review the credit union’s list of customers whose accounts are repeatedly overdrawn.

    (Note: This list may or may not be the same overdraft list maintained in the ordinary course of business. The credit union may maintain a list of recent overdrafts as well as a list of customers whose accounts are repeatedly overdrawn.)
  5. Review an account classified as repeatedly overdrawn. Determine if the credit union properly classified the account and followed the regulatory procedures outlined in § 229.13(d).
  6. Determine the date the account was placed in ‘‘repeated overdraft’’ exception status. Review account statements for the six months before the account was identified as an overdraft exception.
  7. Determine whether the credit union provided the customer with an exception notice when an exception hold was placed on the account. If it did, review the content of the notice and determine if it meets the requirements of §§ 229.13(g)(1) or 229.13(g)(3).
  8. Determine if notice was given within the required time frames. (§§ 229.13(g)(1) or 229.12(g)(3))

Reasonable Cause to Doubt Collectability

  1. Determine if the credit union has procedures or a special policy for placing reasonable cause holds.
  2. If it does, determine who initiates reasonable cause holds.
  3. Obtain a list of accounts or checks to which this exception was applied. Review the exception notice given to the customer.
  4. Determine if the reason for invoking the exception was reasonable.
  5. Review the content of the notice and determine if it meets the requirements of § 229.13(g)(1).
  6. Determine if notice was given within the required time frames. (§ 229.13(g)(1))
  7. If the credit union imposes a reasonable-cause exception hold and does not provide the notice at the time of deposit, determine whether it either discloses the availability of refunds of overdraft and returned-check fees or does not assess these fees when the requirements of § 229.13(e)(2) are met.

Emergency Conditions

  1. Determine if the credit union has procedures or a special policy for placing emergency condition holds. If it does, review the credit union’s procedures for placing these holds.
  2. Determine whether the credit union invokes this exception only under the conditions specified in § 229.13(f).
  3. Determine whether the credit union makes the funds available for withdrawal within a reasonable time after either the termination of the emergency or the time at which the deposit would normally be available for withdrawal, whichever is later. (Note: A reasonable period for on-us checks is one business day and for local checks, five business days. (§§ 229.13(h)(3) and 229.13(h)(4))

Miscellaneous Provisions

Special Deposit Slips

  1. Determine if the  credit union requires a special deposit slip for state or local  government, cashier’s, certified, or teller’s checks in order to provide next-business-day availability on the deposits. (§ 229.10(c)(3)(i))
  2. If the credit union requires a special deposit slip, determine that it does one of the following (§ 229.10(c)(3)(ii)):
    1. Provides the deposit slip to its customers
    2. Informs its customers of how to obtain and prepare the slips
    3. Makes the special deposit slips ‘‘reasonably available’’

Additional Disclosure Requirements

  1. Determine if the credit union displays a notice of its availability policy in a conspicuous place at locations where employees receive consumer deposits. (§ 229.18(b)) (Note: The notice is not required at drive-up windows and night depositories. See Comment 229.18(b).)
  2. Determine if the credit union displays a notice at each of its proprietary ATMs stating that the funds deposited in the ATM may not be available for immediate withdrawal. (§ 229.18(c)(1)) If the credit union has off-premises ATMs from which funds are not collected more than twice a week, determine if the credit union discloses on or at the ATM the days on which the deposits made at the ATM will be considered ‘‘received.’’ (§ 229.18(c)(2))
  3. Determine if the credit union includes a notice on all preprinted deposit slips that the deposited funds may not be available for immediate withdrawal. (§ 229.18(a))

Payment of Interest

  1. Determine whether the credit union pays interest as of the date of the deposit or as of the date provisional credit is granted.  (§ 229.14)
  2. If the credit union pays interest as of the date provisional credit is granted, review the credit union’s schedule for provisional credit. (This schedule may be from a Federal Reserve Bank or may be based on the time credit is generally received from a correspondent bank.) Select a NOW account statement and ask the credit union to give a detailed explanation of how the interest was calculated.
  3. Review the credit union’s method for calculating interest on deposits reviewed. Select another NOW account and, using the credit union’s procedures for calculating interest, verify that the credit union accrues interest as of the date provisional credit is received.

Calculated Availability—Non-consumer Transaction Accounts

  1. Determine if the credit union uses a formula for calculating funds availability for non-consumer transaction accounts.  (§229.19(d))
  2. If it does, review a copy of the credit union’s formula.
  3. Select a commercial account subject to the formula. Ask the credit union to demonstrate how funds are made available to the customer.

Record Retention

  1. Determine that the credit union retains for two years records to show compliance with this section of the regulation.  Also, the credit union should retain a copy of each notice provided when a ‘‘reasonable cause’’ exception is invoked, along with a brief description of the facts giving rise to the availability of that exception. (§§ 229.21(g) and 229.13(g)(5))

Note: Subpart C of Regulation CC,” Collection of Checks,” has been omitted.  It addresses payments system issues exclusively; therefore, it does not present any consumer-related regulatory compliance issues to be reviewed during a consumer compliance review

Subpart D

Whether a credit union will or will not function as a ”reconverting bank,1 the interlinked nature of the payments system virtually guarantees that every  credit union will at some time receive a substitute check that is subject to the provisions of subpart D, the ‘‘Check 21’’ section of Regulation CC.  All credit unions must be prepared to accept a substitute check in place of the original because the Check 21 Act provides that a properly prepared substitute check is the ”legal equivalent of the original check for all purposes.”.

One of a credit union’s regulatory compliance obligations is to apprise members who receive canceled checks with their periodic account statements or who otherwise occasionally receive substitute checks of their rights under the law through a consumer-awareness disclosure. A credit union that provides a substitute check to a consumer must also be prepared to comply with the Check 21 Act’s expedited recredit procedure for addressing errors relating to substitute checks. Even if the customer does not receive actual canceled checks in a monthly statement but instead receives a truncated summary, the individual may eventually receive a substitute check, either in response to a request for a check or a copy of a check or because a check that the consumer deposited was returned unpaid to the consumer in the form of a substitute check. Some increase in the potential for duplicate posting (substitute check and original) may also involve a degree of consumer education and explanation. The regulation specifies the appropriate timing for the distribution of the consumer-awareness disclosure and also provides model language. Finally, credit unions will likely want to train their personnel so that they can adequately convey to customers the impact of this instrument in the payments system.

General

  1. Obtain copies of the documents associated with the  credit union’s Check 21 compliance, including but not limited to the following:
    1. Consumer-awareness disclosure(s)
    2. Sample (test) substitute checks, if available
    3. Direct mail correspondence, statement stuffers, and the like, describing Check 21/substitute check implementation to consumer customers
    4. Notices relating to expedited re-credit claims:
      1. Notice of valid claim and refund
      2. Notice of provisional refund
      3. Denial of claim
      4. Reversal of refund
    5. Any other relevant documents
  2. Identify the individuals within the credit union who may have responsibilities associated with Check 21. The following is a non-exhaustive list of such individuals:
    1. New-accounts personnel
    2. Employee training department
    3. Internal auditors, reviewers
    4. Deposit operations, bookkeeping
  3. Review the credit union’s training manual, internal audit or similar reports for Regulation CC, written procedures given to employees detailing their responsibilities under the regulation, and similar materials.
  4. Determine the training methods used by the credit union in conveying specific responsibilities to employees. Are written procedures distributed to employees?

Consumer Awareness

Note:  Model disclosure language is provided in Appendix C of the regulation.

Determine whether the credit union distributes only a single version of its consumer-awareness disclosure or maintains variations of the disclosure to be used depending on the circumstances giving rise to distribution. Each notice should reflect the following:

  1. General disclosure content—Determine whether the disclosure notice states
    1. That a substitute check is the legal equivalent of an original check and (§ 229.57(a)(1))
    2. The consumer re-credit rights that apply when a consumer in good faith believes that a substitute check was not properly charged to his or her account. (§ 229.57(a)(2))
  2. Timing and distribution—A credit union is required to provide its consumer customers with a consumer awareness disclosure prior to the receipt of a substitute check.
    1. For those who receive canceled checks with periodic statements, determine that the credit union provided the disclosure at the time the customer relationship was established.  (§229.57(b)(1)(ii)
    2. For those who do not receive canceled checks with periodic statements and who will receive substitute checks only occasionally:
      1. Upon customer request for an original check or a copy of a check — Determine that the credit union provides the disclosure to a consumer customer who requested an original check or a copy of a check and received a substitute check in response. (§ 229.57(b)(2)(i))
      2. Upon customer’s receipt of a returned substitute check — Determine that the credit union provides the disclosure to a consumer customer of the credit union who receives a returned substitute check (at the time the bank provides such substitute check). (§ 229.57(b)(2)(ii))
  3. Mode of delivery of information (§ 229.58) — Determine whether the bank employed one of the following in delivering its consumer awareness disclosure(s) and expedited re-credit notice(s):
    1. U.S. mail
    2. Any other means to which the recipient agreed to receive account information, including electronically

Expedited Re-credit for Consumers

  1. Determine whether any credit union customer has raised a Check 21-related claim of loss since the last examination. If yes, review for the following. (Credit unions where multiple Check 21-related claims have been raised and resolved, the examiner need only review a sampling sufficient to ensure that the credit union’s processing is consistent and in compliance with subpart D.)
    1. Necessary preconditions (consumer must allege all of these)—(§§ 229.54(a)(1)–(4))
      1. Was the consumer’s account charged for a substitute check that was provided to the consumer? (The consumer need not be in possession of the substitute check at the time of claim submission.)
      2. Was the consumer’s account not properly charged? (Alternatively, a consumer’s account could be properly charged yet still give rise to a warranty claim, for example, in the case of a substitute check image that is illegible.)
      3. Did the consumer suffer a resulting financial loss?
      4. Was the production of the original check or a sufficient copy necessary to determine whether or not the consumer’s claim was valid?
    2.  Procedural steps for consumer’s claim
      1. Did the consumer submit a timely claim? (§ 229.54(b)(1))
      2. Did the claim contain a description of the claim, a statement and estimate of loss, the reason why the original check or a sufficient copy is necessary, and sufficient information for the credit union to investigate? (§ 229.54(b)(2))
      3. If the consumer attempted to make a claim but failed to provide all of the necessary information (as listed above), did the credit union inform the consumer that the claim was incomplete and identify the information that was missing? (§ 229.54(b)(2)(D)(ii))
      4. Was the claim submitted in a form acceptable to the credit union? Did the credit union compute the time for action accurately?  (§ 229.54(b)(3))
    3. Procedural steps for  credit union response—If the  credit union concluded that (1) all necessary prerequisites to the filing of a consumer claim existed and (2) the consumer followed the appropriate steps in filing the claim, verify that the credit union provided the following appropriate response:

Claim deemed valid:

In the event of a valid consumer claim, did the credit union re-credit the account for the amount of the loss, up to the amount of the substitute check (plus interest, if applicable), no later than the end of the business day after the banking day on which the credit union made its determination, (§ 229.54(c)(1)(i))

  • Draft a notice of re-credit stating (1) the amount of the re-credit and (2) the date on which funds will be available for withdrawal, (§§ 229.54(e)(1)(i)-(ii)) and
  • Send the notice no later than the business day after the banking day on which the bank re-credit occurred? (§ 229.54(e)(1))

Claim deemed invalid:

In the event of an invalid consumer claim, determine whether the credit union sent a notice stating that the claim was invalid and included the original check or a sufficient copy, (§ 229.54(e)(2)(i))

  • Demonstrated to the consumer that the substitute check was properly charged (or that the consumer’s warranty claim was not valid) (§ 229.54(e)(2)(ii)), and
  • Included the information or documents (in addition to the original check), if any, relied upon by the credit union in making its determination (or a statement that the consumer may request such). (§ 229.54(e)(2)(iii))

Claim not resolved within initial ten days, pending further investigation:

If the credit union could not resolve the claim before the end of the tenth business day after the banking day on which the credit union received the claim, determine whether the credit union

  • Re-credited the consumer’s account for the amount of the loss, up to the lesser of the amount of the substitute check or $2,500 (plus interest, if applicable), (§ 229.54(c)(3)(i)(A))
  • Drafted a notice of re-credit stating (1) the amount of the re-credit and (2) the date on which the funds would be available for withdrawal, (§§ 229.54(e)(1)(i)-(ii))
  • Re-credited the consumer’s account for the remaining amount of the loss, if any, up to the amount of the substitute check (plus interest, if applicable), no later than the end of the forty-fifth calendar day after the banking day on which the credit union received the claim, (§ 229.54(c)(3)(ii)), and
  • Sent the notice of re-credit no later than the business day after the banking day on which the credit union re-credit occurred. (§ 229.54(e)(1))

Claim resulting in reversal of re-credit:

In some instances, it may be necessary for a credit union to reverse a re-credit made previously to a consumer’s account (plus any interest paid, if applicable). If such a circumstance has occurred, determine whether the credit union

  • Concluded that the consumer’s claim was not valid and (§ 229.54(c)(4)(i))
  • Drafted a notice of reversal of re-credit (§ 229.54(e)(3)), accompanied by the following:
  • The original check or a sufficient copy, (§ 229.54(e)(2)(i))
  • Information or explanation to demonstrate to the consumer that the substitute check was properly charged (or that the consumer’s warranty claim was not valid), (§ 229.54(e)(2)(ii))
  • Information or documents (in addition to the original check or a sufficient copy), if any, on which the credit union relied in making its determination (or a statement that the consumer can request such), (§ 229.54(e)(2)(iii))
  • A description of the amount of the reversal, including both the amount of the re-credit and the  amount of interest paid on the re-credited amount, if any, being reversed, (§ 229.54(e)(3)(i)), and
  • The date on which the credit union made the reversal. (§ 229.54(e)(3)(ii))
  • Sent the notice no later than the business day after the banking day on which the credit union made the reversal (§ 229.54(e)(3))

Availability of Re-credited Funds

Under circumstances detailed above, when the credit union determined that it was appropriate to re-credit its consumer customer’s account, determine whether the credit union took the following actions:

  • Next Day Availability — Did the credit union make any re-credited amount available for withdrawal no later than the start of the business day after the banking day on which the re-credit was provided? (§ 229.54(d)(1))
  • Safeguard Exceptions — If necessary, for reasons of (1) new-account status, (2) overdrawn-account status, or (3) well-reasoned suspicion of fraud, did the credit union invoke its right to delay immediate availability of re-credited funds? If so, was the delay invoked because the credit union had not yet determined the validity of the claim?  Were the funds made available no later than the business day after the banking day on which the final determination was made or the 45th calendar day after the credit union received the claim, whichever occurred earlier? (§ 229.54(d)(2))
  • Overdraft Fees — If the credit union chose to invoke its right to delay immediate availability of re-credited funds, did it refrain from imposing an overdraft fee until the appropriate five-day period had elapsed? (§ 229.54(d)(3))

EXPEDITED FUNDS AVAILABILITY ACT
(REGULATION CC)
CHECKLIST

EXPEDITED FUNDS AVAILABILITY ACT (REGULATION CC) CHECKLIST
Item Description Yes No N/A
1 Does the credit union consider every day except Saturday, Sunday, and federal holidays a “business day”? (§ 229.2(g))      
2 Does the credit union consider “banking days” those business days on which an office of the credit union is open for substantially all of its business? (§ 229.2(f))      
3 Does the credit union have a cutoff for receipt of deposits of 2:00 p.m. or later for credit union offices and 12:00 noon or later for ATMs? (§ 229.19(a)(5)(ii))      
4 Does the credit union comply with the following rules in determining when funds are considered to have been deposited?      
4(a) Deposits over the counter or at ATMs (subject to D. below) are considered deposited when “received.” (§ 229.19(a)(1))      
4(b) Mail deposits are considered deposited when they are received by the mail room of the credit union. (§ 229.19(a)(2))      
4(c) Deposits in a night depository, lock box, or similar facility are considered received when the deposits are removed from the facility and are available for processing. (§ 229.19(a)(3))      
4(d) Deposits at an off-premises ATM (not within fifty feet of the credit union) that is not serviced more than twice a week are considered received as of the date the deposits are removed from the ATM by the credit union. (§ 229.19(a)(4))      
5 Does the credit union consider deposits made on a nonbanking day to have been received no later than the next banking day? (§ 229.19(a)(5)(i))      
6 When funds must be available on a given ”business day,” does the credit union make the funds available at the later of 9:00 a.m. or the time the credit union’s teller facilities (including ATMs) are available for account withdrawals?  (§ 229.19(b))      
7 If the credit union limits cash withdrawals, does it make $450 available for cash withdrawals no later than 5:00 p.m. on the appropriate business day (second day for checks) following the day of deposit? (§ 229.12(d))      

Required Next-Day Availability

Required Next-Day Availability
Item Description Yes No N/A
8 Does the credit union make funds from the following types of deposits available for withdrawal no later than the first business day following the date of deposit:      
8(a) Electronic payments (§ 229.10(b))      
8(b) Checks drawn on the U.S. Treasury and deposited to the payee’s account (§ 229.10(c)(1)(i))      
8(c) “On-us” checks (checks that are drawn on and deposited in branches of the same credit union in the same state or check-processing region) (§ 229.10(c)(1)(vi))      
9 Does the credit union make funds from the following deposits available no later than the first business day after the day of deposit if the deposit is made in person to a credit union employee, or no later than the second business day if the deposit is not made in person to a credit union employee?      
9(a) Cash deposits (§§ 229.10(a)(1) and 229.10(a)(2))      
9(b) U.S. Postal Service money orders deposited in an account held by the payee of the check (§§ 229.10(c)(1)(ii) and 229.10(c)(2))      
9(c) Checks drawn on a Federal Reserve Bank or Federal Home Loan Bank deposited in an account held by the payee of the check (§§ 229.10(c)(1)(iii) and 229.10(c)(2))      
9(d) Checks drawn by a state or local governmental unit and deposited:      
9(d)(i)  In an account held by the payee of the check? (§§ 229.10(c)(1)(iv)(A) and 229.10(c)(2))      
9(d)(ii) In a depositary credit union located in the same state as the governmental unit issuing the check, and (§§ 229.10(c)(1)(iv)(B) and 229.10(c)(2))      
9(d)(iii) Accompanied by a special deposit slip (if required by the credit union to make the funds available on the next business day). (§§ 229.10(c)(1)(iv)(D) and 229.10(c)(3))      
9(e) Cashier’s checks, certified checks, and teller’s checks (as defined in section 229.2) deposited in an account held by the payee of the check when the check is accompanied by a special deposit slip or envelope (if required by the credit union to make the funds available on the next business day) (§§229.10(c)(1)(v)(C) and 229.10(c)(3))      
10 If the credit union requires the special deposit slips, for the checks covered in checklist items 9(D) and 9(E), does it provide the slip to its customers or tell its customers how to prepare or obtain the slips? (§ 229.10(c)(3)(ii))      
10(a) Are the special deposit slips reasonably available? (§ 229.10(c)(3)(ii))      
11 Is the first $225 of a customer’s daily aggregate deposits of checks not subject to the next-day availability rules available on the next business day? (§ 229.10(c)(1)(vii))      
12 Is the $225 in addition to other deposited amounts that must be afforded next-day availability? (§ 229.10(c)(1)(vii))      

Checks and Certain Other Deposits

Checks and Certain Other Deposits
Item Description Yes No N/A
13 Are funds from checks generally available no later than the second business day after the day of deposit? (§ 229.12(b)(1))      
14 If a credit union limits cash withdrawals, (§ 229.12(d)) N/A N/A N/A
14(a) Is $225 available on the next business day after the day of deposit for withdrawal in cash or by check?      
14(b) Is the $450 available for cash withdrawal sometime before 5:00 p.m. on the second business day after the day of deposit?      
14(c) Are any remaining funds available for withdrawal the business day after the $450 was made available?      
15 For Treasury checks and U.S. Postal Service money orders that do not meet the criteria for next-day availability, does the credit union make funds available no later than the second business day after the date of deposit? (§§ 229.12(b)(2) and 229.12(b) (3))      
16 Are funds deposited by cash or check at a nonproprietary ATM available no later than the fifth business day after the banking day of deposit? (§ 229.12(f))?      

Extended Holds

Case-by-Case Holds

Case-by-Case Holds
Item Description Yes No N/A
17 Does the credit union’s specific availability policy disclosure indicate that case-by-case holds may be placed? (§ 229.16(c)(1))      
18 If it does, does the disclosure do the following? N/A N/A N/A
18(a) State that the credit union may extend the time period when deposited funds are available for withdrawal? (§ 229.16(c)(1)(i))      
18(b) State the latest time a deposit will be available for withdrawal, if the availability time frame is extended? (§ 229.16(c)(1)(i))      
18(c) State that the credit union will notify the customer if funds from a particular deposit will not be available for withdrawal until after the time period stated in the credit union’s funds availability policy? (§ 229.16(c)(1)(ii))      
18(9) Encourage customers to ask when particular deposits will be made available for withdrawal? (§ 229.16(c)(1)(iii))      
19 When case-by-case holds are placed, does the credit union provide the customer with a written notice of the hold? (§ 229.16(c)(2))      
20 Does the notice include the following?      
20(a) The customer’s account number (§ 229.16(c)(2)(i)(A))      
20(b) The date and amount of the deposit (§ 229.16(c)(2)(i)(B))      
20(c) The amount of the deposit that is being delayed (§ 229.16(c)(2)(i)(C))      
20(d) The day the funds will be available for withdrawal  (§ 229.16(c)(2)(i)(D))      
21 Does the credit union provide the notice at the time the deposit is made, if the deposit is made to an employee of the depositary credit union? (§ 229.16(c)(2)(ii))      
22 If the notice is not given at the time of deposit, does the depositary credit union mail or deliver the notice to the customer not later than the first business day after the day of the deposit? (§ 229.16(c)(2)(ii))      
23 If the credit union does not provide the notice at the time of deposit, does it refrain from charging the customer overdraft or return check fees if:      
23(a) The overdraft or other fee would not have occurred if the deposited check had not been delayed; and      
23(b) The deposited check was paid by the paying credit union? (§ 229.16(c)(3))      
24 If the credit union does not provide the notice at the time of deposit and charges overdraft fees, does it notify the customer of the right to a refund of such fees and how to obtain the refund? (§ 229.16(c)(3))      
25 Does the credit union refund the fees if the conditions listed in checklist item 23 above are met and the customer requests a refund? (§ 229.16.(c)(3))      

Exception-Based Holds

Exception-Based Holds
Item Description Yes No N/A
26 When invoking an exception hold for accounts other than new accounts, does the credit union provide the customer with a written notice that includes the following?      
26(a) The customer’s account number?  (§ 229.13(g)(1)(i)(A))      
26(b) The date and amount of the deposit? (§ 229.13(g)(1)(i)(B))      
26(c) The amount of the deposit that is being delayed? (§ 229.13(g)(1)(i)(C))      
26(d) The reason the exception was invoked (§ 229.13(g)(1)(i)(D))      
26(e) The day the funds will be available for withdrawal (unless the emergency conditions exception is invoked and the credit union does not know when the funds will become available) (§ 229.13(g)(1)(i)(E))      
27 Does the credit union refrain from delaying funds availability beyond a reasonable time period? (Note: Five days for checks is considered reasonable.) (§ 229.13(h)(4))      

Exceptions

New Accounts (§ 229.13(a))

29
    Yes No N/A
28 If the credit union’s definition is different, does it delay availability to new account holders beyond the limits set forth in the regulation?      
29 If the credit union’s definition is different, does it delay availability to new account holders beyond the limits set forth in the regulation?      
30 Do credit union disclosures accurately reflect the credit union’s practice for making deposited funds available for new accounts?      
31 Do cash deposits in a new account made in person to a credit union employee become available for withdrawal on the first business day following the day of deposit? (§§ 229.13(a)(1)(i) and 229.10(a)(1))      
32 Are cash deposits in a new account not made in person to a credit union employee available for withdrawal on the second business day following the day of deposit? (§§ 229.13(a)(1)(i) and 229.10(a)(2))      
33 Are electronic transfers into new accounts available for withdrawal on the business day following the day the transfer is received? (§§ 229.13(a)(1)(i) and 229.10(b))      
34 Is the first $5,525 from any of the following types of check deposits available for withdrawal from a new account not later than the first business day after the day of the deposit, if the deposits meet the requirements of section? 229.10(c)? (§ 229.13(a)(1)(ii)) [For more information, see checklist section ‘Required Next-Day Availability.”]      
34(a) Treasury checks (§ 229.10(c)(1)(i))      
34(b) U.S. Postal Service money orders (§ 229.10(c)(1)(ii))      
34(c) Federal Reserve and Federal Home Loan Bank checks  (§ 229.10(c)(1)(iii))      
34(d) State or local government checks (§ 229.10(c)(1)(iv))      
34(e) Cashier’s, certified, and teller’s checks (§ 229.10(c)(1)(v))      
34(f) Traveler’s checks (§ 229.10(c)(1)(v) and Comment 229.10(c)      
35 Is the amount of any deposit of the types listed in checklist item 34 above exceeding $5,525 available for withdrawal no later than the ninth business day following the day of deposit? (§ 229.13(a)(1)(ii))      

Large Deposits (§ 229.13(b))

Large Deposits (§ 229.13(b))
Item Description Yes No N/A
36 If the credit union invokes the large-deposit rule, does it do so for only that portion of the aggregate check deposits that exceeds $5,525 on any one banking day? (§ 229.13(b))      
37 Does the credit union refrain from applying this exception to deposits made in cash, to deposits made by electronic payment, or to checks that must receive next-day availability under section 229.10(c)? (Comment 229.13(b).)      
38 Does the credit union provide customers with a written notice of the longer delay? (§ 229.13(g)(1)) Is the notice (§ 229.13(g)(2)):      
38(a) Provided at the time of the deposit, when the deposit is received in person by an employee of the credit union? Or      
38(b) Mailed on or before the first business day after the day the credit union learns of the facts giving rise to the exception?      

Redeposited Checks (§ 229.13(c))

Redeposited Checks (§ 229.13(c))
Item Description Yes No N/A
41 Does the credit union refrain from applying the redeposited exception to:      
41(a) Checks that are returned because an endorsement is missing and are subsequently indorsed and redeposited; and, (§ 229.13(c)(1))      
41(b) Checks that were returned because they were postdated but are not postdated when redeposited? (§ 229.13(c)(2))      
42 Does the credit union consider the day the check was redeposited to be the day of deposit when determining when funds must be made available for withdrawal? (Comment 229.13(c))      

Repeated Overdrafts (§ 229.13(d))

Repeated Overdrafts (§ 229.13(d))
Item Description Yes No N/A
41 Does the credit union impose longer holds for depositors who have a history of overdrafts?      
42 Does the credit union invoke the repeated-overdraft exception only when the account balance has been negative (or would have been negative had checks or other charges been paid):      
43(a) Six or more times during the preceding six months (§ 229.13(d)(1)); or      
42(b) Two or more times during the preceding six months, if the amount of any negative balance would have been $5,525 or more (§ 229.13(d)(2))?      
43 Is this practice articulated in the credit union’s written policy and initial disclosure statement? (§ 229.16(a))      
44 When the credit union imposes the longer delay, is the depositor notified of the reason, in writing, at the time of deposit?  If not, is a notice mailed on or before the first business day after the day of the deposit or the day the credit union learns of the facts giving rise to the exception? (§ 229.13(g))      
45 Does the credit union return the account to the normal availability schedule when the account is no longer repeatedly overdrawn? (Note: Credit unions may use this exception for six months after the last overdraft that made the depositor eligible for the repeated-overdraft exception. See checklist item 42 (§ 229.13(d))      

Reasonable Cause to Doubt Collectability (§ 229.13(e))

Reasonable Cause to Doubt Collectability (§ 229.13(e))
Item Description Yes No N/A
46 Does the credit union refrain from applying the reasonable-cause exception to the following?  (§229.13(e)(1))      
46(a) U.S. Treasury checks      
46(b) U.S. Postal Service      
46(c) State and local government checks      
46(d) On-us checks      
47 When the credit union invokes a reasonable-cause exception, does it provide the customer with a written notice of exception at the time the deposit is made, if the deposit is made in person to an employee of the credit union? (§ 229.13(g)(1)(ii)      
48 If the deposit is not made in person to an employee of the credit union, or if the hold is placed because of information learned subsequent to the receipt of the deposit, does the credit union mail the exception notice to the customer? (§ 229.13(g)(1)(ii))      
49 Does the credit union retain a copy of each reasonable-cause exception notice, along with a brief statement of the facts that led to the hold, for a period of two years? (§ 229.13(g)(4))      
50 Does the depositary credit union refrain from invoking the reasonable-cause exception on the basis of the race or national origin of the depositor or the class of the check? (§ 229.13(e)(1))      
51 Does the credit union refrain from assessing a fee for any subsequent overdraft, returned check, or other unpaid charge (or advise customers of their right to a refund of such fees, and refund the fees upon request) if all of the following conditions are met?      
51(a) The depositary credit union extended the availability period on the basis of its belief that the check was uncollectible (§ 229.13(e)(1))      
51(b) The depositor was not provided with the written notice required by § 229.13(g)(1) at the time of deposit (§ 229.13(e)(2))      
51(c) The overdraft or return would not have occurred if the availability period had not been extended (§ 229.13(e)(2)(i))      
51(d) The deposited check was finally paid by the paying credit union (§ 229.13(e)(2)(ii))      
52 Does the exception notice tell the customer where to direct a request for a refund of the overdraft fees? (§ 229.13(e)(2))      

Emergency Conditions (§ 229.13(f))

Emergency Conditions (§ 229.13(f))
Item Description Yes No N/A
53 Does the credit union refrain from imposing emergency-condition holds on checks subject to next-day availability under § 229.10(c)?  (Official Interpretation 229.13(f))      
54 Does the credit union invoke the emergency-conditions exception only in the following circumstances and when the credit union has exercised necessary diligence as circumstances require:      
53(a) An interruption of communications or computer or other equipment (§ 229.13(f)(1));      
53(b) Suspension of payments by another bank (§ 229.13(f)(2));      
53(c) War (§ 229.13(f)(3)); or      
53(d) An emergency condition beyond the control of the credit union? (§ 229.13(f)(4))      
55 Does the credit union make funds available for withdrawal no later than a reasonable period after the emergency has ended or within the time period established by the temporary and permanent schedules, whichever is later? (§ 229.13(h)(3)) (As stated in the Comment 229.13(h)(4), a reasonable period is five business days for checks.)      
56 Does the credit union provide customers with a written notice of the longer delay? (§ 229.13(g)(1))      
57 Is the notice provided at the time of the deposit, if the deposit is received in person by an employee of the credit union, or is the notice mailed on or before the first business day after the day the credit union learns of the facts giving rise to the exception? (§ 229.13(g)(1)(ii))      

Miscellaneous

Calculated Availability—Non-consumer Transaction Accounts (§ 229.19(d))

Calculated Availability—Non-consumer Transaction Accounts (§ 229.19(d))
Item Description Yes No N/A
58 Does the credit union calculate funds availability for non-consumer accounts on the basis of a sample of the customer’s deposits? If it does, obtain a copy of the credit union’s formula for determining its availability schedule. Review a sample of checks similar to that used by the credit union to calculate funds availability and answer the following questions:      
57(a) Is the sample of checks large enough to accurately use the formula?      
57(b) Does the formula accurately represent the average composition of the customer’s deposits?      
57(c) Does the specified percentage of available funds appear reasonable? (Is a set percentage available the next business day, with remaining funds available according to the customer’s deposit mix?)      
59 Based on the sample, are the terms of availability for the account equivalent to or more prompt than the terms outlined in the regulation?      
59 Does the credit union display a notice of its availability policy in a conspicuous place at locations where employees receive consumer deposits? (§ 229.18(b))      

Payment of Interest

Review a copy of the credit union’s availability schedule for check deposits credited through the Reserve Bank or its correspondent bank. Determine the time that the credit union receives credit for check deposits.

Payment of Interest
Item Description Yes No N/A
60 For each interest-bearing transaction account offered by the credit union (for example, NOW accounts and ATS accounts), does the credit union begin to accrue interest on the funds deposited no later than the business day on which the credit union receives provisional credit for the funds? (§ 229.14)      

Deposits at Non-continental U.S. Offices

NOTE: The credit union may extend the time periods set forth in §229.12 by one business day in the case of any deposit, other than a deposit discussed in §229.10 (next day availability), that is:

  • Deposited in an account at a branch of a depository credit union if the branch is located in Alaska, Hawaii, Puerto Rico, or the U.S. Virgin Islands; and
  • Deposited by a check drawn on or payable at or through a paying bank not located in the same state as the depository credit union.
Deposits at Non-continental U.S. Offices
Item Description Yes No N/A
61 For offices located in Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands does the credit union extend availability for check deposits drawn on banks in other states? (§ 229.12(e))      
61(a) If yes, is the extension limited to one day? (§ 229.12(e))      
65(b) Is the extension available only for deposits other than those discussed in § 229.10?      
65(c) Is the extension limited to such deposits only if the paying credit union is in a different jurisdiction?  (§229.12(e)(2))      

Footnotes

1 A reconverting bank is the bank that creates a substitute check; if a nonbank creates a substitute check, the reconverting bank is the first bank to transfer, present, or return the substitute check (or the first paper or electronic representation of that substitute check) for consideration.

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