The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Federal Re se r v e Bank
OF DALLAS
W ILLIA M
H. W ALLACE
FIR S T V IC E
P R E S ID E N T
DALLAS. TE X A S 7 5 2 2 2
AND C H IE F O P E R A T IN G O F F IC E R
December 7, 1987
Circular 87-88
TO:
All Chief Executive Officers of
all financial institutions in the
Eleventh Federal Reserve District
SUBJECT
Request for conments on proposed regulations to implement the
Expedited Funds Availability Act
DETAILS
The Federal Reserve Board of Governors is seeking public comment on a
proposed rule to implement provisions of the C ompetitive Eouality Banking Act
passed by the Congress on August 10, 1987.
Specifically, the rule addresses
Title IV, known as the Expedited Funds A v a i l ability Act.
The rule sets out
the requirements that banks and other financial institutions make deposited
funds available according to specified time schedules and that institutions
disclose funds availability policies to their customers.
The proposed
regulation also establishes rules designed to speed the return of unpaid
checks (return items).
The Board has proposed to amend Regulation J, which governs the
collection of checks and other items by Federal Reserve Banks, and to conform
that regulation to the new standards proposed in Regulation CC.
Due to the significance of these regulatory changes to financial
institutions within the Eleventh District, the Federal Reserve Bank of Dallas
will conduct seminars during January designed to increase yo u r understanding
of the proposed regulatory and operational changes. We encourage you to send
representatives from you r check operations, compliance and legal staffs to
attend these seminars.
The seminars will be held in Dallas, Lubbock, San
Antonio, El Paso and Houston, Texas, and Shreveport, Louisiana.
A formal
announcement detailing the exact locations and dates will be sent to you soon.
For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are
encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800)
527-9200 (interstate).
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
- 2 -
Your comments will be an important contribution to the future of the
nation's payments system.
Comments are due by February 8, 1988.
Please refer
to Docket No. 0620 and send all comments to:
Mr. W i l l i a m W. Wiles
Secretary
Board of Governors of the Federal Reserve System
20th and C Streets, N.W.
Washington, D.C. 20551.
ATTACHMENTS
A t tached is the Board's press release on this subject as well as a
comprehensive description of the proposed regulation changes and background on
this topic.
MORE INFORMATION
For mo r e information, please contact Jack A. Clymer (214) 651-6337 or
Robert L. W h itman (214) 698-4357 at the Dallas Office, Robert W. Schultz (915)
544-4730 at the El Paso Branch, Vernon L. Bartee (713) 659-4433 at the Houston
Branch, or John A. Bullock (512) 224-2141 at the San Antonio Branch.
Sincerely yours,
FEDERALRESERVEpressrelease
For immediate release
December 3, 1§87
The Federal Reserve Board today issued for public comment
a proposed new regulation to carry out provisions of the Expedited
Funds Availability Act.
Comment should be submitted to the Board by February 8,
1988.
Because of the lead time needed by banks to comply with the
new law, the Board said it would be unable to extend the time for
comment beyond the 60-day period.
The proposed regulation, designated "CC," would:
1.
Spell out details of the requirements in the Act
that banks —
defined as all depository institutions —
provide that a c u s t o m e r ^ deposit be available for use
within stated time periods; that banks disclose their
availability policies to customers;
and that banks
accrue interest on deposits not later than the day
they receive provisional credit for the deposits.
2.
Require that banks return checks in an expeditious
manner and use a standard endorsement.
Other proposals issued b y the Board would amend Regulation J,
which governs Federal Reserve Bank check collection services, to conform
to the new Regulation CC and provide for new Reserve Bank services to
facilitate compliance with the new law and proposed regulation.
The Act goes into effect on September 1, 1988.
-2-
Congress adopted the Act after expressing growing concern
about delayed availability —
the length of time that some banks
place on checks deposited in customer accounts before funds can be
withdrawn.
Under a temporary availability schedule written into the
law, a bank must make the proceeds of local checks available for
withdrawal by the third business day following deposit.
For example,
the proceeds of local checks deposited on a Monday must be available
for withdrawal on Thursday.
A local check is one deposited in a
bank located in the same Federal Reserve check processing region as
the paying bank.
The proceeds of nonlocal checks must be made available
for withdrawal under the temporary schedule by the seventh business
day following deposit.
On September 1, 1990, these time periods will be reduced
—
to two business days for local checks and five business days for
nonlocal checks.
Banks are also required to provide disclosures to new
customers prior to opening an account, to existing customers, and
to any person upon request.
Disclosures also are required on
preprinted deposit slips, at branch locations, and at automated
teller machines.
The Board is also seeking public comment by April 8, 1988
on proposed longer term initiatives to improve the check system,
such as machine-readable endorsements,
and image processing.
electronic clearing zones
Under both the temporary and permanent schedules, deposits by cash,
electronic payments, and certain categories of checks including T r easury
checks, cashiers' checks, certified checks, and tellers' checks mu s t be
available for withdrawal on the business day after the day of deposit.
Copies of the complete proposal are attached.
Attachment
FEDERAL RESERVE SYSTEM
[Docket No, R-0620]
Regulation CC
12 CFR Part 229
Availability of Funds and collection of Checks
Regulation j
12 CFR Part 210
Collection of Checks and Other Items and Wire
Transfers of Funds
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Proposed rules.
SUMMARY:
rule
The Board
(Regulation CC)
Availability Act.
that
is publishing
banks
and
to
deposited
into accounts
schedules
and
policies
to
implement
The proposed
other
that
their
for comment
the
rule
depository
customers*
sets out
the
institutions
disclose
The
proposed
Expedited
available according
institutions
a
to
funds
proposed
new
Funds
requirements
make
funds
specified
time
availability
regulation
also
establishes rules designed to speed the return of unpaid checks.
The
Regulation J,
Board
which
is
also
governs
proposing
to
amend
the collection
A-1
its
existing
of checks and other
-2items by Federal
Reserve
Banks,
the new standards proposed
DATE:
Comments must
to conform
that regulation
to
in Regulation CC.
on or before February 8, 1988
be submitted
.
No extension of time for comment will be provided.
ADDRESS:
be
Comments, which should
mailed
System,
to
the
Board
20th
and
c
Attention:
Mr.
of
W.
delivered to Room B-2223
comments
received
public file,
Governors
Streets,
William
at
refer
of
Washington,
Wiles,
Secretary;
the above
8:45
0620,
the Federal
N.W.,
between
and may be
to Docket No.
a.m.
and
Reserve
D.C.
or
may
20551,
may
be
5:00 p.m.
All
address will be included in the
inspected
at Room B-1122
between 8:45
a.m. and 5:15 p.m.
FOR
FURTHER
INFORMATION
Subparts A
and
Joseph
Alexander,
R.
C of
CONTACT:
Regulation CC
Senior
For
information
and
Regulation J,
Attorney,
Legal
regarding
contact
Division
(202/452-2489).
For information on §§ 229.10 through
through
229.21
Roseman,
of
229.19
Director,
Division of Federal
Reserve
Bank
(202/452-2789) .
For
Subpatt B of
Attorney,
and
Subpart B of Regulation CC, contact Louise L.
Assistant
Operations
229.14
information
Regulation
Division
of
on
CC,
§§ 229.15
contact
Consumer
through
Gerald
and
P.
229.18
Hurst,
Community
of
Senior
Affairs
(202/452-3667) .
For
Device
for
the
the
hearing
Deaf,
impaired
Earnestine
(202/452-3254) .
A-2
only:
Hill
or
Telecommunications
Dorothea
Thompson
-3SUPPLEMENTARY
Act,
Title
INFORMATION:
VI
depository
of
Pub,
L,
institutions
The
Expedited
100-86,
to make
available
within
to depositors
and
to
disclose
depositors.
The
regulations
Board
to
with
is
implement
banks
and
funds deposited
time periods
availability
given
policies
The Act
to adopt
to
within
the
also
regulations
funds
in
by
the
their
to prescribe
provides
the
to improve the
system so that checks may be cleared
returned
other
into accounts
specified
responsibility
the Act.
authority
check processing
necessary,
funds
Board
broad
requires
Availability
(collectively referred to as "banks"
the proposed regulation)
Act
Funds
availability
and,
if
schedules
mandated by the Act.
The Board
proposals,
is today requesting
Docket Nos.
R-0620,
exercise
its responsibilities
consists
of
Part 229)
proposed
that will
detailed
and
a
rules
changes
to
encourage
the
Board's
governs
the
law
return of
result
Docket No.
current
and
R-0622,
the Act,
that
(Regulation CC,
compliance with
and
on
the
unpaid
the
collection
checks,
12
provide
substantive
of
checks
to
the
the availability
several changes to
J
(12
CFR
checks
and
other
A-3
CFR
thus minimizing
R-0620 also proposes
of
will
availability
several
from compliance with
Regulation
collection
make
of
Docket No. R-0620
clarify the definitions of the Act,
current
losses that could
the
under
requirements,
faster
schedules.
R-0621,
regulation
to facilitate
disclosure
comment on a series
Part
210),
which
items by Federal
-4Reserve Banks,
so that it conforms
to the new standards
adopted
in Regulation CC.
Docket
No.
R-0621
services
to be offered
in
new
the
check
Regulation C C .
requests
by the Federal
collection
Docket
No.
R-0622
longer-term
improvements
to
proposed
Reserve
in
comment
on
is studying
nation's
check
new
to assist
established
requests
the
on
Reserve Banks
rules
possible services that the Federal
as
comment
some
as well
collection
system.
OVERVIEW
Delayed availability —
place on checks deposited
the
funds
holds
placed
depositors
Banks
that
into their
may be withdrawn —
in the Congress
for a number
by
have
many
banks
a
right
impose
holds
the holds that some banks!./
to
was
c u s t o m e r s ' accounts
a subject of growing concern
of years.
were
Many argued
unduly
prompter
responded
before
long,
access
that
to
their
that
and
the
that
their
funds.
availability
schedules reflect the time needed for the collection
and
return
i/
The proposed Regulation CC terminology corresponds with the
terminology of the Uniform Commercial Code,
with
some
modifications.
"Bank" is defined to include all depository
institutions.
A "paying bank" is the bank on which the check
is drawn.
In the case of payable through drafts, the payable
through bank is the paying bank.
A "returning bank" is an
intermediary bank handling a returned check.
A "depositary
bank" is the bank in which the check was first deposited.
(See
§ 229.2 of the proposed Regulation CC for the complete
definitions of these terms.)
A-4
-5of
checks
dishonored
by the
paying
of protection against the risk
funds
from
withdrawn
the
Congress
to address
the
Expedited
the
Competitive
1987).
that
if
and
provide
the bank
those
funds
could
had
a measure
not
recover
already
been
from the depositor's account.
The
required
depositor
bank
The
concluded
delayed
that
federal
availability practices
Funds Availability Act
Equality
Act
seeks
Banking
(the
Act,
checks?
"Act")
enacted
to ensure prompt
and to expedite the return of
issue regulations
legislation
and
passed
(Title VI of
on
August 10,
availability of
the Board
was
funds
is directed
to
to implement the Act, which becomes effective
on September 1, 1988.
The
Act
requiring
banks
customers
includes
to:
within
bank
provide
the
to
their
(2)
not
later
and
to
pay
their
interest on
than
the
(3) disclose
customers.
with
provisions
available
credit,
Board
detailed
frames,
accounts
provisional
funds availability policy
and
funds
time
transaction
receives
provisions
make
specified
interest-bearing
the
(1)
specific
little
These
day
their
statutory
flexibility
in
developing rules to implement the Act's requirements.
The
and certain
risk
to
business
requires
check
the
cashier's
Act
deposits
depositary
checks,
day
depositary
after
bank
that cash
be
the
that congress
bank,
made
day
deposits,
such
as
available
of
must make other
A-5
believes
Treasury
for
deposit.
check
wire
transfers,
pose
checks
withdrawal
The
time
deposits
little
and
by
the
when
the
available
for
-6withdrawal
depends
"nonlocal"
deposited
to
in
on
whether
the
the depositary bank.
a depositary
bank
check
is
processing region
48
Federal
States,
a
than
Reserve
and
the
check
deposited
"local"
check
located
as
is
or
a
check
in the same
the paying
bank.
a different
in
bank.
processing
territory
is
region
the paying
check
is
A local
that
Federal Reserve check processing
nonlocal
check
check
There
offices
A
are a total of
in
the
United
served by each office constitutes
a
region.
Under the temporary schedule that becomes
September 1,
1988,
a depositary bank must make the proceeds of
local checks available for withdrawal by the
following
deposit;
deposited on
following
of
business
that
is,
the
proceeds
a Monday must be available
Thursday.
nonlocal
checks
day
effective on
third business
of
local
for withdrawal
available
for
deposit;
withdrawal
that
is,
by
the
week.
are
reduced.
At
On
that
September 1,
time,
proceeds
1990,
of
the
by the
seventh
proceeds
Monday deposit must be available for withdrawal
following
checks
The depositary bank must make the proceeds
following
the
day
a
by Wednesday of
these
local
of
time periods
and
nonlocal
checks must be available for withdrawal by the second and fifth
business
are
day
provided
automated
following
deposit,
respectively.
for cash withdrawals,
teller
machines,
deposits
and deposits
the continental United States.
A-6
made
Special
rules
at nonproprietary
in banks
outside
-7Although
will
accelerate
be returned
improvements to
by the
for withdrawal under
that will
effective.
in
the check
increase when
order
time
been
paid,
availability
exceptions,
beyond
Congress
the risk
schedules.
it may
When
extend
the statutory
establish
provided
limits on
a
schedule
to banks
several
bank
the additional
from making
the check
one
to
of
hold
the
has
the
these
its customer's
Nevertheless,
a
becomes
exceptions
invokes
the hold on
schedule.
be
the temporary schedule —
the permanent
to reduce
funds must
funds available to customers before learning that
not
system
the return of most checks, many checks will not
to the depositary bank
made available
number
the proposed
account
Board
must
that may be placed on
checks subject to these exceptions.
The
availability
statute
requires
to
policies
customers
that
immediate
banks
customers
withdrawal.
disclosures
existing
at
to new
customers
and
locations
teller
in the check
the
where
machines.
gives
which
are
prior
any
not
and
be
to opening
upon
inform
their
available
required
person
their
to
for
provide
an account,
request.
to
In
consumers
Banks must
make
deposits,
and
at
also provide notice
to
their availability policies change.
the Board authority to make improvements
collection
time within
to
may
disclose
are required on preprinted deposit slips,
their customers whenever
The Act
funds
Banks
disclosures
staffed
automated
deposited
customers,
addition,
their
to
and
return
depositary
A-7
system
banks
in order
to shorten
learn of the nonpayment
-8of checks, and thereby reduce the number of
bank
will
be
customers
Board's
that
required
before
it learns
authority
are
not
previously,
by law
is broad
cleared
a check
funds
has
the
and
Federal
enactment
of
the
Act,
Steering
to
The
representatives
from three Divisions of
Reserve
industry,
businesses,
to select
Act
private
and
sector
expedite
which
the
the
the
of
improvements
implement
to
the
to
the
banking
comply
to provide
and
check
and
with
ability of
checks;
to the
staff
the ability of banks
Reserve
unpaid
of
these proposals,
approaches
(3)
a
the law's
consists
costs
(2)
regulation;
formed
the Board's
(1)
alternative
the Federal
return
System,
the authority to
staff
developing
and consumers?
Board's
and
in
considered:
from several
the
Committee
Banks.
the Steering Committee
to checks
Reserve
Board
requirements.
Federal
The
it collected.
Steering Committee to develop proposals
three
extends
the
to its
dishonored.
Reserve generally had
regulate only those checks
when
available
been
and general,
through
the Federal
Upon
to make
situations
(4)
collection
the
services
the extent
system
to
to
reduce
r isk.
in developing
imput
from
the private
the proposals,
sector.
Board relied
The Board
staff discussed
proposal with the Consumer Advisory Council and
Advisory
committee,
industry
group.
occasions
with
and
corporate
in
which
is
a
addition,
representatives
trade
joint Federal
the
staff
from
associations,
A-8
met
consumer
and
heavily
the
Return
on
the
item
Reserve/banking
on
over
groups,
individual
20
banking
banks.
Two
-9consulting firms were retained
aspects
major
of
its proposals
concepts
on
underlying
to assess
the effect of certain
the banking
the proposal
industry.
have been
Many of the
suggested
by
the private sector.
The proposed
of
Funds
and
Subpart A
Collection
defines
enforcement.
must
make
of
terms
and
rules
available
disclosure
of
funds
interest.
Subpart C
includes
paying
and
bank,
authorization
within
which
Subpart B
to
the
policies,
rules
subparts.
administrative
withdrawal.
exceptions
Availability
three
for
schedules
availability
and return of checks.
contains
provides
for
regarding
(12 CFR 229),
Checks,
Subpart B specifies
funds
includes
Regulation CC
banks
also
schedules,
and
to expedite
payment
of
the collection
These rules cover the means
by which
the
returning banks must return checks to the depositary
nonpayment
of
indorsement
of
direct
large-dollar
standards,
returns,
returns
and other
by
notification
the paying
related
changes
of
bank,
check
to the
check
collection system.
Subpart A —
Definitions
The
required
Act
little
defines
a
additional
number
of
terms,
clarification
Nevertheless,
the definition of two terms
significant.
The
accounts,
does
but
Act
applies
to
in
terms
A-9
the
of
which
regulation.
in the regulation are
deposits
not precisely define
proposes to define "account"
in
many
the
in
transaction
term.
The Board
of a transaction
account
-10as
described
The
Board
Board's
that
Regulation D
using
in Regulation D —
—
will
regulation
proposes
the
believes
definition
banks
in
avoid
and
that
is
the
(12
transaction
a definition
confusion
consistent
about
with
CFR 204 .2(e)).
already
the
the
account
familiar
coverage
statute.
of
The
to
the
Board
the definition of "account" exclude correspondent
accounts? that is, accounts held by a bank at another bank.
The
critical
as
well
definition of
in determining whether
as
determining
expedite returns.
include
payable
requirements of
drafts
"paying
that
the
through
are
banks
used
of
by
for
in
to define
the
of
the payable through bank.
unions
paying banks,
and
checks one or two days faster
Board
believes
that
this
is
through
which
sent
bank
—
the check
for
and not
the
and
return
than may be
—
A-10
of
bank
through
the
the
the payable
requirements
to return
today.
The
reflects
be based on where
of
to
insurance
most accurately
the location
location
is drawn.
the case
to
the
payable
thus would be required
definition
collection
of
in addition,
the statutory requirement that schedules
check
paying
checks based on
through bank would be subject to the prompt
imposed on
parties
purposes
As a result,
credit
is
is local or nonlocal,
companies are considered local or nonlocal
location
the regulation
the various
proposes
the regulation.
often
a check
duties
The Board
bank"
the
the payable
organization
on
-11Subpart B —
Funds Availability and Disclosure Requirements
Availability
s c h e d u le s .
The
proposed
regulation
reflects the availability schedules provided in the Act.
deposits
checks
of
cash
and
deposits,
government
electronic payments,
including
checks,
and
available
for
schedules
are provided
Treasury
on
the
schedules
for
these checks.
must
The
business
checks,
The
made
day.
Longer
based on whether
following
Board proposes
that:
effect of
this
nonlocal
in the Act be limited;
regulation
on
depositors'
checks
and
rights
the
of checks
(3) the holds that can be placed on deposits
provided
the
(1)
shortened;
exception
certain
the
charts depict
(2)
an
for
local
clarified;
to
schedules
and
be
application of the schedules to certain categories
the
as certain
state
next
for other
checks are local or nonlocal.
checks,
checks,
depository
withdrawal
as well
Thus,
be
subject
(4)
to
be
the
withdraw
cash be clarified.
The Board proposes
of
checks
not
requirement
following
Banks
specified
that
that certain
in
Act
Federal
Home
Service money orders,
Loan
Checks
Banks,
The
schedules
for
Act
subject
the
categories
to
the
business
day
issued by Federal Reserve
as
well
are not explicitly
but do not present greater risk of
checks for which
be
funds be made available on
the day of deposit.
and
the
additional
loss
as
U.S.
addressed
to banks
postal
in the Act,
than do other
the Act mandates next day availability.
directs
the
Board
any category of checks
A-ll
to
reduce
the
where most of
statutory
the checks
Temporary Funds Availability Schedules
F igure 1
Illustrates availability of different types of checks under the temporary schedules
MONDAY
(Day 0)
TUESDAY
(Day 1)
WEDNESDAY
(Day 2)
THURSDAY
(Day 3)
FRIDAY
(Day 4)
w
sj!?'
MONDAY
(Day 5)
TUESDAY
(Day 6)
WEDNESDAY
(Day 7)
THURSDAY
(Day 8)
xism m m jsfm m ss&mg:
LOCAL
(Cie arlnghouse)
Deposit
Cash Withdrawals
Check Writing
LOCAL
(Hon-C^arlng
house)
NONLOCAL ;
1
2
3
A
The first $100 of a day's deposit must be made available for either cash withdrawal or check 4
writing purposes at the start of the next business day $ 229.10(cXlXvii).
For local checks cleared through a local clearinghouse, the remainder of the deposit must
be made available for either cash withdrawal or check writing purposes by the th ird
5
business day following th e day of deposit § 229.11(bXl).
For local checks cleared outside a local clearinghouse, the remainder of th e deposit must
be made available for check writing purposes by the th ird business day following the day 6
o f deposit § 229.1 l(bX2).
For local checks cleared outside a local clearinghouse. $400 of the deposit m ust be made
available for cash withdrawal no later than 5:00 p.m. on the day specified in the schedule.
This amount is in addition to the $100 that must be made available on th e business day
following the day of deposit § 229.1l(bX2).
The remainder ofthe deposit m ust be available for cash withdrawal at th e start ofbusiness
on the following day § 229.1 l(bX2).
For nonlocal checks, the remainder o f the deposit m ust be made available for eith er cash
withdrawal or check writing purposes by the sev en th business day following th e day of
deposit § 229.1 l(bX2).
Permanent Funds A vailability Schedules
Figure 2
Illustrates availability of different types of checks deposited the same day, under the permanent schedules.
MONDAY
(Day 0)
TUESDAY
(Day 1)
WEDNESDAY
(Day 2)
THURSDAY
(Day 3)
FRIDAY
(Day 4)
MONDAY
(Day 5)
LOCAL
TUESDAY
(Day 6)
WEDNESDAY
(Day 7)
THURSDAY
(Day 8)
Deposit
Cash Withdrawals
Check Writing
NONLOCAL
1
2
3
The first $100 of a day's deposit m ust be made available for either cash withdrawal or check
writing purposes at the start of the next business day § 229.10(cXlXvii).
Local checks m ust be made available for check writing purposes by the second business
day following deposit 5 229.12(b).
Nonlocal checks m ust be made available for check writing purposes by the fifth business
day following deposit § 229.12(c).
4
5
$400 of the deposit m ust be made available for cash withdrawal no later than 5:00 p.m.
on the day specified in th e schedule.This is in addition to th e $100 th at m ust be made
available on the business day following deposit § 229.12(d).
The remainder o f the deposit must be made available for cash withdrawal at the start of
business the following day § 229.12(d).
Perm anent Funds Availability Schedules
Figure 3
Illustrates availability of different types of checks deposited on separate days, under the permanent schedule._____________
MONDAY
(Day 0)
TUESDAY
(Day 1)
WEDNESDAY
(Day 2)
THURSDAY
(Day 3)
FRIDAY
(Day 4)
MONDAY
(Day 5)
TUESDAY
(Day 6)
WEDNESDAY
(Day 7)
THURSDAY
(Day 8)
Deposit
LOCAL
Cash Withdrawals
Check Writing
NONLOCAL
1
2
3
The first $100 o f a day's deposit must be made available for either cash withdrawal or check 4
writing purposes at the start o f the next business day $ 229.1(KcXIXvii).
Local checks must be made available for check writing purposes by th e secon d business
day following deposit § 229.12(b).
Nonlocal checks m ust be made available for check writing purposes by the fifth business 5
day following deposit § 229.12(c).
$400 of the deposit m ust be made available for cash withdrawal no later than 5:00 p.m.
on the day specified in the schedule. This applies to the aggregate amount of deposits th a t
m ust be made available on a specified day, and is in addition to the $100 that must be made
available on the business day following deposit § 229.12(d).
The remainder of th e deposit m ust be made available for cash withdrawal at the start of
business the following day § 229.12(d).
-12would be returned in a shorter
the
schedules.
reduced
prompt
for
The
Board
proposes
certain nonlocal
processing
and
period of
that
checks
return,
time
than provided
the
that are
where
schedules
subject
significant
in
be
to more
improvements
can be made to the Act's schedules.
The
Act
and
the availability
states
that
regulation provide
schedules
for
certain
higher-risk
deposits.
The
to
Act
the hold placed on deposits subject to an exception
"shall not exceed a reasonable period of
the
exceptions
Board,"
The
Board
proposes
time as determined
that a bank
be permitted
by
to
extend the schedule by no more
than
four business days when
exception
four
additional
should
is
invoked.
These
provide adequate
time
for
business
the depositary bank
an
days
to learn
of the nonpayment of virtually all checks that are returned.
In addition,
policies
limiting
any given day
expressed
the Board proposes
such policies.
affected by
that
the Act,
small
any
insurance
or
regulation,
Small
These restrictions are usually due
that some
time
bank
for
however,
banks
have
the Act could be interpreted to prohibit
the amount of cash
one
that
the amount of cash a customer may withdraw on
are not
concern
to clarify
would
not
banks
may
security
supersede
to limits on
keep on hand
reasons.
any
common
at
The
law
or
other duty to make funds available for withdrawal by cash.
Disclosures.
specific policy with
funds
deposited
rule,
requires
in
The Act
respect
an
banks
requires banks to disclose their
to when
account.
to
The
provide
A-12
a customer
regulation,
customers
with
may
withdraw
as a general
an
initial
-13disclosure
customer
of
the
bank's
availability policy
that allows
to determine when a deposit will be held
and
the
for how
long.
Numerous banks normally provide
their
customers
with
same- or next-day availability for almost all deposits and only
impose
holds
in
case-by-case
customer
special
basis.
with
circumstances,
In
many
notice of
cases,
the delay
at
determined
the
banks
the
time
on
provide
a
the
the deposit
is
made.
Banks with such policies may find it difficult,
impossible,
to develop a specific disclosure
that would
the customers to determine whether a particular
delayed
the
and
Act,
the length
The
precludes
customer
nature
such
a
of checks
policy) ,
the
these
disclosure.
imposing
routinely
holds
on
interest
generally by
essentially
to disclose
subject
to
a
to
the
delay
in
it necessary to discontinue
a
case-by-case
basis,
and
to delay availability on specific types
(essentially adopting
The
order
funds will be
find
policy
allow
deposit will be
as required
banks'
In
these banks may
the practice of
begin
the delay,
of
when deposited
availability,
instead
of
if not
an automatic or blanket
delay
Board believes that such a result would not be in
of
bank
customers.
substantial costs not only
Also,
banks
would
in making disclosures,
but also
developing and implementing new availability policies.
A-13
incur
in
-14The
Board
proposes
alternative disclosure
availability
basis.
meet
the
Banks with
the
while
beyond
initial
their
bank
customer
to determine
to
same
impose
or
longer
whether
advantage
of
in
addition,
deposited
funds
will exceed the time periods
Relation
laws
supersede
availability.
exception
to
to state
federal
One
a
state
exceptions.
and
results
The
Board proposes
that
address
that
if
of
set of
Act
they
this
be viewed
believes
in a complex
allows
must
the
to be
A bank
that
still
established
by the
is held,
indicates
the delay,
The
availability
Board
words,
is going
alternative
that
that,
the
when
the
This notice
unless
the hold
in the schedules.
law
than the federal law must
that
for withdrawal.
for
law.
reading
in other
check
limits
to
availability,
time a deposit
will be available
need not give a specific reason
by disclosing
next-day
bank must give a notice to the customer
delay
be permitted
for deposit.
the time
only
a case-by-case
a policy
this
at any
on
would
a specific
include
that
delays.
and disclose
provide availability within
regulation.
policies
to presenting the check
take
day
requirements
is to give
times
regulation
for banks
business
case-by-case
not adopt
delayed prior
chooses
next
disclosure
may at
the
requirements
the
policy
the bank need
that
provides
result
provision
schedule
this
legal
faster
is
that
that
any
is narrower
result
rules.
state
in
as superseding
that
that
the
federal
is unwieldy
Therefore,
the
exceptions to a state availability schedule
the same
situation
as
A -14
the
federal
exceptions
be
-15preempted
even
circumstances,
deposit.
the
result
However,
a certain
law,
if
in
faster
might,
under
availability
some
of a particular
if state law provides for a shorter
category
that
exception
checks
than
is provided
requirement
state
of
will
supersede
hold
under
the
for
federal
federal
provision.
c
Subpart
—
Regulatory Initiatives to Expedite Returns
In
contrast
to
involved in the forward
system
involves
inspection
of
machine-readable
should
be
collection,
of
information,
In
which
100,000
rate of only
1,000
hour,
per
by
mail,
their
to
the
generally
check,
although
checks
on
hour.
rather
in addition,
than
through
this
may
relies
where
visual
than
the
for
return
forward
equipment
at
are processed
returns
by courier,
bank.
on
rather
handled
checks
return
The return system
high-speed
returned
processing
the check
check,
to
depositary
returned
the
determine
are processed
transported
trip
on
that
to
contrast
per
of checks,
processing
indorsements
sent.
automated
intensive operation.
manual
the
high-speed
collection
is a slow, labor
generally
rate
the
are
further
Finally,
a
a
at a
often
slowing
check
is
each of the banks that collected the
not
be
the
most
efficient
path
to
route the return.
Under
that are
until
returned
after
temporary
the current check collection
the
would
time
schedules
not be
funds
many checks
received by the depositary bank
must
in the Act.
system,
be
available
under
the
The number of returned checks
A-15
-16that do not reach the depositary bank before funds must
available
under
the Act will
of the permanent schedules
study
by
the
Bank
time for a check
days.
increase with
in 1990.
Administration
to be collected
15 percent
and
longer.
according
(BAI),
returned
returned
the collection
take 10 days or
implementation
Currently,
institute
Approximately 40 percent of
days or longer to complete
the
be made
to a
the average
is 6,8 calendar
checks
and
take seven
return
cycle
and
(Return Items Study, Final
Report, prepared for the Bank Administration institute by J, D.
Carreker
the
and Associates,
temporary schedules,
available
after
for
withdrawal
deposit
available
and
for
(May 1985)
Under
"BAI STUDY")
the proceeds of local
on or
proceeds
withdrawal on or
after deposit.
checks
the
inc.
before
of
the
third
nonlocal
before
checks
checks
must
be
day
be
the seventh business day
the permanent schedule,
proceeds
of
local
must be available for withdrawal on or before the second
be available
by
must
business
business day after deposit and proceeds of nonlocal
after
Under
checks must
for withdrawal on or before the fifth business day
deposit.
the Federal
Approximately one-third of
the
checks
handled
Reserve Banks would be considered nonlocal under
the Act.
It
BAI to
on
the
calendar
is
difficult
statutory
days
to relate
schedules
rather
than
the data
because
it
is clear
the BAI data
business
differentiate between local and nonlocal
collected
days
and
checks.
by the
are based
do
not
Nevertheless,
that large numbers of checks will be returned after
A-16
-17funds must be made available for withdrawal
in
the
Act.
withdrawal
risks
if
funds
likely
to
recognition
exceptions
provides
before
requirement
many
the proceeds
checks are
make
The
to
checks
are
of check
be
for
returned
of
these
risks,
to the statutory
that
the
returned
the
Act
schedules
of
for
banks
some
and the
checks
check
fraud.
provides
for
and,
to
the requirement
to
are
In
certain
in section
609(b),
Board shall consider a number of proposals to
improve the check processing system to speed
return
available
are withdrawn
before
encourage
the schedules
exposes
Further,
withdrawal
may
funds
deposits
subsequently returned.
available
make
under
checks.
(12
section 609(c) of the Act
U.S.C.
4008(b)).
(12 U.S.C. 4008(c))
the collection
Further,
provides that:
(C )
REGULATORY RESPONSIBILITY OF BOARD
FOR PAYMENT SYSTEM. —
(1)
RESPONSIBILITY FOR PAYMENT
SYSTEM. —
In order to carry out the
provisions of this title, the Board of
Governors of the Federal Reserve System
shall
have
the
responsibility
to
regulate —
(A) any aspect of the payment
system,
including
the receipt,
payment, collection, or clearing
of checks; and
(B) any related function of
the payment system with respect to
checks.
(2)
REGULATIONS. —
The Board
shall prescribe such regulations as it
may determine to be appropriate to
carry out
its responsibility under
paragraph (1) .
A-17
and
-18-
Under
this
is appropriate
collected
and
Board
authority,
to propose
returned
changes
by both
other banking institutions
return
of
checks
collection
proposed
system.
to
from
In
many
the
the way
the Federal
improve
of
the
the risk
regulations
Uniform Commercial Code as enacted
bank;
in Subpart C:
(2)
expand
large-dollar
ability
proposals
bank,
each
returned
to reduce
of
the
number
bank(s),
in arriving at
the
proposals
and (3)
of
contains
to depositary banks
modify
of
the
provisions
including
to
provide
banks
checks.
duties
of
the depositary bank
these proposals,
of
the
The
the depositary
notification
returned
and
the check
requirements
for
by modifying
and
and
in the various states.
requirements
checks;
Banks
the collection
(1) expedite returns
are accomplished
returning
process,
the
are
Reserve
state law applicable to the collection of checks,
proposals
checks
regulation
availability
these
that
the efficiency of
to reduce
prompt
cases,
to
in order to speed
Subpart C
rules designed
resulting
Act.
and
the Board believes that it
of
with the
These
the
paying
in the return
the Board
considered
listed for Board consideration
in
the
Act.
Section 609 (b)
of
the Act
(12 U.S.C. 4008 (b)) provides
that:
(b)
REGULATIONS
RELATING
TO
IMPROVEMENT OF CHECK PROCESSING SYSTEM. —
In order to improve
the check processing
A-18
-19system, the Board shall consider
(among
other proposals) requiring, by regulation,
that —
(1)
depository institutions be
charged based upon notification that a
check or similar instrument will be
presented for payment;
(2)
the Federal Reserve banks and
depositary
institutions provide
for
check tr uncat i o n ;
(3)
depository institutions be
provided incentives to return items
promptly to the depository institution
of first deposit;
(4)
the Federal Reserve banks and
depository
institutions
take
such
actions as are necessary to automate
the process of returning unpaid checks,
(5)
each depository
and Federal Reserve bank —
institution
(A) place its endorsement,
and other notations specified in
regulations of
the Board,
on
checks in the positions specified
in such regulations; and
(B) take such
necessary to —
actions
as are
(i) automate the process
of reading endorsements; and
(ii) eliminate
sary endorsements;
u nneces
(6)
within one business day after
an originating depository institution
is presented a check (for more than
such minimum amount as the Board may
prescribe) —
(A)
such
originating
depository
institution determine
whether it will pay such check; and
A-19
-20-
(B)
if
such
originating
depository institution determines
that it will not pay such check,
such
originating
depository
institution directly notify the
receiving depository
institution
of such determination;
(7)
regardless of where a check
is cleared
initially, all returned
checks be eligible to be returned
through the Federal Reserve System;
(8)
Federal Reserve banks and
depository institutions participate in
the development and implementation of
an electronic clearinghouse process to
the
extent
the
Board
determines,
pursuant to
the
study
under
subsection (f), that such a process is
feasible; and
(^)
originating
depository
institutions be permitted to return
unpaid checks directly to, and obtain
reimbursement for such checks directly
from,
the
receiving
depository
i nsti t ut i o n •
The proposals
or
are closely
Act,
related
and the Board
potential
system.
in Subpart C either
to many of
the proposals
is studying many of
longer-term
improvements
to
listed in the
the other
the
implement
check
proposals
as
collection
The Board's proposals are more fully described below.
Expediting
proposals
depositary
return
contained
is
returns.
are designed
bank.
limited
to speed
Today,
to
A
the
number
the
paying
dispatching, a
A-20
of
return
the
of
bank's
returned
regulatory
checks
duty
of
check
to
the
prompt
by
its
-21"midnight deadline."?./
on
the paying
in a manner
check
bank
bank.
checks
using
for
places
the check
an additional duty
to the depositary bank
to the efficient manner
in
Generally,
returns
to return
similar
deposited
The proposal
the paying
bank
used
to collect a
and drawn on the depositary
the paying bank would be required
the
means
of
transportation
forward collection.
used
(This duty
is
to dispatch
to
dispatch
similar
to
the
third proposal listed in the Act.)
To facilitate prompt
not
it.
the
be required
Instead,
to return a check
the paying bank
depositary
providing check
bank
or
return
the depositary bank
day
of
returns,
receipt.
to
return
Reserve
services.
paying
to the bank
could
a
the
would
that presented
a check
Bank
bank
or
directly
other
To encourage direct
to
bank
returns,
would be required to pay for returns on the
(This
proposal
is
similar
to
the
ninth
proposal listed in the Act.)
Today,
checks
by
many
courier
banks
not
with
the
checks
the
courier
forward
collection,
if
instead,
they mail
their
order to meet their
do
legal
returns
by
dispatch
their
returned
that
being
sent
are
leaves
after
for
midnight,
their midnight deadline in
responsibility
under
the U.C.C.,
but
2/
.
The Uniform commercial Code requires a paying bank to
dispatch checks it is returning unpaid by midnight of the next
banking day following the banking day on which the checks were
presented for payment.
A-21
-22by
doing
so delay
the completion of
proposed
regulation
encourages
returned
checks
allowing
midnight
if the returns will be
by
the
the return
use
banks
to
of
process.
couriers
dispatch
received
by
to
The
handle
returns
after
the next bank
that
day.
The
proposed
banks
that
are
banks
to expedite
regulation
similar
to
the
the return
handle a returned
imposes
duties
duties
imposed
process.
A
on
on
returning
the paying
returning
bank
must
check as expeditiously as a check handled for
forward collection.
One way
returned
to speed
check
for
automated
equipment.
Returned
paying
or
carrier
bank
and
number
of
checks
returning
envelope
check,
or
by
encoding
regulation
automated
day
to
similar
returned
the bank's
be
by
envelope
is to prepare the
by
automated
placing
a strip on
or
strip
high-speed
by
the
either
return
with
Automated
the
preparation
by
returns
for prompt
a
returning
return.
the
routing
(This
allow
for
The proposed
checks by providing an additional
time
in
the check, and a
processing by returning banks.
the
the
the bottom of
the amount of
identifier.
facilitates
banks
of
business
proposal
is
to the fourth proposal listed in the Act.)
One
returns
bank
the depositary bank,
more efficient
processing
can
placing
the
special returned check
far
the return process
is
of
the
indorsements.
the
lack
Today,
obstacles
of
to
efficient
uniformity
clerks
often
A-22
in
processing
depositary
of
banks'
have difficulty determining
-23the bank
to which the check will be returned.
on the back of the check
are often
and
the
overlapping.
increase
same
since
banks
under
many
checks
that handled
faint,
proposal,
will
not
the checks
during
of a remote depositary
difficult
indorsement were not
its
from the other
its
of
a unique
proposal
information
routing
color
of
same
through
the
forward collection.
bank
would
often
be
readily distinguishable
requires
in
number.
its
In
the depositary bank
indorsement,
addition,
the
indorsement must be readily identifiable
the back
the
the
specific
nine-digit
bank's
would
indorsements on the check.
Therefore,
to provide
incomplete,
difficulty
returned
The determination
if
blurred,
this
be
The indorsements
ink and by placement
the check.
color,
or
Subsequent
be
placed
in
indorsement of the depositary bank.
depositary
through
the use
in a specified area on
indorsements
the
including
same
may not be
location
(This proposal
as
in
the
is similar
to the fifth proposal listed in the Act.)
Notification of n o n p a y m e n t .
the check
all
return
returned
available
bank's
risk
Therefore,
provide
to
system,
checks
the
is
the
by
the depositary bank
the
customer
larger
Board
notification
in
time
for
the
it must
to
of
returned checks.
A-23
the
The
for
paying
all
to
not receive
proceeds
depositary
large-dollar
require
nonpayment
improvements
will
make
withdrawal.
case
proposes
of
Even with
returns.
banks
to
large-dollar
-24Notification
only
for
those
The proposal
to
include
channel
checks
expands
all
be provided.
the
Under
of
through
$2,500
they
which
reduces
collected
or
were
the proposal,
notification
more,
Reserve.
requirement
regardless of
In
addition,
the
the
is
received
the paying bank must ensure
p.m.
(local time of depositary bank)
presentment.
by
Federal
the depositary
presentment.
Reserve
(This
bank
by 4:00
on the second business
regulations
require notice to be received by midnight on
following
required
time period within which notification must
notification
day
is now
the Federal
cleared.
that
following
returns
the large-dollar
checks
though
proposal
of large-dollar
proposal
the
day
currently
third
is similar
business
to
the
sixth proposal listed in the Act.)
Reducing
extending
Over
$100 or
less.
portion of
returns.
midnight
The Board proposes
deadline
Many depositary banks
these
redeposit
the
payment.
On
returns
funds
for
low-dollar
average,
are
paid
on
number
of returned
paying
bank
held
midnight deadline.
several
routinely
redeposit
that
that are returned due to insufficient
(or
checks on
checks
of
bank's
of
one-half of all returned checks are in amounts of
uncollected
support
volume
the paying
checks.
or
the
direct
their
over
the
checks
behalf)
60
second
could
low-dollar
the
percent
Federal
Reserve
in an effort
of
these
to obtain
redeposited
presentment.
A
be
entirely
checks
This concept has
eliminated
several
received
days
significant
beyond
if the
its
the long-standing
banking industry trade groups.
A-24
to
The proposal
-25permits
a paying bank
business
days
to hold
beyond
its
checks
midnight
of
$100 or
deadline
in
less
an
for
two
effort
to
secure payment.
Regulation j Amendments
Changes
conforms
to
c.
Subpart
are also proposed
the
proposed
to Regulation j so that
requirements
Regulation J governs
of
it
Regulation CC,
the collection
and
return
of
checks by Federal Reserve Banks.
Proposed Federal Reserve Bank Services
Returned
check
services.
(Docket No. R-0621)
In
order
to
achieve
objectives of the proposed regulatory requirements
return
of
checks,
it
is
essential
that
the
the
to speed
Federal
the
Reserve
Banks and private-sector correspondent banks provide new return
services.
The
services
to
Board
proposes
facilitate
requirements.
The
a
bank
Board
wide
array
compliance
anticipates
that
of
Reserve
with
a
Bank
these
number
of
correspondent banks will offer similar services.
Several
to
CC.
any
of
facilitate direct
Under
returns
the proposal,
returned
returned
the proposed
check?
checks
return checks directly
any
permitted
the
Federal
it collected.
to
are designed
in proposed
the local
intermediary collecting
Reserve
The Federal
only
depositary bank,
b a n k s •in the
as
accepts
Reserve would
bypassing
indorsement chain.
depositary bank may designate its correspondent bank
bureau
Regulation
Reserve Banks would accept and process
today
that
service changes
or
A
service
the location to which the Federal Reserve should send
A-25
-26that
bank's
returned
return
check
indicates
Reducing
will
process.
conducting
checks
returns.
the
Federal
Reserve
a pilot program of
handled
Bank
43
percent
indorsement chain
directly
to
Banks
returned
checks.
New
proposed
that are
similar
would
an
later.
check
deposit
By September
overnight
returns
high-speed processing
by
bank
will be processed
Bank
office on
them.
basis
Reserve
Bank
following
process
and
night.
the
that
and
sent
to
Today,
returned
have
returns
processing
checks
of
are
handled
returns
dispatched
with
will
the
in contrast,
today
been
to
will
return process.
A-26
a prior
the
be
for
returning
second
automated
Reserve
Reserve
which
automated
Reserve
the Reserve Bank received
the second
check,
by delivering
local
bank or
the day
both
in the
the day and dispatched one day
dispatched
nonlocal
which
returned
deadlines
for
1988,
and
the paying
the night of
Most other
local
their
to the deadlines
are processed during
Nonlocal
is
(This proposal is
forward collection checks the next morning.
the returns
a
in the Act.)
accelerate
returned
for forward collection.
on
of
the depositary bank.
Reserve
processed
Dallas
is bypassed
similar to the seventh proposal listed
be
of
the B a n k , at least one collecting bank
forward collection
the return
handling
the direct return process,
in the case of
by
of banks
shorten the length of time required for the
The
that,
number
adds
Bank
an
Bank
by
the
office
the
offices
extra
day
manually
to
the
-27Currently,
price
are
returned
The
imposing
Board
return
forward
returned
thus
Reserve
instead,
the
check
costs
the
forward
to price
the paying or
Federal
fees as
returning bank
Under
not
be
subject
to
they are
the
today,
since
Reserve
of collection,
Banks'
in addition, paying and returning
deposit
checks
ways
that
Reserve
result
Bank.
in
For
expensive
for
returns.
Reserve
returned
example,
Banks
that
similar
that
that
the
require
charge
Federal
costs
Reserve
would
have
been
for
to handle
returned
than
for
similar
fee would be
processing.
checks
banks
could
in various
by
the
be
less
would
charge
prepared
for
forward
incurred
returns
initially
A higher
manual
Reserve
being
automated
to that charged
in forward collection.
returns
the
different
the Federal
checks
processing
with
some
Reserve will not follow
collection fees,
returned
this
through the Reserve
that they followed in the process
may
returns
explicitly,
Reserve.
the Federal
explicitly
collection
returns
cannot be recovered
handled by
not
of handling
Banks'
fees on
with
does
the costs
Reserve
collection
checks
the same route
Federal
is proposing
returns
proposal,
Banks'
in
returned
depositing
and
checks;
incorporated
fees.
the
nonautomated
a
fee
for
automated
checks
charged
handled
for
"raw"
The Board estimates
that
require
manual
processing will range from $0.25 to $1.00.
The
Reserve
proposal
Banks'
also
notification
addresses
services
modifications
for
large-dollar
Reserve Banks will offer same-day notification
A-27
to
services
the
returns.
for all
-28large-dollar
proposed
checks
to
requirements
large-dollar
checks
facilitate
to provide
within
bank
compliance
with
notice of nonpayment
shorter
time
periods.
the
for
The
all
Board
proposes that beginning on January 1, 1989,
any depositary bank
that
with
has
Reserve
an
on-line
be
required
electronic
to
connection
receive
large-dollar
the
Federal
notifications
electronically.
Cost
provided
of
proposed
preliminary
services.
estimates
of
Reserve
the
costs
proposed new returned check services.
the
proposed
capital
initiatives
expenditure
additional
1988
$15,000,000,
The
recovered
the
by
would
of
costs
of
require
Reserve
an
Banks
offering
of
the
projected
additional
these
through
have
$15,000,000,
expenditures
providing
of
They have
approximately
operating
Banks
that
1988
and
approximately
services
the fees
will
be
assessed
for
the services.
Truncation
and
Board proposes
expansion
pilot
to
program
a
extended
of
the
permanent
M I C R capture
Federal
the
MlCR-line
presented
truncation
to
information
on
the paying bank
the
checks
is
times
bank;
captured
the
instead,
and
The benefits
processing
the paper
The
truncation
truncation,
to the paying
check
Truncation may also create savings
storage, equipment,
in
electronically.
include expeditious
a reduction in the number of
Reserve's
service.
physical checks are not delivered
services.
and
check
return and
is handled.
in transportation costs, and
and personnel costs for the paying bank.
A-28
of
-29Initially,
truncation
services
the benefits
earlier
will
to
truncation
increase
the
collection
process.
that after
be
able
truncation at
One
Reserve
Bank
under
the
Check
Safekeeping.
rules
(The
truncated
gained,
Reserve
is
truncation
of
in
inter-bank
the
of
are
the
Reserve Bank
is now engaged
basis
checks
However,
Therefore,
inter-bank
the Federal
pilot
as
more experience
to provide
is,
Banks offer
interested local paying banks.
of
in
believes
it is proposed that the Reserve
National
truncation proposal
Board
Banks
services;
first
that
deposit.
truncation on a
Association
for
is similar to the
first and second proposals listed in the Act.)
The Board
also proposes
the same benefits of
the
paper
check
this service,
Reserve
retrieval
truncation without
stopping
the
flow
magnetic
services,
of
Under
is now provided on a pilot program basis,
would deliver
or
that offers many of
the extended MICR capture service.
which
Banks
transmission
—
a service
payment
tape,
information
provide
and deliver
returned
the checks
to
by electronic
check
the paying
and
bank
several days later using less time-critical transportation.
Extended
and
its customers
truncation
check.
as
MICR capture
would
an opportunity
services
to
without giving
provide
test
all
the paying bank
aspects
up receipt of
of
the
the physical
The benefits of extended M I C R capture are not as great
those of
truncation; however,
extended MICR would serve as a
stepping stone for developing broader acceptance of truncation.
A-29
-30For
a
further
discussion
of
these
services see Docket
R - 6 0 2 1 , Federal Reserve Bank Services.
Longer-term
addition
to
these
checks,
which
Federal
Reserve
improve
initiatives
proposed
would
the check
be
initiatives
implemented
is also exploring
system
in
to
determine
depositary
bank,
and
also
by
R-0622).
expedite
September
various new
term.
feasibility
images
as
a
to
returned
1988,
One
the
to
such effort
in a high-speed
of
using
the paying
substitute
In
technologies
image processing
the
technology to transmit check
No.
to
the longer
involves testing of digitized
environment
(Docket
for
this
bank
and
the
microfilming
checks.
Further,
of
the Board
initiatives,
including:
machine-readable
inclusion
facilitate
depositary
of a bar
is requesting comment on a variety
(1)
bank
the
feasibility
indorsement,
code of the nine-digit
further
all
banks
in
presentment of
number,
specified
their
electronic clearing zones,
area
checks;
concept;
agree
to
accept
and banks;
returned checks for
the
MICR-encoding
routing
number
of
several
potential
to
(5)
the
the
the
in which
(4) further actions that should be
of certain
an alternative method of preparing
automated processing
of
(3)
(2)
electronic
considered to address delayed disbursement practices
corporations
by
automation of returned check processing;
establishing
a
a
possibly
routing
the feasibility of an electronic clearinghouse
feasibility of
of
returned
depositary
check
bank;
that does
with
and
not
require
the amount and
(6)
concepts
for
future Federal Reserve services to depositary
A-30
-31banks,
specifically,
cashier's,
a service to ascertain
certified,
and
teller's
the authenticity of
checks
and
a
service
communicate information regarding returned checks
banks
prior
electronic
to
the
physical
clearing-house
proposal listed
delivery
proposal
of
is
the
based
to
to depositary
checks,
on
(The
the
eighth
in the Act.)
Impact of the proposal
Cost
impact.
proposed
regulation
public.
Transaction
information
on
withdrawal,
which
accounts,
to
The
will
requirements
result
in
funds
will
should
help
be
made
them
funds.
However,
it
is
and
the
benefits
to
the
be given
will
Act
specific
available
better
in addition, many customers will
their
the
several
account customers
when
of
difficult
for
manage
gain
their
earlier
to quantify
access
these
b en e f i t s •
The overall
quite
significant.
provisions
lost
The
impact on the banking industry may be
disclosure
in the Act may result
investment
balances,
cost
and
income due
increased
and
funds
availability
in higher operating expenses,
to earlier
withdrawal
bad check losses.
of
collected
It is also difficult
to estimate the cost impact of these changes.
On
the
other
hand,
the
collection system may actually
proposed
bank,
regulations
returning
modifications
to
banks,
the
would
improvements
reduce overall
change
the
duties
and depositary bank,
operations
of
A-31
each
to
bank
of
the
costs.
the
and would
bank
in
check
the
The
paying
require
return
-32process.
Some of
costs
Initially,
these new
these costs
are one-time
to the depositary
equipment
costs
ongoing,
bank
to comply with
are
initiatives
such
to
increase costs.
transition costs,
modify
the new
as
may
its
standard
costs
for
such as the
check
processing
indorsement.
expedited
Other
handling
of
returns at returning banks.
However,
potential
return
bank
for
the
substantial
process.
Returns
more quickly
from providing
The number
of
returns
deadline
for
longer-term
will
be
to
paying
because
would
withdraw
encourage
reducing
the
number
return process.
should,
over
processing
returns.
by
funds
more
from
direct
of
long
allow all parties
by
the
enhancements
more
in the
depositary
its
customers.
reduced due
their
to the
midnight
regulation's
may
made
also
result
available
accounts.
of
banks
the new
reduce
the
in
for
know more precisely when
exchange
term,
to
The
would
their
the
extend
be
intermediary
facilitating
Future
to
may
Most importantly,
the
reductions
funds
requirements
funds
have
reducing the bank's risk
returns.
disclosure
returns
may
cost
received
banks
small-dollar
and
aggregate
may be significantly
withdrawal sooner and customers
they
the
than they are today,
granted
reduced
in
prompt availability of
authority
availability
proposals
the
The proposal
returned
checks,
involved
in
indorsement
cost
efficient
of
the
standard
return
processing
of
to the indorsement standard would
in the check
collection
completely their return processing.
A-32
system
to
automate
-33Competitive i m p a c t .
the
development
returns
and
regulatory
Reserve
Bank
in
the
check
from
benefited
the
competitive
the Federal
correspondent
The
the
related
competition
between
of
An important
Board
has
requirements
designed
banks
in
sought
and
services
and
to
that
Reserve
the
that
public
has
banks,
the proposed
to banks
impact
collection
service
in
expedited
The
correspondent
ensure
options
system.
check
considered
for
was
environment
providing
Federal
to provide
framework
collection
Reserve
factor
on
has
existed
and among
services.
regulatory
offerings
were
in the return process and
to facilitate a competitive environment.
Although
proposals
—
explicit
a
such
as
pricing
of
forward
collection
Reserve
to
the
competitive
that
number
returns
fees,
and
implications,
be.
could
collection
check
services
all returns could
and
that uses
return
charges
universal
returns
result
a
in
direct
bank
it
make
—
the
return
may
in
reduction
of
Federal
A-33
by
the
the
in the
Federal
significant
to determine
what
Banks’
and
forward
acceptance of
On the other
hand,
a
for both forward collection
an
increase
addition,
by the Federal
checks,
lower Federal Reserve check
attractive,
experience
services
decrease
have
Reserve
Reserve
services.
Bank
returned
is difficult
more
the Federal
check
any
increase return volume.
services may
for
of
For example,
fees
Reserve
and corresponding
depositary
impact would
the
acceptance
collection
bank
of
the
Reserve has
Reserve
in
its
total
acceptance of
the potential
forward
to
collection
-34check volume,
in
the
since returns
collection
are often
process
that
viewed
have
as nuisance
deterred
banks
items
from
competing for forward collection volume.
Correspondent
compete
with
services.
banks
the Federal
returned
through
Reserve
example,
checks
collect
For
checks
to
will
forward
rather
their
than
the
their
result
in
to
the
additional
to
volume
returned
banks
Reserve
Bank.
separate
Federal
4,000
Under
their
of
check
mail
this proposal,
checks
along with
correspondent bank,
transportation
Reserve.
to
that do not
currently
these returned
checks
establishing
the opportunity
providing
Federal
Reserve
collection
returns
in
approximately
these paying banks may deliver
their
have
This
to
deliver
practice
returned
checks
could
for
c o rr e s p o n d e n t s .
For
Docket
a
further
R-6022,
discussion
Proposals
of
these
for Long-Term
initiatives see
improvements
to
the
Check collection System.
Educational Efforts
During
Banks
plan
to
understanding
implications
comment
issues.
on
the
public
conduct
of
of
the
Reserve
seminars
depository
the
Act
Board's
Banks
and
will
industry
in
preparing
period,
designed
institutions
better
proposed
after approval of the final
the
comment
A-34
increase
regarding
the
the
the
public
regulations
and
operating
another
regulations
the
to
Reserve
prepare
sponsor
for
Federal
to
series of seminars
by the Board
regulatory
to assist
and operational
-35changes
to
Federal
Reserve
groups
as
be
effective
they
staff
on
September 1,
is working
prepare
1988.
In
addition,
closely with various industry
to offer
similar
seminars
to
their
cons t i t ue n c i es .
Summary of proposals
The Board
proposals
is
issuing
to implement
for
public comment the following
the provisions
of
the Expedited
Funds
Availability Act:
(1)
Docket
R-0620,
proposed
Regulation
CC
and
Amendments to Regulation J, which
(a)
of
deposits
within
availability
interest
on
requires banks
specified
policies
deposits
to
to provide
time periods,
customers,
to accounts
and
not
for
availability
to disclose
to
begin
later
than
to
their
accrue
the day
they
receive provisional credit for the deposits? and
(b)
checks,
including
requires
banks
to
expedite
authorizing direct return,
the
and
return of
requires
the
depositary bank to use a standard indorsement.
This docket also
which
so
governs
that
includes
the collection
it conforms
to
the
amendments
of checks
proposed
to Regulation j,
by Federal Reserve Bank
rules
to
expedite
the
return of checks.
(2)
which
Docket
proposes
compliance with
R-0621,
Reserve
Bank
the proposed
Federal
services
Reserve
to
requirements
A-35
Bank
Services,
facilitate
to
expedite
bank
returns
-36and
improve
Reserve
the check collection system,
Bank
check
truncation
and
including expansion of
extended
MICR
capture
services from pilot programs to permanent services.
(3)
Docket
Improvements
to
the
public comment on
check
R-0622,
Collection
longer-term
Proposals
System,
initiatives
to
for
which
Long-Term
requests
improve
the check
system.
Effect of the proposals on the Check Collection System
The
following
for returning checks
of
paying,
future,
should
is an explanation of the current process
and a description
returning,
if
and
depositary
the Board's proposals
assist
the reader
are
in better
of
the responsibilities
banks
now
adopted.
and
in
This
overview
understanding the impact of
the proposed changes to expedite the return of checks
banks,
returning banks,
In
returned
contrast
check
and costly operation.
forward
collection
complete,
BAI
study
returned
the
check
average of 1.4
is a slow,
The BAI
process
that,
collection
relatively
an
average
process,
labor
study concluded
takes
during
that,
of
checks
the return process,
is handled by 3.4 banks:
returning
banks,
though less than one percent
of all
forward
the return process takes an average of
found
on paying
and depositary banks.
to
process
the
are returned,
and
1.6
intensive,
while
days
5.2 days.
bank,
the depositary bank.
0.86
A-36
to
The
an
Even
percent)
the absolute volume of returns
study estimated 350 million annually)
the
the average
the paying
(the study estimated
the
is relatively large.
(the
-37Bo th
correspondent
frequently
act
as
depositary
banks
banks
returning
in
the
banks
return
may route forward collection
the
Federal
Reserve
or
and
Federal
between
process.
checks
through
Reserve
the
offices
paying
and
Correspondent banks
for payment either
private
channels.
through
Thus,
the
return process currently may include one or more correspondents
and
the Federal
depositary
returned
bank,
Reserve before
bank.
check
The
more
the
returned check
intermediate
reaches
processing
the
steps
a
must pass through on its route to the depositary
the greater
the probability
that additional
time will be
necessary to complete the process.
Many
checks
are
collected
arrangements,
clearinghouses,
arrangements.
Such arrangements
agreeing
to
exchange
checks
many such arrangements,
through
and
local
direct
exchange
consist of two or more
drawn
on
each other.
of collecting
There are
and returning certain checks.
check
processes
local
unaffected
by
the
banks
and they are a very efficient and
means
of
clearing
Board's
clearinghouses
proposals,
should
although
fast
The returned
be
the
largely
individual
participants are subject to the provisions of the Act.
The Paying Bank
Current.
dishonoring
back
to
Reserve's
dispatch
Today,
a check
the
is to assure
presenting
Regulation J
a check
the paying bank's
bank.
timely dispatch
The
specify
principal duty when
U.C.C.
that
the
it has determined not
A-37
and
of
the
paying
the check
Federal
bank
must
to pay by midnight
of
-38the banking day
check
for
following
payment
may be satisfied
or
U.S.
mail.
through
(the
the day
"midnight deadline").
by dispatching
The
return
clearinghouses
the paying bank received the
of
the
obligation
check
returned
checks
is usually
This
by courier
presented
subject
for
payment
to the rules
of the
clearinghouse and these checks are dispatched accordingly.
Typically,
paying
throughout the day:
or
though
a
banks
receive
from correspondents,
clearinghouse,
checks
would be posted to customers'
and
checks
funds,
that
account
reports
are
are not
closed,
prepared
for
actually return
a check
of
or
bank
policy
The checks
bank's
process
accounts
(due
rejected
management
following
to
from
review.
insufficient
the system and
The decision
then
checks,
or by messenger
sent
by
courier
by mail or
to
the
with
clearinghouse.
Because the return process
by
banks
paying
return
courier leaving after midnight would be
be returned was
or more,
return
day
presented by
the paying bank
following
receipt
checks
faster.
The
Tuesday
must begin
by mail
when
If a check
a
to
the Federal Reserve and is $2,500
is also obligated to provide
to the depositary bank
the
to other
in this example must begin by midnight
many
to
Tuesday.
courier
to conform to the U.C.C.
midnight,
for
on Monday night
review by management on
returned are
banks,
Reserve,
can be made automatically as a matter
forward collection
collecting
return
to be
are
payment
the Federal
to be paid
etc.)
for
received on a Monday,
example,
any
checks
notice of
by midnight of the third banking
(Thursday
in
A-38
this e x a m p l e ) .
Receipt
of
-39the
physical
frame would
check
one
checks
paying
each
of
deposit checks
returning
mail.
bank
for
midnight
and,
these
within
this
time
returns
to
checks
in
receive
If
dispatch
the paying
with
the
the
is also
bank
bank
order
The
used
from more
returned
bank
to
does not
which
concerned
by
paying
to which
to
it sends
ensure
compliance
paying
bank
incentive to make an effort to speed
not
checks
it
is
checks are usually returned through the
mail
deadline.
generally
bank
therefore,
collection
In some cases,
collection
currently
those banks.
checks,
transport
depositary
banks
collecting
to
the
fulfill this notification requirement.
Many
than
by
about
the
currently
the return
return
banks
its
forward
with
has
the
little
process
process
to
and
after
is
a
returned check has been dispatched timely.
Proposed.
A major
impetus
for
change
in
the role of
the paying bank will be the responsibility placed on
bank
by
states
§ 229.30
that
"expeditious
paying
bank
checks.
decides
the
to
to
returned
checks
dispatch
forward
noon
the
on
returned
the proposed
return
manner,"
Under
not
of
pay
steps
must
providing
to
speed
proposed
a check,
with
be
the
duty,
the
paying
section
accomplished
the
new
This
incentive
flow
once
of
in
to
the
returned
the paying
bank
an
must
bank
dispatch
the same speed and diligence that it would
collection
banking
check.
thus
take
this
process
regulation.
the paying
checks
day after
This
means
received
for deposit before
the day of presentment of
that
A-39
a check
presented
to
the
the
-40paying
bank
on Monday
quickly as a check
that
is drawn
on
that
is not
deposited
the
other
new or
in meeting
in that bank
depositary
would provide new deadlines
paid must be dispatched as
bank*
on
Tuesday
The
morning
Federal
Reserve
for deposit of returned
checks
and
enhanced services, which would assist paying banks
the proposed new duties*
Some
of
the
changes
in
the
return
process
from the
perspective of the paying bank are anticipated to be:
1*
in many cases,
paying banks will dispatch returns
by the same manner,
send
forward
collection
usually
mean
courier
rather
be
required
sorting
and at the same
that
to
returns
than mail.
meet
the
requirements
will
will
be
sent
deposit
deadlines
they
via
The paying bank
will
and
set by any returning bank to
which the returned check
2.
as
This
checks*
time,
is sent.
Additional
be
returns*
the
options
will
indorsement chain
could
returning
multiple
to
Returns would not be required
originally collected.
bank
available
return
bank
all
presenting
checks
than
banks.
that
to
sending
Paying
the paying
a
single
them
banks
return checks to the depositary bank or
agreeing
to
process
A-40
to follow
through which the check was
This means
rather
send
returns,
to
could
to a bank
including
the
-41Federal
Reserve.
identify
the
indorsement,
If
paying
that returned
all
this
cannot
bank
may
check
find
from
the
it
back
paying
service.
banks
Other
necessary
to
send
to the presenting bank.
Reserve would
from
bank
depositary
it
The Federal
the
accept
returned
checks
and explicitly charge
returning
banks
are
for
likely
to establish similar services.
3.
Under
checks
would
the
proposal,
for
$100
normally
or
days
deadline
without
the
less,
return,
business
additional
using
beyond
example
which
may
be
a
paying
held
paying
liability.
The
bank
returned.
paying
banks,
reduce
the
If
paying
this
widely
procedure
total number
two
midnight
incurring
bank
attempt to obtain payment on the day
actually
bank
for
the paying bank's
the
above,
must
the check
implemented
is
of checks
expected
is
by
to
that would
be
returned unpaid.
4.
Paying
banks
returned
will
check
high-speed
have
for
equipment.
the option
automated
This
only when the paying bank
check
to a returning
check
processing
option
will
is sending
bank.
a "qualified returned check"
returned
to prepare a
by
be used
the returned
The bank can produce
(QRC)
by enclosing
a
in a carrier envelope or attaching
A-41
-42a strip to the bottom of
the carrier
or
the check,
strip with
By
identifier,
and
the
QRCs,
the
paying
return
of
creating
expeditious
bank.
Preparation
reduces
the
because
checks
of
the
banks
more
amount
provide
prices for QRCs
not
bank
overall
will
deposit
be
The
the
facilitates
banks
return
able
to
To
Paying
banks
will
be
handle
encourage
deadlines
Board
checks
to
Reserve
at
believes
required
also
process
lower
that are
that
correspondent banks will adopt a similar
5.
check.
the Federal
than for returned
qualified.
returned
to the depositary
efficiently.
later
of
by paying
paying banks to prepare QRCs,
will
a special
the check
of QRCs
returning
these
cost
encoding
the nine-digit routing
number of the depositary bank,
check
and
strategy.
provide
notification of nonpayment on all
returned
of
the channel of
$2,500 or more,
collection,
today.
at
an
regardless
earlier
Notifications
the depositary bank
the second
by 4:00
business day
is made
more
that
bank
must
was
than
p.m.
that
A-42
required
(local
time)
on
following presentment of
This means
to return a check
presented
ensure
time
will have to be received by
a check to the paying bank.
decision
of
checks
on
the
Monday,
of
that
if a
$2,500 or
the
paying
notification
is
-43received
4:00
by
p.m.
provide
bank
the
depositary
Wednesday.
bank
The
Fedwire
by
physical
that
noon
returned
to
the message
on
the
check
given to the Federal
later
due
than
Reserve
Federal
timely notification
provided
no
will
the
depositary
is originated by
date
or
that
the
or a telephone message is
Reserve
by 9:00
a.m.
on
the
due date.
Returning Banks,
including Federal Reserve Banks
Current.
checks
from paying
subsequently
to other
during
banks
the
send
banks
those
returning
the
Banks
process
check
to
from the bank
its
indorser,
similar
applicable
returned
checks
advantages
chain
account
duty
by
the
relationships
typically
banks,
and
as returning
a returning
to which
indorser.
bank
In
paying
midnight
under
to
One
the
then
sends
sending
banks
deadline.
bank
it sent
returning banks are
to
banks
the
a duty
dispatch
of
the
to the practice of returning through the indorsement
is that parties
collection
act
The returning
prior
returns to its prior
the
also
Generally,
for collection or payment.
check
returning
returned
that act as collecting
the return process.
returned
receive
returned checks to depositary banks and
collection
a returned
to
currently
and from other
banks.
forward
during
receives
check
Returning banks
process.
a
reversal
in
the return
that
The
of
were
payment
the
process
used
for
payment
collection process.
A-43
have
during
the
established
the
returned
made during
forward
check
the
is
forward
-44The
the current
the
Federal
Reserve
return process
forward
only
and other
the returns
to
returning
Reserve
particularly
well
banks
over
regions,
active,
50
must handle
i.e.,
returned
of
returning
banks.
correspondent
are sent
In
some
banking
is
the
returns it
handles
to
returning
checks
in an
banks
will be
That is, returning
"expeditious
manner",
as
banks
forward
must
collection
process
checks.
returned
in the
This
checks
means
in a much
time frame than is typical today.
deadlines
for
Reserve
returned
forward collection
checks.
While
checks
received
checks.
these
for
establish
returning
Banks
checks
banks will also establish
other
as
Reserve
checks must be processed and dispatched
returning
to
receives
them to depositary
the Federal
the proposal,
returned
Federal
wish
by
where
Under
same general manner
shorter
Reserve
in <
Approximately 43 percent of
to a standard similar to paying banks.
banks
that
sends
it handled
in their role asreturning banks.
Proposed,
held
that
in
the Federal Reserve office currently sends
percent
correspondents
checks
and
banks.
acting
as a returning bank
The Federal
banks
currently handled
correspondent
Federal
for
collection process.
returned checks from paying
banks
functions
establish
new
that closely parallel
deposit
those
for
It is expected that other returning
new
deposit
deadlines need
forward
these
banks
will
deadlines
not be
the
for
same
collection, returning
deadlines
to send
so as
returned
A-44
returned
as
banks
for
may
to permit paying or
checks
to
them
on
the
-45same courier
as
forward collection checks.
return a check
directly
returning
as
bank
expeditious.
returning
bank
if
long as
Generally,
bank
it
to the depositary
to
send
sends
Returning banks may
bank
the route chosen
it
would
returned
forward
not
be
checks
collection
or
for
to
another
the return
expeditious
to
another
checks
is
for
a
returning
drawn
on
that
depositary bank directly to the depositary bank.
Returning
required,
to
banks
convert
would
returns
chooses to prepare a QRC,
time when
the check
extra
is
day
depositary
not
to
the
QRCs.
option,
If
a
but
not
returning
be
bank
it may take a day to do so beyond
the
would otherwise have been dispatched.
available
bank,
have
when
returning
directly
because preparation of a QRC
to
would
An
the
not speed
the return of such checks.
It
is
anticipated
that
one
of
the
most significant
changes in the return processing system
for non-Federal
returning
the Federal
direct
send
banks
will
be
return policy.
returned
the
effect
Federal
checks
This potential
current
Federal
shift
Reserve
non-Federal
in
return
reduce the number of returned
Reserve's
Reserve offices will no
to other
banks.
of
Reserve
volume
(about
volume)
could
checks
43
Reserve
longer
returning
percent
of
significantly
that are handled by
these
returning banks.
The Depositary Bank
Current.
from both
paying
The depositary bank receives returned checks
and
returning
banks.
A-45
Generally,
a
returned
-46check
is received
forward
from the bank used by the depositary bank for
collection.
notifications
of
Depositary
nonpayment
collected
through
currently
redeposit
on
the Federal
banks
checks
of
Reserve,
low-dollar
also
because a significant proportion
of
$2,500
Some
returned
receive
more
depositary
checks
these
or
for
checks
banks
collection
are
paid
upon
second presentment.
Proposed.
a standard
in
the
indorsement on the check
return
indorsement
bank
on
paying
and,
and
the
banks
encode
place
may
in
standard,
proposed
complete,
want
the
bank
and may need
to
return
depositary banks
work
with
to deposit
corporate
to have
Failure
increase
the risk
to
of
loss
legible
will
greatly
the depositary
promptly.
to
customers
delay
in
return
if
the
delay
is
due
that
customer
the check according
the
indorsement
the depositary bank
because paying and returning banks may be relieved of
for
To
some equipment.
the corporate
follow
new
may have to install
to modify
indorsement on
standard.
standard may
a
depositary
processing
the depositary bank's
new
the
returning banks in identifying
checks prior
the
following
the
to place
is critical to improvements
imprinting
check,
indorsement plates
Some
to
the
By
and
therefore,
comply with
new
process.
standard
indorsement
assist
The depositary b a n k ’s requirement
to
liability
a nonstandard
indorsement.
Depositary
banks with which
banks
may
receive
the depositary bank
A-46
returns
from
returning
currently does not
have a
-47forward
will,
check
for
collection
the
directly
first
from
the
relationship.
time,
begin
Federal
where
the
the
its returned
depositary
checks
bank
at a location
courier
bank
may
the
that
depositary
does
checks
not currently provide
the
Reserve
If
returned
Some depositary banks
service,
Federal
receiving
Reserve.
requests courier delivery of
Many depositary banks
be
charged
for
transpor ta t i o n .
returning
returned
must
bank
for
checks
pay,
returned
without
checks are received.
return
by wire
if
the
the
item
transfer,
paying
or
Depositary
bank
The
and
banks
returning banks
Reserve net
does
the depositary bank,
form of payment.
receiving
that
to receive same-day payment
Federal
returning
begin
for returned checks on the day the
If paying banks
cash,
or
will
charge.
checks directly do not wish
relationship with
to
checks
a per
in same-day funds,
currently are charged by a
settlement,
not maintain
or
an account
the banks may agree as
form of payment may be a check or
an ACH payment.
Depositary banks
the
Federal
Reserve
will
that have
have
to
an on-line
receive
connection with
notifications
of
nonpayment through that terminal after January 1, 1989.
It
experience
is
fewer
are returned,
on
anticipated
returns,
that
faster
depositary
receipt of
banks
those checks
and more comprehensive notification
large-dollar
returned
fewer returns will
checks.
be redeposited
A-47
will
of nonpayment
It is also anticipated
for collection
that
that
by depositary
-48banks
because
some
paying
banks will
small-dollar checks for an extra
have
two days
retained the
to attempt
to secure
payment,
REGULATION CC
SECTION-BY— SECTION ANALYSIS
The
analysis
Board
with
commentary
the
on
the
interpretation
(12
U.S.C,
commenters
intends
final
to
regulation
regulation
within
section-by-section
will
be an official
an
official Board
be
Accordingly,
issues
raised
the
by
of the
Board
Act
requests
the commentary as well
itself.
General
Section 229.1
This
this
that
and will
as making comments on the regulation
Subpart A —
a
the meaning of section 611(e)
§ 4010(e)),
to address
include
Authority and purpose? organization
section
regulation
and
summarizes
provides
the Board's authority to adopt
a
description
of
how
the
regulation is organized.
Section 229»2
This
regulation.
Definitions
section
For
defines
the most part,
the
terms
terms
used
in
the
as
they are
are defined
in section 602 of the Expedited Funds Availability Act
(12 U.S.C. 4001).
the sake of
The Board is, however,
proposing
for
clarity or to conform the terminology to that which
is familiar to the banking industry and defining
not defined
changes
in the Act.
reference the definitions
The
of
Board
proposes
to
terms
incorporate by
the Uniform Commercial
A-48
that are
Code where
-49appropriate,
CFR Part
self
continuing a practice adopted
210),
Some
explanatory
of
and
the
for
Regulation J
Regulation C C 's definitions
therefore
are
not
discussed
in
(12
are
this
commentary.
Account.
deposit
The Act defines
account
depository
defines
"account"
does
with
not
in
account"
Part 204).
accounts
similar
institution."
"transaction
CFR
or
account
mean
transaction
The
terms
of
the
general
time
the
regulation
including money market deposit
of
Regulation D
applies
third party payment
or
at a
definition
definition
deposits
"a demand
account
proposed
in the Board's
Thus
cover
to
savings
accounts,
(12
to
powers
but
deposits,
even
though
they may have limited third party payment powers.
Board believes that it is appropriate
accounts
because
of
the reference
to exclude
to demand
in the Act, which suggests that the Act
apply
party
only
to
accounts
transfers.
Regulation
CC
"transaction
The
nondocumentary
from
found
definition
that
the
in
are
(see
not
these
deposits
intended
unlimited
for
definition
of
deposits,
12
as
the
such
CFR
represented
by
accounts but that are covered under Regulation D.
A-49
to
third
proposed
Regulation D,
excludes
obligations
2 0 4 . 2 (a) (1)(vi i ) ),
permit
definition
differs
account"
Regulation CC
that
is
The
as
-50The
Board
also
proposes
to
exempt
inter-bank
deposits and accounts from Regulation CC.
Automated
define
clearinghouse
automated
processes
circular
and
by
The Board proposes
clearinghouse
debit
established
(ACH).
a
credit
Federal
governing
as
a
facility
transfers
Reserve
automated
under
Bank
to
that
rules
operating
clearinghouse
items
or
the rules of an ACH association.
ACH credit
are included
"electronic payment."
in the definition of
The reference
transfers"
credit
"credit
is not meant
credit
but
ACH
be
the
debited
debit
authorization,
that
and
are
originator
and
another
transfer,
the
orders
another
"debit
to the corresponding
part
of
the
the kinds of ACH payments,
transfer,
account
transfers"
to refer
and debit entries
transaction,
an
to
transfers
orders
account
in an ACH
that
its
credited.
originator,
account
same
In
with
prior
be
debited
to
and its account to be credited.
A
facility
that
handles
only
"wire
(defined elsewhere)
would not be an ACH,
organizations,
example,
for
the
New
transfers"
although
York
some
clearing
House, operate both an ACH and a wire transfer network.
Automated
Act.
The
teller
machine
Board
proposes
A-50
(ATM)
to
is not defined in the
define
an
ATM
as
an
-51electronic
or
mechanical
device
person may make deposits
and
perform
terminals,
other
and
they
terminals)
do
treated
to
as
branches
located
Point-of-sale
dispense
deposit
boxes
the proposed
accept
or check
cash,
are
night
not
ATMs
definition,
deposits
either
(point-of-sale
or because they only accept deposits
depositories)
Deposits
only
lobby
not
a natural
to accounts by cash
that
within the meaning of
because
which
transactions.
machines
depositories,
at
and
cannot
night
depositories
deposits
of
for
the
perform
at
the
depositary
other
and
banks
transactions.
lobby
teller
(night
boxes
windows
where
of
they
are
the
are
the purpose of determining when funds must
be made available for withdrawal.
Available
what
for
it
w i t h dr aw al .
means
withdrawal."
for
funds
The Board
The
to
"available
be
does
Under
for withdrawal,"
may
and
depositor's
agreement
include
account
with
payment
for
the proposal,
to any use for which
actually
define
"available
funds may be put
use
not
proposes to define this phrase
in order to clarify the Act.
funds become
Act
under
the
the
bank.
Examples
of
checks
it means that
the
finally collected
funds
drawn
on
the
in the
account
such
electronic payments, and cash withdrawals.
A-51
depositor
depositor's
of
when
uses
account,
-52-
Bank.
The Act uses the term
"depository
institution,"
which it defines by reference to section 19(b)(1)
(A) (i)-(vi)
of
the
Federal
4 6 1 ( b ) ( 1 ) (A)(i)-(vi)).
term
Board
"bank,"
a term
Reserve
Act
(12 U.S.C.
The Board proposes
that
conforms
has previously adopted
to
the
to use
usage
in Regulation J.
is also the operative term in Article 4 of
the
the
"Bank"
the Uniform
Commercial Code.
"Bank"
is
institutions,
defined
to
as defined
include
depository
in the Act, and U.S. branches
of foreign banks.
Unless
otherwise
specified,
the
term
bank
includes all of a bank's offices in the United States.
Banking
day
"business
and
day"
Saturdays,
Business
and
Sundays,
holiday," however,
local
holidays,
banks
to
difficult
close
the
The Act defines only
as
legal
any
midweek,
with
makes
day
the
and
the variety of
the Act's
of
some
definition
The Board believes that two kinds
are
relevant.
a deposit
First,
is made or
(such as returning
focus
be
a day
A-52
that
when
dealing
a bank's duty
action
on
"Legal
practice
perform some
should
excluding
holidays.
is not defined,
together
days
day
only
and
to apply.
of business
with
that
day.
the bank
to
a c h e c k ) , the
is actually
-53open
for
business.
purposes
of
Second,
when
determining when
counting
days
for
funds must be available
under the regulation or for the time limits banks must
meet
in returning
uncertainty
particular
checks,
in
trying
to
bank,
and
there
day when a particular
act
as
follow
bank
Reserve
follow
schedule.
Accordingly,
two definitions:
standard
the
Most banks
the
Board
same
a
that
and
holiday
proposes
is defined
to
adopt
to follow
Reserve holiday schedule
is followed by most large b a n k s ) , and
defined
of
correspondents
"business day"
Federal
schedule
is open.
(large
Banks)
the
is less need to identify a
intermediaries
Federal
the
there would be confusion and
(which
"banking day"
to mean a business day on which a bank
is
is open
for substantially all of its banking activities.
The
definition
of
definition of banking day
changes
it by
"business day."
Saturday
might
defining
Thus,
be
banking
day
follows
the
in U.C.C. § 4-104(1) (c), but
a banking day
if a bank
a banking day
in terms of a
is open on
Saturday,
for purposes
U.C.C., but it would not be a banking day
for
of
the
purposes
of Regulation CC because Saturday is never a "business
day" under
Under
the regulation.
the proposal, a bank may observe a banking
day on a per branch
is open
to
basis.
the public
for
A-53
The
fact that one branch
substantially all of
its
-54banking
day
business
does not necessarily mean
is a banking day for other branches.
made at an ATM,
if the branch of
that
account
holds
deposit
the
is open
activities
on
for
the
of
the
of
that
For deposits
the depositary bank
person
making
substantially all of
day
that
deposit,
its
that
the
banking
day
is
considered a banking day for that deposit.
Cash
the
means
Act
U.S.
coins
"including
and currency.
Federal
deleted as unnecessary.
Cashier's
check.
second
item
check"
the
in
Board
Act's
language,
drawer,"
to clarify
intended
to cover
notes'*
has
in
been
(See 31 U.S.C. 5103.)
The
the
Reserve
The phrase
"on
proposes
to
add
definition
of
"cashier's
behalf
the
of
to
bank
the
as
that the term "cashier's check" is
only
checks
that
a bank
draws
on
itself.
Certified c h e c k .
one
to
which
signature
funds
The Act defines a certified check
a bank
is genuine
to pay
has certified
and
that
the check.
(U.C.C.
that
it
§§ 3-410,
will
Under
honor
3-411).
A-54
the drawer's
the bank has set aside
the Uniform commercial
Code, certification of a check means
agreement
that
as
the bank's
the check
The
Board
signed
as presented
proposes
to
-55define
"certified
check"
to include both the Act's and
U.C.C.'s definitions.
Check
draft
is defined
drawn
depository
on
or
payable
institution
excluding noncash
availability
state
in the Act as a negotiable demand
through
located
items.
an
office
of
in the United
a
States,
The Act also mandates prompt
for drafts drawn on the U.S. Treasury and
governments.
The
Board
proposes
to
define
"check" to include these items as well.
principal
instruments
are
Federal Reserve
States,
and
and
often
Bank
these
indistinguishable
Reserve
Banks.
interest payments on
paid
as
with
fiscal
checks
agent
"fiscal
agency
from other
checks
Federal
drawn
of
the
checks"
drawn
Reserve checks
by some banks as substitutes
federal debt
on
a
United
are
on
Federal
are also used
for cashier's
checks
and
therefore are analogous
to depository checks under the
regulation.
savings
often
Similarly,
use checks drawn on
substitutes
Federal Reserve Banks in
loan
associations
Federal Home Loan
for cashier's
to treat checks drawn on
and
checks.
Banks as
The Board proposes
Federal Home Loan Banks and
the same manner
as
it treats
depository checks.
The Act treats drafts
checks,
even
though
under
A-55
payable
the
through
U.C.C.
the
a bank
payable
as
-56through bank
and
is
is a collecting bank
generally
not
(U.C.C. § 3-120).
are
payable
regulation,
at
authorized
to
The Act does not
a
the
to make presentment
bank. 3/
Board
For
proposes
make
payment
address
purposes
items
of
that
this
to treat both
payable
through and payable at demand drafts as payable by
bank
designated
bank.
The
payable
Board
at
a
substantial
banks
—
items
are
items,
bank
by far
not
as
the payable
believes
effect
such
bankers'
as
as
on
through
that
the
or payable at
treating
checks
will
demand
not
operations
of
payable
negotiable
demand
commercial
and
drafts,
paper,
but
bonds,
securities.
(The
regulation.
connection
with
is
discussed
treatment
in
the definitions
of
greater
of
"local
at
time
These
or
drafts
at
notes,
the requirements of
through
a
the largest proportion of payable
acceptances,
this
drafts
have
items are not covered by
of
the
time
the Act
payable
detail
check"
in
and
"paying bank.")
1/
The U.C.C. provides alternative treatment for payable at
items (U.C.C. § 3-121).
in 32 states, the payable at bank,
like the payable through bank, is not authorized to pay the
item solely because it is designated as the payable at bank.
In 18 states, the District of Columbia, and the U.S. virgin
Islands, an item that is payable at a bank is treated as a
draft drawn on that bank.
Thus, under current law, a large
number of payable at items are treated as drafts drawn on the
payable at bank.
A-56
-57The Board
drafts,
the
to
or
proposes
warrants,
to
drawn on
definition of check.
address
paragraph
checks
(3)
drawn
on
a
state
government
The Board has not proposed
on
local
governments
itself.
government
that
if any commenter
draws
it should include this information
The Board proposes
orders
Service
as
does not propose
other
types
money
drawn
on
are
itself,
though
not
Postal
under
Service
postal
negotiable.
The
to provide specific rules
orders;
or
drafts
in its comment.
treat U.S.
even
they
Board
of
to
checks
regulations
generally
under
is aware of a
local government that draws drafts directly on
money
in
in the definition of check because it is
not aware of any local
directly
include negotiable demand
these
payable
instruments
for
are
through or payable at
banks and are treated as checks on that basis.
The
Board
items as checks
proposes
to treat nonnegotiable cash
for purposes of Subpart C.
requests
comment on how to treat cash
entities
that
regulation
are
(for
not
banks
example
for
The Board
items drawn on
purposes
private banks and
of
this
industrial
banks) •
Check
clearinghouse
in the Act,
association
but makes it clear
of a Federal Reserve Bank
A-57
follows the definition
that using
the premises
to exchange checks does not
-58constitute
the
the handling
Reserve
several
Bank.
of
This
clearinghouses
checks
for
provision
meet
at
collection
by
was added because
Reserve
Banks
to
exchange checks among their members.
The Act defines
local
area,
including
clearinghouses
Clearing
areas,
(for
House
clearinghouse
a
example,
the
including whole states
contemplated
how
to
geographic
by
all be
the Act.
treat
areas,
Ha
Some
Bankers
cover
wide
that are served by more
The members of these
"local
The Board
whether
area."
however,
clearinghouses
and
serving
California
Reserve office.
clearinghouses may not
as
metropolitan
Association),
than one Federal
on
a
paying banks"
requests
covering
all
as
comment
large
participants
in a
clearinghouse should be regarded as local paying banks
with
respect
to
all other
regardless of whether
clearinghouse participants
they are all located
in the same
check processing region.
Check processing r e g i o n .
The Act defines
this
term as
"the geographic area served by a Federal Reserve bank
check
Board
processing
may
proposes
center
prescribe
to
adopt
regions
those
Federal
Reserve
as
or
by
the
relevant
served
offices,
A-58
larger
regulations."
territories
head
such
check
by
one
branches,
area
The
as
the
Board
processing
of
or
the
48
regional
-59check
processing
centers.
Appendix
Federal Reserve offices and
routing
symbols
territory.
is
key
gives
associated
The definition
to determining
A lists
all
the Federal Reserve
with
each
office
of check processing
whether
the
a check
region
is considered
local or nonlocal.
Depositary b a n k .
rather
than
The Board
the
institution."
term
proposes
to use this term
"receiving
depository
"Receiving depository
institution"
term unique to the Act, while "depositary bank"
term
used
in
Article
Regulation J.
familiar
to
4
of
"Depositary
the
banking
the
bank"
U.C.C.
is
industry
is the
and
therefore
than
is a
is
more
the Act's
terminology.
A depositary bank
includes
check
is first deposited.
check
in
depositary
foreign
its
account
bank
bank
with
sends
at
If
checks
a customer
a bank,
respect
to
to
bank for forward collection,
the bank
that
deposits
bank
the
check.
its U.S.
the U.S.
in which the
is
a
the
If
a
correspondent
correspondent
is
the depositary bank.
A bank may act as both
the paying bank with
respect
is drawn on,
at,
payable
in which it was deposited.
A-59
or
the depositary
to a check,
payable
bank
and
if the check
through
the bank
-60A bank is also considered a depositary bank with
respect
to checks
it receives as payee.
a bank is a depositary
receives
for
loan
bank
with
For example,
respect to checks
repayment, although
it
these checks are
not deposited in an account at the bank.
Depository
check
is
cashier's checks,
"and
any
other
defined
certified
in
checks,
to include any other
ACH
credit
wire
transfers
transfers
manner
as
but
wire
the
to mean
instrument as
should
transfers.
a wire
transfer
The Act makes no mention
Board
have some of
and
checks,
instruments in this definition.
transfer.
transfers,
include
The Board does not propose
Electronic payment is defined
or an ACH credit
to
teller's
functionally equivalent
determined by the Board."
of
the Act
be
believes
that
ACH
the characteristics of
treated
ACH debit
in
the
same
transfers,
though they may be transmitted electronically,
even
are not
defined as electronic payments because the receiver of
an
ACH
debit
transfer,
transfer
which would
has
the
reverse
originator.
Thus,
ACH debit
checks
wire
transfers.
receive
than
right
to
large
corporate
A-60
the
the credit given to the
transfers
Further,
funds by originating ACH debit
primarily
return
customers
are
more
those
like
that
transfers
who
would
are
-61generally be able
to negotiate
with
their
banks
for
prompt availability.
Forward collection is a term used in Subpart C.
defined
sends
to mean
a
check
returned
the process by which a depositary bank
to
distinguished
It is
the
from
after
paying
bank
for
payment
the process by which
nonpayment.
Noncash
as
the check
collections
is
are
not included in the term "forward collection."
Local check
through,
may
or
rely
is defined
payable
on
the
drawn on,
payable
at a local paying bank.
routing
identifying a local
determine which
as a check
number
check;
on
a
A bank
check
consequently,
in
a person can
checks are local by reference
to
the
routing number.
A routing number is generally printed
in magnetic
near
"MICR
ink
strip";
see
the
bottom
American
and
Location
(Sept. 8,
1983)
of
hereinafter
the
National
Committee on Financial Services,
Placement
of
MICR
check
(the
Standards
Specification
printing,
referred
to
as
for
the
X9.13
"ANSI
X9.13-1983").
A check,
but
payable
such
as a check
through
drawn on a local
a nonlocal bank,
could have two
paying banks, one local and one nonlocal,
how
the
check
is
collected.
A-61
bank
depending on
This definition
allows
-62the depositary bank
the
check,
to rely on
generally
routing number,
in
the
the routing number
payable
determining
through
whether
on
b a n k ’s
the
check
is
local or nonlocal.
Appendix A is a list of routing numbers
by
Federal
Reserve
Bank
office
to enable persons
determine whether or not a check
Local
paying
which
a check
in
bank
is
is sent
defined
for
arranged
is local.
as
a
paying
bank
forward collection
the same check processing
to
region as
to
located
the branch
proprietary A T M of the depositary bank.
or
(See comments
on definition of "paying bank",)
Noncash i te m .
that
noncash
The Act's definition
items are excluded,
items as checks
to which
or
by
accompanied
Act,
"noncash
determined
proposes
Federal
by
the
to define
Reserve
the collection of
defines noncash
more
that
than
and defines
Board's
item"
in
items.
The
the
items
other
as
The
terms
uniform operating
noncash
Under
regulations.
"noncash
noncash
is attached
instructions.
includes
states
Board
of
the
circular oh
proposal
also
item to include checks that consist of
a single
qualify
also
Banks'
"check"
another document
special
item"
of
for
thickness of paper
handling
A-62
by
(except
automated
checks
check
“63processing
equipment,
e.g.
envelopes)
and checks
that have not been preprinted or
post-encoded
in magnetic
those
placed
characters
in
with
carrier
the
paying
bank's routing number.
A photocopy of a check
noncash
item,
but
Federal
Reserve
Banks
properly prepared
it
contains
a
may
be
is neither
treated
generally
as
a check nor
either.
agree
photocopy of a check
guarantee
of
to
The
handle
as a check
authenticity
a
and
a
if
an
indemnity by the depositary bank or a collecting bank.
Paying b a n k .
lieu
of
The Board proposes
the
Act's
institution,"
and
(12 CFR
210),
Part
to use
"originating
to define
to
it,
include
as
the
this term in
depository
in
Regulation J
payor
bank,
the
payable at bank, and the payable through bank.
Under
designated
responsible
other
provisions
as
"payable
a
same
time
through
for performing
return, notice,
of the proposal,
bank"
frames.
The
would
all of the duties
etc.) of the payor bank
Board
believes
a bank
be
(payment,
and within
that
the Act
makes a clear
connection between availability and
time
for checks
it takes
Allowing
the payable
forward checks
the
the
to be cleared and returned.
through bank
to the payor,
additional
time
to
and await return or pay
instructions from the payor, would delay the return of
A-63
-64these
checks,
increasing
Federal
Reserve
the
risks
to
depositary
banks.
Banks
and
Federal
Home
Banks are also treated as paying banks with
checks
drawn on
Loan
respect to
them, even though they are not defined
as "banks" in the regulation.
A state government
that
issues warrants drawn on itself would also be a paying
bank for purposes of the regulation,
and
thus
would be
subject to the paying bank's duties under Subpart C.
Proprietary
deposits
at
deposits
ATM.
of
proprietary
Under
nonproprietary
nonlocal
ATMs
are
at banking offices.
indicates
that
received
provided
because
distinguish among
deposits"
Sess.
at
179
schedule,
checks
deposit
bank
temporary
ATMs
checks
are
and
generally
schedule,
treated
deposits
treated
special
through
Rep.
(1987)).
of
nonlocal
not
consequently
know
nonproprietary
ATMs
are
ATMs
Thus,
any
today
or between
No. 261,
100th
during
is
unable
because
makeup
to
A-64
of
place
do
check
1st
cash
treated
the
and
temporary
of
the
not
Cong.,
the
combination
checks,
the
the Act
for
at a nonproprietary ATM may be
does
like deposits
rules
check deposits
a deposit
of
at
availability
"nonproprietary
(H.R.
all
like
The Conference Report on
the
deposits
cash
the
and
like a
depositary
deposit
different
and
holds
on
-65cash,
local check,
and nonlocal check deposits made at
the ATM.
A
during
colloquy
the
Banking
primary
floor
Act
indicated
made
Cong.
that whether
criterion
to
of
Senators Proxmire
debate
(133
proprietary
capable
between
on
Rec.
S11289
bank.
the
to an ATM operated
by
schedules
a
the
bank
composition
1987))
the ATM is the
whether
Since
Dodd
Equality
(Aug. 4,
a bank operates
ascertaining
the availability
the competitive
to determining
that
and
ATM
should
of
is
be
deposits
that bank, an exception to
is not warranted
for
these
deposits.
The Board believes that generally ATMs
or
operated
by
one
bank
proprietary to that bank,
by customers
the
Act
includes
whether
operated by a bank
the
Board
should
has
location
an ATM
that
as
a
can be made
Nonetheless,
factor
is neither
in
owned nor
is proprietary to that bank.
included,
as
criteria
a proprietary ATM,
premises of
the bank —
outside
considered
even if deposits
constitutes
its
be
of other banks at that ATM.
also
determining
and
are owned
wall.
for
Thus,
what
an ATM located on
the
either inside the branch or on
Since
the
Act
also
defines
a
proprietary ATM as one that is “in close proximity" to
the bank,
within
50
the Board
feet
of
proposes
a
bank
A-65
to define an ATM located
to be proprietary
to
that
-66bank.
test
The Board believes that
was
designed
would appear
its bank,
bank.
to
apply
to
to the depositor
because
of
the statutory proximity
situations
that
it
the ATM was run by
the proximity of
The Board believes
where
that ATMs
the ATM to the
located within
50
feet of a banking office would be presumed proprietary
to that
bank
unless
they
are
clearly
identified
as
being owned or operated by another bank.
The Board proposes to limit
this
definition
considered
to
unaffiliated
by
be
stating
criteria set forth
If
Thus,
stated
generally
more
in
to
the
owns
or
ATM
not
than
more
is
one
than one bank meets
the bank
lowest
the
the ATM will be
that satisfies the
numbered
paragraph.
an ATM will be proprietary to the bank
that owns or operates it.
the
to
an
in the definition,
considered proprietary
criterion
that
proprietary
bank.
the applicability of
operates
If more than one bank meets
criterion,
the
ATM
shall
be
considered proprietary to the bank that operates it.
Qualified
returned
check.
the return of checks
paying
bank
to
to
bank.
prepare
the
depositary
bank
by
for
the
by the same general means used for forward
collection of a check
paying
The proposal provides
from
One way
the
the depositary bank
to speed
returned
A-66
the return
check
for
to the
process
automated
is
-67processing.
Returned
checks
either the paying bank
the return
can
be
automated
ora returning
bank
strip
bank,
with
the
routing
the amount of
identifier.
"2"
in
X9.13-1983.)
44
may
of
the
the
and
MICR
under
the depositary
a
special
return
by placing a
line.
the
the envelope
(See
standard
ANSI
of
care
a paying or returning bank would
number,
incurred due to misencoding
the
amount
of
the
check
or
identifier on a qualified returned check unless
error
bank's
was
due
to
problems
indorsement.
§ 229.38(c).)
contain
the
A
as
qualified
such
of
also
a
depositary
discussion
check
check drawn
name of
of
need
on
the
not
the
depositary
the direct return provision
Because
envelopes will not appear
the
returned
as the
is required under
of U.C.C. § 4-212(2).
with
(See
elements
depositary bank,
bank;
of
identified
the
for any damages
routing
return
be
Generally,
imposed by § 229.38,
of
number
the check,
Returns
position
be liable
by placing
in a carrier envelope or by placing a strip
on the bottom of the return, and encoding
or
by
indorsements on carrier
on a returned check
banks will wish to retain carrier
itself,
envelopes with
their
check records.
Returning bank
a Federal
but
is defined to mean any bank
Reserve
excluding
the
Bank or a Federal
paying
A-67
bank)
(including
Home Loan B a n k ,
handling
a
returned
-68check
under
Subpart C.
that
the
return
procedures
established
in
A returning bank may or may not be a bank
handled
the
returned
check
in
the
forward
collection process.
Routing
number.
Each
bank
is
assigned
number by Rand McNally & Co. as agent
Bankers
forms:
Association.
a
fractional
paying bank
routing
hand
form
form
routing
and
(which
(which
corner
of
normally
the
is printed
require
banks
to
place
and
magnetic
their
the American
number
appears
the bottom of the check) .
routing
takes
two
form,
a
the fractional form
check)
in
for
a nine-digit
is identified by both
number
right
along
The
a
in
the
upper
the nine-digit
ink
in
Subpart
routing
nine-digit form in their
is defined as
the code adopted by the
individual
strip
proposes to
numbers
in
indorsements.
Uniform Commercial Code
c
a
in the regulation
the version of
states,
are to the official
text
citations
published
by the Code's sponsors.
Wire
t r a ns fe r.
authority
to
The
Act
define
the
delegates
term
to
"wire
Board
transfer."
Board proposes to define wire transfer
a bank
the
the
The
as an order
to
to pay a fixed or determinable amount of money
A-68
-69-
to
a
beneficiary.
permit
the bank
beneficiary.
The
must
unconditionally
receiving the wire transfer to pay the
A wire
electronic or other
transfer
means.
computer-to-computer
telegrams
order
communication),
be
transmitted
"Electronic means"
links,
(including TWX,
may
on-line
terminals,
calls,
or
other
methods.
The Board believes that Fedwire
Reserve's
wire
House
York
inter-bank
clearing
network),
payments
House),
include
TELEX, or similar methods of
telephone
transfer
by
System,
and book
CHIPS
similar
(the Federal
(Clearing
operated by the New
transfers
among
banks
or within one bank would be covered by this definition.
Subpart B —
Availability of Funds
Section 229.10
Next-day availability for certain deposits
(a)
cash
availability
"staffed by
its
deposits.
The
Act
provides
next-day
for cash deposits to accounts at a depositary bank
individuals
proposal,
the
Board
employed
has
by
such
eliminated
institution."!/
this
condition
In
for
receipt of next-day availability for cash deposits as well as
1/
Nothing in this regulation or in the Act affects terms of
account arrangements, such as negotiable order of withdrawal
accounts, that require prior notice of withdrawal.
See 12
CFR 204.2(e) (2) .
A-69
-70-
for
checks
paragraph
subject
(c) .
is
not
availability
next-day
Current
availability for
Board
to
law
generally
cash deposits,
aware
for
of
any
provides
(See U.C.C.
impediments
cash deposits
night depository,
availability
under
for
next-day
§ 4-213(5).)
The
to providing next-day
received at a proprietary
lobby deposit box,
requests comment on any problems
or
this
through
ATM,
the mail,
but
requirement may pose
for
depositary banks.
This
subpart
provision,
governing
the
funds must be made
specified number
on which
the
as well
availability of
available
of
funds
the public
banking
functions.
on a Saturday,
to
the
bank's
deposited.
used
example,
under
the
For
banking
to determine
of deposit
day,
for carrying
the
that
not later
Thus,
a deposit
deposit
day.
is
than
a
is only
all of
its
if a deposit is made at
an ATM
considered
Nevertheless,
the number
if a deposit of a local
day
received
"business
is closed
on
that
days"
are
of days following the banking day
funds must be available
business
that
i.e., a day that the bank is
on substantially
example,
the temporary schedule,
third
this
provides
Sunday, or other day on which the bank
public,
next
funds,
in
"business days" following the "banking day"
are
to
provisions
for withdrawal
considered made on a banking
open
as other
withdrawal.
For
check were made on a Monday
which
after
for
calls
deposit,
for availability
funds
must
be
on
made
available on Thursday regardless of whether the bank was closed
on
Wednesday
for
other
than
a
standard
legal
specified in the definition of "business day."
A-70
holiday
as
-71-
Under
a Monday,
this provision,
except
cash
deposited
for cash deposited at
must become available
for withdrawal
in an account on
a nonproprietary
ATM,
by the start of business
on Tuesday.
(b)
Electronic
availability
for
The regulation
funds received
uses
the term
payments.
The Act provides next-day
for deposit by wire
"electronic payment," rather than
"wire transfer," because the Board is proposing
transfers
also
be
transfer.
accorded
next-day
that ACH credit
availability.
(See
discussion of definition of "electronic payment.")
The
Act
requires
that
funds
be
available
withdrawal not later than the business day following
wire
transfer
is
received.
This
provision
this
section,
receipt
receives
payment
finally
collected
credit
transfer
account
bank
on
the
receives
is made.
in
finally
funds
when
determined
collected
generally
settlement
day.
finally collected
by
when
the
what
the purposes
the
For
received
to
In
For
funds.
are
they are posted
bank
example,
for
an
receiving
ACH
bank's
the case of Fedwire,
funds at
the time
the
the payment
(See 12 C FR 210.36.)
This
is
is
the day a
clarifies
constitutes receipt of an electronic payment.
of
for
provision
considered
received.
establishes
The
"to
when
an electronic payment
the extent"
language
in the
provision is intended to address cases where a participant on a
private network
fails
to settle,
and
the bank receives finally
settled funds representing only a partial amount of the payment.
A-71
-72(c)
drawn on
Act
Government
checks,
the depositary bank,
generally
requires
business day
that
and certain
funds
following deposit
local government
checks,
under
conditions.
specified
next-day
availability
local
government
check
must
issued,“
has been
be
checks,
third party
that
made
Treasury
depository
by
the
and
as
to
checks.
person
to
on
The
the
state
and
“on us" checks
receipt
checks,
checks
is
of
state and
that
whom
the
itwas
to include a check
and deposited
is not named
checks
available
checks,
interpreted
in blank
other
condition
on
only
checks,
for Treasury checks,
One
and
The Act could be
indorsed
be
depository
placed
"endorsed
depository
that
into an account of a
payee.
The
Board
believes
that such a check presents greater risks than a check deposited
by
the
payee
available
check
on
and,
the
therefore,
business
"is deposited
The
availability
the Act.
under
day
that
following
deposit only
is
proposing
additional
to
types of
the proposal,
require
checks
and U.S.
orders
on
be
if
be
the
made
available
following deposit if the check
not
next-day
addressed
in
checks drawn on a Federal Reserve
Bank or a Federal Home Loan Bank
must
funds should
in an account of a payee of the check,"
Board
for
proposes
the
Postal
next
is deposited
Service money
business
day
in an account of a
payee of the check.
A check deposited in a branch
and drawn on
the same or
of
the depositary bank,
another branch of the same bank, must
be made available at the start of the next business day
A-72
if both
-73branches
are
located
in
the
same
state
or
the
same
check
processing region.
The Act and proposed regulation also require that $100
of
the
aggregate
banking
day
example,
by
check (s)
be made available on
if $70 were deposited
Monday,
start
deposit
the entire
of
checks
on
any
one
the next business day.
For
in an account by check(s)
on a
$70 must be available for withdrawal at the
business
check(s)
or
on
Tuesday.
on a Monday,
If
$200
the Act requires
were
deposited
by
that $100 of the funds
be available for withdrawal at the start of business on Tuesday.
Under
the Act,
a depositary bank may require
of a special deposit slip as a condition
availability
included
in
for
certain
availability of
manner
by
deposited
reading
the
customers'
the
checks.
whether a check
on
their
Bank, or a branch
Reserve
Bank,
other
because
checks
the check
these
drawn
on
the
is a check
drawn
a Federal Home Loan
or
is a U.S.
Postal
The bank, however, would not be able to
was
a state or local
check or a depository check by reading
number,
the
The bank cannot require a special deposit
slip for these checks.
whether
number
check;
the depositary bank;
Service money order.
determine
these procedures, a bank can determine
a Federal
of
banks
routing
is a local or nonlocal
Treasury,
distinguish
of
This condition was
check deposits in an automated
MICR-encoded
Using
to providing next-day
types of checks.
the Act because a number
the use
on
checks bear
the
same
the MICR-encoded
routing
the same routing number
bank
A-73
government
that
are
not
as
accorded
-74-
next-day
availability.
Therefore,
a bank may require a special
deposit slip for these checks.
The
require
regulation
specifies
that,
the use of a special deposit
granting
next-day
availability and
if a bank decides
slip
as
inform
the
provide
its customers
slips
the special
how such
reasonably
to
customers with an order form for
allowing
sufficient
the slips
before
requirement
may
its branches
time for
for
the special deposit
requires
the
next-day
availability
that
customer
government
deposited,
either
Providing
segregate
and
indicate
and
to order and receive
imposed,
is one
way
this
provides deposit slips
it should
in the branches,
and/or
make
the
also provide
if the bank simply
checks
subject
on a regular
depository
in
to
deposit slip
checks
are
being
Temporary schedule
(a)
be
customers.
and
the bank should so instruct its customers.
Section 229.11
must
is
to
checks
the
its customers,
slips
the
slips to its customers or
the customer
If a bank
use by
slips,
the special deposit slips
this condition
be met.
deposit
slips may be obtained
available
to
the deposit slip that must
be used is different from the bank's regular
bank must either
a condition
to
Effective
accorded
next-day
date.
availability,
checks,
are
other
then
categorized
those
as
local or nonlocal, with different availability schedules
attached
to each.
September 1,
1988,
These
and
schedules
will
be
will
become
superseded
schedules on September 1, 1990.
A-74
by
effective
more
on
stringent
that
-75(b)
Local
maximum hold period
the
temporary
which
funds
after
schedule.
must
be
of
a specified
provided
in
day
following
The regulation
available
business
number
a
local
check
withdrawal
forth
to the day on
withdrawal
as
within
after deposit,
rather
funds
a
than
days,
check
available on
the
third
as
from
business
day on which the check is deposited.
in the Act.
to
the
Thus,
on
Thursday,
except
nonproprietary ATMs
refers
intervening
deposited
on
sets
business
a local
of
the banking
specified
for
days
This requirement corresponds
days
paragraph
A depositary bank must make
the Act.
the deposit of
This
that can be placed on local checks during
number
specified
checks.
two
business
under the temporary schedule,
a Monday
in
and deposits
intervening
must
the
be
case
to accounts
available
of
for
deposits
in banks
at
located
outside the 48 contiguous states.
The
availability
schedule,
Act
provides
rules
the
provides
for
specified
in the schedule.
cash
day's
$400 of
This
deposit,
that
withdrawal
deposits of nonlocal
withdrawal.
adjustment
funds
During
from
to
the
the temporary
local
checks
a check clearinghouse arrangement need not be
available
5:00 p.m.,
further
for cash withdrawals.
Act
collected outside
a
until
5:00
p.m.
on
the
day
This special rule does not apply to
checks under
the temporary schedule.
At
the deposit must be made available for cash
$400
which
is in addition
must
be
made
to the first $100 of
available
for withdrawal,
including cash withdrawal, at the start of business on
A-75
a
the next
the
-76business
day
following
deposit*
The
remainder
must be available for cash withdrawal
on
the business
of
the
funds
at the start of business
day following the business day specified in the
s c he du l e•
The Act recognizes
that the $400 that must be provided
on the day specified in the schedule may exceed a bank's daily
ATM cash withdrawal
limit, and explicitly provides that the Act
does not supersede the bank's policy in this regard.
believes
that
withdrawal
rationale
for
limit also applies
established
relation
the
by
that
between
a
over-the-counter
withdrawals)
bank.
cash
to other
In
bank's
accommodating
the
cash
and the requirements of
well
ATM
limits
regulation,
withdrawal
as
a bank's
cash withdrawal
proposed
withdrawals
The Board
limit
as
(for
ATM
this subpart
the
cash
is addressed
in § 229.19 (c) (4) .
The
Board
special cash
believes
rule
that
available
to
its
customer.
local check on a Monday,
paying
bank,
Thursday
temporary
the
(the
day
Congress
and
depositary
funds
must
s c h e d u l e ) , but
that
a check before
If
improvements
regulation,
this
check
bank
may
be
made
would
most
proposed
in
is
the
available
likely
deposits
returned
receive
not
Subpart C
checks written by the customer
A-76
it must make
a customer
return by the opening of business on Thursday,
payments
included
to provide a depositary bank with additional
time to learn of the nonpayment of
funds
the
by
the
check
under
a
on
the
receive
even
with
of
the
the
this
that are presented
-77-
to the depositary bank on Thursday are typically not posted to
the customer's account until late
Thursday night.
that
day
have
customer's
been
received
on
account before
that
are
debited
funds
must
risk.
be
made
However,
significantly
if
until sometime during
available
the
does
customer
withdraws
The
before
risk
the
the
Thus,
for
the fact that a
the day on which
increase
bank's
because the withdrawal may occur
and posted.
not
depositary
the
to
these checks are posted.
the purpose of checks written by the customer,
return is not received
Any returns
the
does
funds
the return
bank's
increase
in
cash,
is received
intent of the special cash withdrawal rule is
to minimize this risk to the depositary bank.
For
it must
this
apply
not
rule to minimize
only
to
cash
withdrawals by other means
to the customer's
the depositary bank's risk,
withdrawals,
that result
account or commitment
the customer's behalf during the day.
to expand the cash withdrawal
rule
but
also
to
in an irrevocable debit
to pay by the bank on
Thus, the Board proposes
to also
include withdrawals
by electronic payment,
issuance of a depository check, or other
irrevocable
to pay,
commitment
on-line point-of-sale debit.
apply to checks
and other
such
as
authorization
of
an
The cash withdrawal rule does not
provisional debits presented
to the
bank for payment that the bank has the right to return.
The regulation provides
Postal
Service money orders
that Treasury checks and U.S.
be treated as local checks,
where
the conditions to receiving next-day availability are not met.
A-77
-78-
These
checks
are
treated
as
local
checks
Treasury
check
or
a postal
deposited
in
accordance
held
with
on
a Federal
state and
which
local
Reserve
by
the
Other types of checks described
drawn
are
this
rule a
money order
in an account not
available
they
Thus, under
payable at any Federal Reserve office.
because
that
the
is
payee
schedule
for
or
government checks,
Federal
local
and
made
checks.
such
as checks
Home Loan
Bank,
for
(e.g., because they
were not deposited
in an account of a payee of
treated
local or nonlocal
either
be
and depository checks,
next-day availability does not apply
as
must
in § 229.10(c),
Bank
indorsed
checks,
the check) , are
depending
on
the
check processing region in which they are payable.
(c)
Nonlocal
funds deposited
withdrawal
not
checks.
later
than
the seventh
business day
except
for
following
in the case of
at nonproprietary ATMs or in accounts of banks located
outside the 48 contiguous
check
the temporary schedule,
by nonlocal checks must be made available
the banking day the funds are deposited,
deposits
Under
deposited
states.
Thus,
funds
from a nonlocal
on a Monday must be available for withdrawal by
Wednesday of the following week.
The Act does not establish
special
for nonlocal checks under the
rule
temporary
full
for cash withdrawals
schedule.
amount
of
Therefore,
the
deposit
subject
becomes
to
§ 229.19(c),
available
for
the
cash
withdrawal on the business day specified in the schedule.
Section 603(d)(1)
requires
the Board
of
to reduce
the
Act
(12
the statutory
A-78
U.S.C.
4002(d)(1))
schedules
for
any
a
-79-
category of checks
in a shorter
The
where most of those checks would be returned
period of
conferees
time
indicated
than
that
provided
"if
the
in
new
the
system
schedules.
makes
it
possible for two-thirds of the items of a category of checks
meet
this
Reserve
test
must
in a shorter
shorten
the
period of
schedules
checks,
schedules
where significant
schedules.
are
shorter
deposited
in banks
located
cities
and
on
faster
collection
are proposed
banks
where
for
in
transportation
and return.
are
certain
provided
other
arrangements
In addition,
shorter
for
Reserve
Federal
allow
for
schedules
for checks drawn on certain banks that are served
and certain
and
York
on
Rep.
nonlocal
in certain Federal
by two Federal Reserve offices,
drawn
certain
schedules
located
cities,
H.R.
(1987).
proposed
checks
Reserve
the Federal
improvements can be made to the Act's
Specifically,
drawn
then
accordingly."
No. 261, 100th Cong., 1st Sess. at 179
Reduced
time,
to
banks
in
the
where the proximity of
New
the Federal
checks deposited
City metropolitan
Reserve offices
in
area,
facilitates
faster clearing and return of these checks.
Appendix B-l
schedules applicable
sets
forth
to banks
the
located
specific
reduction
of
in each check processing
region.
(d)
provides a
ATMs.
Deposits
special
During
the
rule
at
for
temporary
treat all deposits made by
nonproprietary
deposits
schedule,
made
at
at
The
Act
nonproprietary
a depositary
its customers
A-79
ATMs.
bank may
a nonproprietary
-80-
A T M as
though
the deposits were nonlocal checks.
a nonproprietary ATM on a Monday,
or
checks
that
availability,
would
rule
proprietary ATMs.
is governed by
be
subject
made available for
than Wednesday of the
This
including a deposit by cash
otherwise
must be
A deposit at
to
next-day
withdrawal not
later
following week.
does
not
apply
to
deposits
made
at
Availability of deposits at proprietary ATMs
the
same
rules
as
deposits
made
directly
at
certain
deposits
branches of depositary banks.
(e)
Alaska,
Hawaii,
Act provides
banks
located
Virgin
checks,
Extension
of
schedule
Puerto Rico,
an
extension
in Alaska,
islands.
The
and
of
the U.S. virgin i s l a n d s .
the
availability
schedules
Puerto
Hawaii,
schedules
for
and
for
Rico,
local
checks,
the
in
The
for
U.S.
nonlocal
and deposits at nonproprietary ATMs are extended by one
business day for checks
deposited
in
that
these
jurisdictions
are
through a paying bank
For
drawn
not located
the depositary bank.
to accounts
example,
on
in banks
or
in thesame
payable
located
at
or
jurisdiction
as
a check deposited in
a bank
in Hawaii and drawn on a San Francisco paying bank must be made
available
for withdrawal not later than the fourth business day
following
deposit.
This extension
does not apply
to
deposits
that must be made available for withdrawal on the next business
day.
The
Congress
schedules to checks
did
not
provide
this
drawn on a paying bank
A-80
extension
located
of
the
in Alaska,
-81-
Ha wai i , Puerto
Rico,
in
at
an
account
states.
drawn
or
a
depositary
Therefore,
on
a
withdrawal
Hawaii
not
the U.S.
a check
paying
later
bank
in
deposited
bank
than
virgin
must
the
islands and deposited
the
48
contiguous
in a San Francisco bank
be
third
made
available
business
day
for
following
deposit.
The availability
rules of
§ 229.11
are
illustrated in
Figure 1.
Section 229.12
(a)
supersede
Permanent schedule
Effective
date.
temporary
schedule
the
The
permanent
on
schedule
September 1,
will
1990.
The
Board requests comment on whether the permanent schedule should
be made effective on an earlier date.
(b)
Local
becomes
effective,
Postal
Service
availability
local
money
under
withdrawal not
deposit.
checks,
When
checks
orders
than
the
are
Exceptions
and
made
subject
must
be
second
for
permanent
to
made
located
outside
proceeds of a local
the
48
business
next-day
day
withdrawals
contiguous
and U.S.
available
for
following
by
similar means, deposits at nonproprietary ATMs,
banks
schedule
Treasury checks
not
§ 229.10(c)
later
the
cash
or
and deposits
states.
Thus,
check deposited on a Monday must be
in
the
made
available for withdrawal on Wednesday.
(c)
the
time
reduced.
Nonlocal
period
for
checks.
Under
availability
of
the
permanent
nonlocal
checks
Nonlocal checks must be made available
A-81
schedule,
is also
for withdrawal
-82not
later
than
the
fifth
business
day following deposit,
i.e.,
proceeds of a nonlocal check deposited on a Monday must be made
available
are made
means,
for withdrawal on
to the schedule
deposits
the
for
following Monday.
withdrawals
at nonproprietary ATMs,
by
Adjustments
cash
or
similar
and deposits
in banks
located outside the 48 contiguous states.
As
described
in
the
Board is required
to shorten
check
of
discussion
where
most
depositary bank
the
schedule.
§ 229.11(c),
the schedules for
those checks
in a shorter
Appendix B
of
can
period
sets
any category of
be returned
of
forth
time
the
the
than
to
provided
reductions
to
the
in
the
schedule for certain nonlocal checks.
(d)
Time
similar m e a n s .
the
special
checks
regulation
the
temporary
withdrawal
rule
for withdrawal
schedule,
to
this
rule
The
is
temporary schedule
the
proceeds
available
for
withdrawal
the withdrawal
limitation
nonlocal
Board's
proposed
in
the
§ 229.11(b).
of
applies
and
described
at
if
by cash or
the Act applies
both local
permanent schedule.
schedule,
checks become
day,
the
adjustment
the
implementing
discussion of
permanent
Unlike
cash
under
period
local
on
the
and
in
the
nonlocal
same
business
to the aggregate amount
of the funds.
(e)
provides
a
deposits
at
Deposits
limited
at nonproprietary A T M s .
exception
nonproprietary
next-day availability
under
to
the
ATMs.
Cash
§ 229.10
A-82
permanent
This
provision
schedule
and checks
for
subject
that are deposited
in
to
an
-83account
at
a
nonproprietary
ATM
roust
be
available
withdrawal not later than the second business day
banking day on which
the deposit was made.
the
schedule
in
the regulation
following
Other
nonproprietary ATMs must be made available
for
deposits at
in accordance
applicable
the
with
to the category of
check being deposited.
Section 603 (e)(4)
of
the
Act
"establish and maintain a dialogue"
regarding
the
depositary
ability
bank
nonproprietary
the
of
ATM
ATM,
The
of
Board
deposits
made
at
Board
to communicate
a
deposit
requests
depositary banks plan to comply with
for
the
to
with banks and ATM vendors
systems
composition
directs
to
at
made
comment
the
a
on
how
the availability schedules
nonproprietary ATMs
under
the permanent
sche du le .
(f)
Extension
Alaska, Hawaii, Puerto Rico,
extension
of
the
and
availability
of
schedule
the U.S, Virgin
schedules
located
in Alaska,
Hawaii,
Islands
under
temporary
schedule
becomes
effective.
permanent
the
schedule
for
Puerto
Rico,
certain
islan ds .
provided
and
also
deposits
the
to
U,S,
applies
banks
Virgin
when
Explanation
The
of
the
this
provision is provided in the discussion of § 229.11(d) .
The availability rules of
§ 229.12 are
illustrated
in
Figures 2 and 3.
Section 229.13
Exceptions
While certain
new
accounts
and
safeguard exceptions
checks
the
bank
A-83
has
(such as those for
reasonable
cause
to
in
-84believe
are
uncollectible)
Congress
gave
the
certain
other
should
the
redeposited checks
deposits
discretion
exceptions
to establish
overdrawn.
the
established
Specifically,
regulations.
authority
Board
are
that
to determine
included
Act
for accounts
exceptions
must
the Act,
gives
in
the
the
whether
these
Board
the
exceptions to the schedules for large or
and
These
be
in
be
that have been
repeatedly
do not apply to checks or other
accorded
next-day
availability
under
§ 229.10.
•Although proposed improvements to the check
system will
accelerate
will not be returned
must
be
schedule
permanent
made
—
a
number
schedule
which
for
that
is
withdrawal
will
adopted.
to
the
and,
checks
in
bank
to make
during
in some cases,
the
increase
order
that
to
to
temporary
when
reduce
the
available.
to the schedules
next-day
the
risk
to
to
the Act in
time
within
The exceptions
for local
the temporary and permanent
the
funds
it is appropriate
to extend
funds
provided in this section apply
nonlocal
many checks
to the schedules permitted by
allow
it is required
under
likely
the Board believes
the exceptions
the regulation
of most checks,
to the depositary bank by the time
available
depositary banks,
adopt
the return
collection
availability
and
schedules,
requirement
for certain check deposits.
The Act also gives
the
schedules
for
any
the Board
classification
the authority
of
schedules result in an unacceptable level of
A-84
checks,
fraud
to suspend
if
the
losses.
The
-85-
Board
will
adopt
authority,
if
regulations
and
when
to
implement
circumstances
this
statutory
requiring
its
implementation arise.
(a)
the
New a cc ou nt s .
availability
schedule
defined as a new
after
the
customer
account
account
opening
has
the
calendar
account
days
of
new
during
been
accounts.
the
has
an
the bank,
relationship
opening
first
established.
account
account relationship with
transaction
for
The Act provides an exception
the
An
30
account
calendar
However,
established
if
is
days
the
transaction
or has had an established
with
other
the
bank
account,
within
the
30
newly
established account would not be subject to this exception.
Thus,
bank
if a customer
for more
bank,
during
that
the
that has had one account with
than 30 days opens
customer
would
not
a
be
first 30-day period
second
account
with
a
that
considered a new depositor
following
the establishment
of
the second account.
If a customer's account was closed and another
established
example,
as
to the original
to the theft of checks or
the original
new depositor
the
a successor
original
Similarly,
if
account),
account
the
closed
an
is
at
account,
least
established
account within 30 days,
A-85
for
to access
would not be considered
successor
relationship
a customer
opens a separate
to
(due,
a debit card used
the customer
with regard
account
account
30
a
assuming
days
account
old.
and
the new account is not
to
-86subject to this exception,
if the closed account was at least
30 days old.
A customer
bank
and
that has
subsequently
that bank would
not
a joint account
establishes
be
a new
a depositary
individual
an
at
account with
depositor,
assuming
the
joint
account relationship is at least 30 days old.
If a customer establishes an account with
bank
with
which
relationship,
may
of
apply,
must
account
the
schedules
but
be
given
on
any
current
or
recent
for
local
received
next-day
During
and
by
for
the
nonlocal
cash
the first 30
new
checks
electronic
in
banking
money
day
by
Treasury
checks,
orders,
state
and
checks
local government
depository checks must be made available
of
excess of
on
a
than
business
the
following
accounts
not
payment
with
the
on
the
following
day
must
start
of
be available
business
on
business
traveler's
checks
checks•
A-86
U.S.
day.
Postal
checks,
and
at the
Funds
in
types of checks
for withdrawal not later
the
the banking day of deposit.
only,
drawn on
for withdrawal
first $5,000 deposited by these
banking
at
do
accordance
Federal Reserve Banks or Federal Home Loan Banks,
start
account
and
availability
and
The first $5,000 of funds deposited to a new account
one
Service
account
is considered a new depositor
relationship.
deposits
§ 299.10.
other
to the new account exception
the
period,
no
that customer
be subject
days
it has
a depositary
are
ninth
business
day
For the purposes of new
treated
as
depository
-87-
(b)
hold
placed
Large d e p o s i t s .
on local
and nonlocal
extent that the amount of
day exceeds
is subject
checks,
the
Deposits
check deposits
While
amount
four
by
in
the first
excess
business
cash,
next-day
only
the
to the
the aggregate deposit on any banking
$5,000 of a day's deposit
to the availability provided
additional
granted
$5,000.
A depositary bank may extend
of
days,
electronic
$5,000
local or nonlocal
be
held
provided
as
may
in
§ 229.13(h).
payment,
availability
for
under
or
the
checks
for an
that must be
regulation
are
not
subject to this exception for large deposits.
where
depositary
a
customer
bank,
the
bank
has
multiple
may apply
exception
to the aggregate deposits
accounts,
if the holders
the same.
made
to
Thus,
two
individual.
an
individual
accounts
A bank, however,
at
are not
the same.
accounts
is proposed because
depositary
bank
similar regardless of how
a
of
the
customer's
to be aggregated are
the deposits
that bank held by the same
may not aggregate
and a joint account
accounts
the
to all
a depositary bank may aggregate
separate
with
the large-dollar deposit
of the accounts
the large-dollar deposit exception,
to
accounts
for
the deposits of
the purpose of applying
because
the holders
of the
Aggregation of deposits to multiple
the Board believes
associated
with
the deposits
large
that
the risk
deposits
are allocated
is
among
the
the Board
the
customer's accounts.
(c)
authority
Redeposited c h e c k s .
The Act gives
to promulgate an exception to the schedule for checks
A-87
-88that have been
provides
such
returned
unpaid
an exception
and
for
redeposited.
proposal
that have been
checks
The
returned
unpaid and redeposited by the customer or the depositary bank.
The Board proposes
increased risk
to the
been
once
returned
presented
to
however,
for
the
checks
that
will
paying
checks
have
Thus,
be
the reason
after
a
second
this
checks
when
time.
increased
returned
unpaid
due
the missing
to
due
to
that
they
The
risk
a
have
are
Board,
is present
missing
to a missing
missing
indorsements
and
indorsement has been obtained,
for return stamp on
returned due
that
uncollectible
bank
been
bank
there is an
the exception being proposed does not apply
returned
redeposited
exception because
depositary
does not believe that
indorsement.
to
this
the check
indorsement.
this exception does not apply
states
For
to a check
that
the same
returned
if
it was
reasons,
because
it
was postdated
(future d a t e d ) , if it is no longer postdated when
redeposited.
in
indorsements
and
the
cases
postdated
of
both
checks,
checks
the
with
time
for
missing
making
the
funds available begins to run again as of the date of redeposit.
(d)
Repeated o v e r d r a f t s .
authority to establish an exception for
have
been
overdrawn
indicate how
this
repeatedly."
rule
should
"deposit accounts which
While
operate,
The Act gives the Board the
the
the
Act
does
conferees
that they
believe that a reasonable definition would
be one that specifies that an account (or a
successor account) be overdrawn at least on
A-88
not
stated
-893 separate and distinct occasions within any
6 month period.
The funds availability
schedule would not apply to any such account
for a period of six months following the
last occasion involved.
H.R. Rep. No. 261, 100th Cong. 1st Sess. at 181.
(1987).
The proposed regulation generally adopts
for determining
the accounts
instances
in any six-month period any account or combination of
negative
balance,
or
goes
would
proposes
to the repeated
exception.
customer
Board
subject
overdraft
accounts of the
The
that are
this standard
from
have
that,
a positive
done
so
if
charges against the account were paid rather
exception
during
would
which
apply.
the
account
continuing overdraft,
Any
three
had
checks
consecutive
banking
constitutes
continuing
for
days,
a
each
banking
balance
on
on
due
any
of
separate
instance.
this
approach
is two
the
a
the
days
to
a
three
Thus,
three
If the account
for more
consecutive
four banking days
requests comment
to
than returned,
are considered part of the same instance.
has or would have had a negative balance
period
balance
three
or would have had a negative balance due
to the presentment of additional
days,
on
checks or other
consecutive
a negative
if
than
banking-day
an
overdraft
instances.
to determining
three
The Board
whether
an
account is subject to the repeated overdraft exception.
The exception relates not only to accounts
check overdrafts,
debit items
but also accounts subject
to
to check or other
(such as ACH debits or point of sale
A-89
subject
transactions)
-90of amounts
in excess of available
funds, regardless of whether
the items were paid or returned unpaid.
The exception
accounts with overdraft
unless the credit line
lines of credit,
excludes
has been exceeded.
(e)
Reasonable
depositary
bank
customer's
account
check,
Loan
Bank,
the
hold
the check
the
paid
and
depositary
exception.
The exception
incomplete,
if
doubt
of
a
on
funds
local
if the bank
or
have
could be
a
nonlocal
reasonable
For example,
from the paying bank
returned
in
Federal Home
has
is uncollectible.
would
c ol le c ti bi li t y.
Reserve Bank or
is being
bank
to
placed
deposit
received a notification
check was not
were
from
the
or a depository check,
to believe
bank
bank,
extend
a check drawn on a Federal
cause
the
may
cause
to
the
a basis
invoked even
the bank had reasonable
if
that
a
depositary
to apply this
if the notice
cause
to believe
that the notice applied to a particular check.
The
check
is deposited more
the date on the
check
is a
reasonable
uncollectible,
because
to its customer
old.
A bank
deposited
the
trigger
indication
under
that
U.C.C.
to pay a check
the
§ 4-404
that
check may
be
a bank has no duty
is more
than
six
months
could also reasonably conclude that a check being
is uncollectible based on
depositor
belief as
than six months after
fact that a
is
to the
engaging
kiting
activity.
insolvency of the drawer
this exception.
cause to doubt
in
its reasonable belief
that
Reasonable
or drawee may
also
Other facts may give a bank reasonable
the collectibility of a check.
A-90
The Board does
A
-91not
intend
which
to
this
invoked,
provide
exception
a comprehensive
may
the bank must
the cases
in
this
If
of
exception
is
in the notice
to its customer,
the reason that the bank
believes
that
is uncollectible.
The regulation
check
invoked.
include
required by § 229.13(g),
the check
be
list
provides
is uncollectible
or persons.
exception
that
the determination
that a
shall not be based on a class of checks
For example,
a depositary bank
simply because
cannot
invoke
this
the check is drawn on a paying bank in
a rural area and the depositary bank knows it will not have
opportunity
must
be
to learn of nonpayment of that check
made
Similarly,
available
under
a depositary bank
the
availability
before
the
funds
schedules.
cannot apply the reasonable cause
exception based on the race or national origin of the depositor.
If
respect
notice
a
depositary
to a particular
to
its customer
bank
check
invokes
charge
interest
exception
and does not provide
at the
time of deposit,
bank may not assess any overdraft
or
this
fee
and
a written
the depositary
(such as an NSF charge)
for use of overdraft credit,
finally paid by the paying bank
with
these
if the check is
charges
would
not
have occurred had the exception not been invoked.
(f)
conditions
checks,
or
accounts 1
Emergency
may
arise
delay
In
the
the
that
conditions.
delay
the
processing
circumstances
the depositary bank may extend
and
collection or
updating
specified
the
A-91
Certain
holds
of
emergency
return of
customer
in this paragraph,
that
are
placed
on
-92deposits of local and nonlocal checks that are affected by such
delays,
if
the
bank
exercises
such
diligence
as
the
circumstances require.
(g)
Notice
invokes any of
above,
hold
other
on
a
§§ 229.10,
customer
of
exception.
If
a
depositary
the safeguard exceptions to the schedules listed
than
the new account exception,
deposit
beyond
the
229.11, and 229.12,
stating the reason
time
and
periods
extends
permitted
in
it must provide a notice
the exception was
the
to its
invoked and
the
day funds will be available for withdrawal.
The
requirement
that
the
notice
state
funds shall be made available may be satisfied
deposit
is
received
available
for
and
the
withdrawal
number
are
of
days
provided
the
the
if the date
until
in
day
the
the
funds are
notice.
Appendix C contains a model form of this exception notice.
For
depositary
bank,
customer at
deposits
deposits
received
not
in
notice
person
at
through
later
an
to
generally
the time of deposit.
depository, or
customer
the
made
ATM,
an
must
For other
lobby
the mail,
employee
of
the
be
to
the
given
deposits,
deposit
box,
such
as
night
notice must be mailed
to the
than the close of the business day following
the banking day on which the deposit was made.
Notice
time,
if the
exception
do
to
the
customer
facts upon which
not
become
may
be
provided
the determination
known
to
the
A-92
a
later
to invoke
depositary
after notice would otherwise have to be given.
at
bank
the
until
In these cases,
bank
-93the
bank
must
mail
the
notice
practicable, but not later
day
the
facts
become
to
the
deemed
to have
attention
or when
when
the
facts
the
in the
to have knowledge
is made.
are
A bank is
brought
to
the
the
facts
would
have
been
brought
to
attention if the bank had exercised due diligence.
If the
deposit due
depositary bank extends
to an emergency condition,
the hold placed
available
example,
for withdrawal before
if on
cannot be updated
a
computer
failure
in a timely
available balances,
if the funds would be
the notice must be sent.
the last day of a hold
experiences
period
and
fashion
the
to reflect
For
depositary
customer
notices are not required,
/
on a
the regulation provides
that the bank need not provide a notice
bank
following
of the persons in the bank responsible for making the
determination,
their
is deemed
the determination
knowledge
soon as
The Board has clarified
regulation when a depositary bank
facts upon which
as
than the business day
known.
of the
depositor
accounts
the
funds as
if the funds are
made available before the notices must be sent.
(h)
Availability
Section 604(f)
of
holds
on deposits
the
placed
new
period
bank
account
of
funds
must
(12 U.S.C.
deposits subject to e x c e p t i o n s .
4003(f))
any
exception)
"shall
exception
other
the bank may extend
be
made
provides
subject' to an exception
not
exceed
time as determined by the Board."
invokes
exception,
the Act
of
available
than
the
that
(other than
areasonable
If a depositary
new
account
the period of time within which
under
A-93
the
schedule
by
four
-94business
days.
With respect
to checks
availability requirement,
the
time
available
funds
must
be
made
depositary
business days beyond the delay
had
the
checks
requirement.
government checks,
Federal Home Loan
the
local
for
for
bank
may
extend
withdrawal
by
the
four
that would have been applicable
not been subject
Thus,
subject to the next-day
to the next-day availability
depository
checks,
state
and
local
and checks drawn on Federal Reserve Banks or
Banks,
or nonlocal
the
four
schedule
business days are
added
that would apply based on
to
the
location of the paying bank.
Under
business days,
schedule,
an
improved
in addition
check collection
to the
should provide adequate
to learn of the nonpayment of
system,
these four
time period provided
time
for
virtually
in the
the depositary bank
all
checks
that
are
returned.
In
conditions
the
case
of
exception,
the
application
of
the
emergency
the depositary bank may extend
placed on a check by not more than four
business
days
the hold
following
the end of the emergency.
Section 229.14
Payment of interest
(a)
depositary
in
bank
begin
accounts
not
receives
provisional
"account"
later
includes
general.
accruing
than
This
interest
on
the day on which
credit
only
for
the
that
interest-bearing
deposited.
accounts,
interest-bearing accounts of the depositary bank,
A-94
requires
the depositary bank
funds
transaction
section
Because
other
such
as money
a
-95-
market
deposit
accounts,
are not subject
term
interest
to
this
savings deposits,
requirement.
The
absorption
banking
of
function
expenses
or
its
incident
forbearance
connection with such a service.
It may be difficult
which
day
checks
in order
to which
be pronounced
based
Board
intends
to
the check
if the bank
on
the
time
funds,
the
to exclude
from
a normal
charging
a
fee
in
(See 12 CFR 217.2(d).)
for
a depositary
accrue
interest
to
track
credit
properly
on
for
the
This difficulty may
uses different
day
bank
provisional
is deposited.
of
but
to providing
the depositary bank receives
specific checks
account
time deposits,
to refer to payments to or for the account of any
depositor as compensation for the use of
the
and
means
the check
of
collecting
is received,
the
dollar amount of the check, and/or
the paying bank
must be sent.
that,
for the purpose of the
bank
may
interest
accrual
availability
Home
Loan
requirement,
schedule
Bank,
depositary
accrues
The Board proposes
bank
or
from
Federal
correspondent
receives
interest
its
a
from
the
in
provisional
day
of
to which
rely
on
Reserve Bank,
determining
credit.
deposit,
or
A
an
Federal
when
bank
from
it
the
the
that
day
following deposit, meets this payment of interest requirement.
(b)
an
exemption
Special rule for credit u n i o n s .
from
the
payment
of
interest
credit unions that do not begin to accrue
on
their
customer
accounts
credit union receives
requirements
The Act provide
for
interest or dividends
until a later date than the day the
provisional
A-95
credit
for
those
deposits,
-96-
including
cash deposits.
the payment of
notice
of
interest requirements,
their
§ 229.18(f).
computing
These credit unions are exempt
interest
accrual
For example,
as long as they provide
policies
in accordance
if a credit union has
interest on all deposits
month
from the
after
the 10th of the month
provides
first of that month
proper
with
a policy
of
received by the 10th of the
and all
deposits
received
from the first of the next month,
that policy is not superseded by this regulation,
union
from
disclosure
of
this
if the credit
policy
to
its
customers.
The Act limits
types of depository
of
this exemption
to credit unions; other
institutions must comply with
interest requirements.
In addition,
credit
the
payment
unions that now
compute interest from the day of deposit or day of provisional
credit
should not change
their existing practices
avoid compliance with the requirement that
in order
interest accrue
to
from
the day of provisional credit.
(c)
provision
4005(c))
Exception
is
based
on
and provides
deposited
in an
for
section 606(c)
that
checks
returned
of
Act
the
(12
unpaid.
This
U.S.C.
interest need not be paid on
funds
interest-bearing account by check that has been
returned unpaid.
Section 229.15
(a)
the
general
Subpart B.
General disclosure requirements
Form of d i s c l o s u r e s .
requirements
for
the
disclosures
This paragraph
required
under
All of the disclosures must be given in a clear
A-96
sets
and
forth
-97-
conspicuous manner,
form the customer
be in writing, and,
may keep.
in most cases,
be
in a
The required disclosures at branch
locations, at ATMs, and on preprinted deposit slips need not be
in a form that the customer may keep.
The
disclosures
regulation
be grouped
that
is not directly
this
subpart.
required
related
Therefore,
or
may
to their
include
banks
other
the
the
may
not
with
policy
Banks may,
to
their
if there
intersperse
other
within
however,
the
customers
the
that
text
is not
of
the
information
example,
stating
by
account
include
For
though the bank has made funds available,
responsible
required
information
availability policies.
a notice
availability
disclosures
account
availability
required disclosures.
related
to
disclosures
include
to their
that
together and not contain any information
availability
disclosures
related
requires
a bank
that,
the customer
is a problem with the deposit,
even
is still
such as the
return of a deposited check.
The
regulation
be segregated
may
include
does not require that
from other
account
terms and conditions.
the required disclosures
of
The required disclosures must, however,
or
identified
Banks
in a booklet or pamphlet
that sets out the terms and conditions
highlighted
the disclosures
the bank's
accounts.
be grouped together and
in some manner,
for example,
by use
of a separate heading for the disclosures.
(b)
paragraph
requires
Uniform reference
banks
to
disclose
A-97
to day of
their
availability.
availability
This
-98policies
to customers
availability
for
must
withdrawal
customer
in a uniform manner.
disclose when deposited
by
stating
may begin
the
business
to withdraw
funds.
Banks
that
delay
funds are available
day
on
which
The business
the
day
funds
will be available must be disclosed as "on the ___ business day
after"
the day of deposit,
The business day of
number
of
or
substantially similar
availability
business
days
is determined by counting
starting
with
following the banking day on which
determined
the
under
customer
institution
days
§ 229.19(a),
may
that
begin
imposes
for nonlocal
available
"on
deposit.
This
compare
banks
more
and
to
the
through
withdraw
delays
requirement
easily
minimize
the
the
is
business
four
day
is received,
as
after"
intended
For
example,
an
intervening business
those
day
checks
the
as
day of
being
the
to enable customers
availability
possibility
the
the business day on which
funds.
of
business
the
the deposit
checks must describe
fifth
language.
policies
of
of
confusion
to
different
about
the
policies of various banks.
(c)
This
Multiple
paragraph
disclosures
customer
to one
accounts
clarifies
under
the
and
multiple
that banks need not provide multiple
regulation.
A
that holds multiple accounts,
of
the
account
account-holders.
holders
of
a
single
disclosure
to
a
or a single disclosure
jointly-held
account,
satisfies the disclosure requirements of the regulation.
(d)
provides
that
Dormant
or
banks
need
inactive
not
accounts.
provide
A-9 8
This
disclosure
paragraph
of
their
-99specific availability policy
inactive,
Board
and
that
costs
disclosures
disclosures
slips
—
provision
banks,
ATMs,
and
should ensure
the
dormant
regulation
statement
are
or
also
of
dormant
or
avoid
where
deposits
on
account
the
be
in
if
they
the
made,
deposit
are made
customer
availability
requirements
preprinted
in availability,
that
bank's
imposing
may
that these customers
inactive
The
not significantly reducing
disclosures
requires
the
will
The other disclosure
locations
the possibility of delays
use
while
the law.
at
at
this
on
the protections of
—
that
thus do not receive mailings from the bank.
believes
significant
to accounts
aware of
choose
future.
be
policy
given
to
The
a
full
upon an oral or
written request.
Section 229.16
Content of specific availability policy
Disclosure
(a)
Specific
section describes
banks
to
comply
banks
furnish
the
with
information
§§ 229.17
a notice
of
availability of deposited
disclosed
bank's
by
banks
particular
availability
will
and
their
funds.
vary
that must
specific
The
policy.
simply disclose
by
that
regarding
that must be
depending
example,
upon
a
a
bank
the next business day
that deposited funds will be available for
withdrawal on
the business
deposit,
bank's
the
requiring
policy
For
disclosure.
disclosed
information
that does not delay availability beyond
need
be
229.18(d)
considerably
availability
policy
day
business
following
days,
A-99
and
the
when
banking
day
deposits
of
are
This
-100considered received.
delays
On the other
availability on a blanket basis
allowed under the federal law —
delays
on
most
check
type and
deposited
provide
—
must
that
deposits,
determined by the
section,
including
subject to delays,
deposit
a more
The bank
the
and
circumstances
schedules
the
when
to
of
actual
disclosed.
of
the
the delay
check
set
being
These
forth
that
can determine
will
the
in
be
type of
length of any delay.
include a brief
availability
imposes
disclosure.
deposits
the disclosure
Such
of
information
the corresponding
is also required
policy at the beginning
the length
complex
types
that routinely
up to the maximum time
routing number of
how the customer
being made,
a bank
is, automatically
with
latter banks must provide all of
this
hand,
summary
and
may
circumstances
of
its
to describe any
vary
the
arise,
would
from
for
example, when the bank invoked one of the exceptions
set
forth
in the statute and regulation.
(b)
Alternate
case-by-case
banks
hold
currently
poli c i e s .
do
deposited
funds.
immediate
or
next-day
with
basis.
delay
these banks
availability
in special
Often
for
The Board believes
routinely
Normally,
impose delays only
case-by-case
not
disclosure
for
the
banks
that
that numerous
availability
of
provide customers with
deposited
circumstances
these
banks
—
provide
funds,
and
determined on a
the
customer
notice of any delay at the time the deposit is made.
Banks
difficult,
if
with
not
case-by-case
impossible,
hold
to
A-100
policies
develop
may
find
a disclosure
it
that
have
-101tells the customer specifically when
to
a
delay
—
in
fact,
essentially precludes
to
give
a specific
the
such
nature
example,
of
the
a disclosure.
notice
bank's
policy
In order
to the customer
funds will be subject to a delay
for
a deposit will be subject
of when deposited
in availability,
before opening new accounts,
to be able
as required,
these banks may find
it necessary to discontinue the practice of imposing holds on a
case-by-case
basis
availability on
and
instead
specific
begin
routinely
types of checks
an automatic or blanket delay policy).
such a result would be adverse
banks
would
incur
disclosures,
but
delay
(essentially adopting
The Board believes that
to many bank customers.
substantial
also
to
costs
in
developing
this
paragraph
not
and
only
in
Also,
making
implementing
new
availability policies.
Accordingly,
availability
of
deposited
funds
on
allows
banks
that
a case-by-case
delay
basis
to
continue the practice by setting forth a disclosure alternative
for
such
still
banks.
provide
disclosure
paragraph
disclosures
of
their
a
need
(a).
fact, will
Banks
with
specific
not
be
as
case-by-case
policy
as
these
that allow customers
policies must
disclosure;
detailed
Specifically,
hold
that
banks
but,
their
required
need
not
by
give
to determine when a hold,
be placed on a deposit.
In addition
specific availability policy,
in
to disclosure
banks with case-by-case
hold policies must give customers a notice when availability of
funds
from a deposit will be delayed.
A-101
The bank must give the
-102notice
at
the
directly
to
time
of
bank
employee.
a
the
deposit,
If
directly to a bank employee —
by mail
—
deposit
is received.
delay
is
the
the
the
deposit
deposit
for example,
was
is made
not
made
if the deposit were
the bank must send customers a notice on the day the
being
available.
at
if
This
imposed
notice
and
By requiring
must
the
day
that banks
time a deposit is made,
customers will know with
indicate
the
both
funds
that
will
a
be
provide a notice of delay
the Board intends to ensure
specificity when deposited
funds
that
that
are being delayed will be available.
In some situations a bank employee accepting
from a customer
be held,
another
but knows
bank
regulation
the
of
to
employee,
a
delay.
even
if
tell
the
two
to accept
A
bank
may
conditions
notify
are
time.
placing
The
the bank
or
in
requiring
the deposit will
the
after
met.
by
customer
the
time
First,
the
be
that
of
the
to a bank
bank
must
at the time of the deposit that the deposit
the day of
The
that
the deposit,
in fact,
reviewed
the deposit was made directly
to a delay.
customer
withdrawal.
to avoid
funds will be delayed
though
may be subject
on
to be
that is unavailable at
refusing
the customer
customer
needs
to wait for notice of whether
availability of
deposit,
a deposit will,
the deposit
includes special rules
the customer
subject
that
employee
position
notify
may not know whether
a deposit
the
bank
the
day
may
Second, the bank must
deposit if a delay
funds
not
A-102
will
meet
be
this
notify
is imposed
available
for
notification
the
and
-103requirement by mailing
a notice
to the customer*
the customer
must receive the notice of the delay on the day of the deposit.
A bank
still
subject
subpart.
that
or
to
imposes holds on a case-by-case basis
the
If the bank
is not
229.12
hold
that
longer
for
availability
imposes
than
local
requirements
of
is
this
a hold on a particular
deposit
the availability required by §§ 229.11
and nonlocal
need not be based on
checks,
the
reason
for
the
the exceptions provided in § 229.13 .
If the hold exceeds
the time periods
or 229.12,
it must be based on an exception provided
however,
in § 229.13,
and the bank
permitted
must comply with
under
§§ 229.11
the § 229.13 notice
and time requirements.
Section 229.17
initial disclosures
(a)
Notice
banks to provide a notice of
potential
customers
believes
that
account
requires
prior
for new a c c o u n t s .
their
account
may
be opened
the
disclosures
following
to
the
an
account.
the requirement of a notice prior
a written
open
availability policy
to opening
banks
to
provide
accepting any deposit to open
receives
This paragraph require
The Board
to opening an
disclosures
an account.
to all
prior
If a bank,
to
however,
request by mail from a person asking that an
that
account
includes
provided
the customer
banking
an
day
the
not
on
initial
bank
later
which
deposit.
A-103
mails
than
the
deposit,
the
bank
the
the
bank
required
business
receives
day
the
-104-
(b)
Existing
to send a notice of
availability
customers
after
of
their
accounts.
specific policy with
deposited
funds
to
all
in the first scheduled mailing
September 1,
This
1988.
The
to
banks
the
account
to customers
occurring
be sent not
later
31, 1988
law).
banks must include a notice in the first statement
mailing
has
to customers
provided
policy
a
after
notice
that meets
the
after
respect
existing
must
requires
than October
Thus,
(60 days
notice
section
the effective date of
September 1, 1988,
to
its
customers
requirements
of
of
unless
its
§ 229.16
the
the
bank
availability
prior
to
the
mailing of this statement.
Banks may not furnish the required notice
by
including
the
notice with promotional
solicitation
for
health
that material
is permitted
with
a
of
must
or
bank's
then
direct
the
use of a special
Section 229.18
on
the
generally.
customer's
A bank
the customer
terms
The
attention
and
bank,
to
section of the regulation
the
by,
for
insert or a letter.
Additional disclosure requirements
(a)
banks
furnishing
as a
unless
statement.
describes
accounts
disclosures required by this
example,
that
by
such
insurance,
the account
the notice
pamphlet
the
material,
hospitalization
included with
to provide
booklet
conditions
however,
is
or
to customers
Notice on deposit s l i p s .
that delay availability on deposits
all preprinted
deposit
slips
furnished
to
This paragraph requires
include a notice
to customers.
This
notice must indicate that deposited checks may not be available
A-104
-105-
for
Immediate
withdrawal.
preprinted deposit
account number
slips
The
—
and name.
notice
that
next
available
only
the
on
customer's
A bank need not include the notice on
that are
be
required
those printed with
those special deposit slips
will
is
the
used
to
business
identify deposits
day
after
deposit
under § 229 .10(c).
(b)
describes
of
at
the statutory
availability
each
The
Notice
location
notice
branch
requirement
policies
where
that
its
is
lo cati ons .
that a bank
pertaining
employees
required
receive
must
consumer
accounts.
teller window,
consumers
but
the
seeking
service.
lobby at
A
drive-through
notice
the notice
For
notice
is
where
also
will
be
to
in a place where
forms
be
the
posted at each
it before
the notice might
required
teller windows.
deposits.
state
likely see
theline
at
that may be made
must be posted
example,
the point
deposits
not
accounts
consumer
specifically
need
to make deposits
making their deposit.
in
A
paragraph
post a notice
to consumer
availability periods for the various
to
This
for
posted
be posted
teller
at
any
The notice need not be provided
at locations where consumer deposits are not accepted.
(c)
the required
automated
Notice at or on A T M s .
notices for
teller
machine,
may be subject to delays
ATMs.
An
at which
This paragraph sets forth
owner
or
deposits may be made
in availability,
posted on a sign, may be
shown on
A-105
the
of
an
that
must post or provide
a notice at each ATM location or on each ATM.
be
operator
This notice may
screen,
or
may
be
-106-
included on
deposits
the deposit envelopes
into
the
machine.
This
before the customer has made
provided on
that
must
be
disclosure
the deposit.
used
must
to make
be
Therefore,
given
a notice
the customer's deposit receipt or appearing on the
ATM's screen after the customer
has made
the deposit would not
satisfy this requirement.
If an ATM is nonproprietary with respect
of
the
ATM,
identifies
that
a
notice
must
the bank(s)
deposited
funds
be
provided
for which
may
not
be
at
the ATM
to some users
the
is
ATM
that
proprietary,
available until
and
the seventh
business day after the day of deposit.
(d)
Disclosure
upon r e q u e s t .
banks to provide written notice of
policy
to
any
request.
which
person
upon
that
This paragraph requires
their
specific availability
person's
This provision does not contain
such notice
shall be given,
oral
or
written
a time period within
but it should be sent within
a reasonable period of time following receipt of the request.
(e)
Changes
in p o l i c i e s .
This paragraph
the Act's requirement that banks send notice
when
they change
must
send
a
implementing
change
any change
results
example,
if
at
the
in
least
calendar
Generally, banks
days
availability
changes
its
of
deposits
availability
checks from the fifth business day after deposit
business
day
after
before
in their availability policy.
faster
bank
30
deposit
forth
to their customers
their availability policies.
notice
sets
for
—
If the
for
nonlocal
to the
fourth
-- the bank need not send advance
A-106
-107-
notice.
The
within
bank
must,
30 calendar
change-in-terms
however,
days
after
use of
notice
change
is
in any
of
the
change
implemented.
form as long as it
the customer a new availability disclosure,
a letter
or
A
If the bank gives notice of a change
must direct the customer
by
the
notice may be given
is clear and conspicuous.
by sending
send
to the changed terms
insert,
or
the bank
in the disclosure
by highlighting
the changed
terms in the disclosure.
(f)
paragraph
credit
all
sets
unions
cash
and
provisional
payment
union
Notice
forth
check
deposits
credit
is set
to
payment
disclosure
of
requirement
the
date
of
being deposited.
forth
describe
policy.
policy
(The
with
for
receiving
in § 229.14(a).)
its
This
for
interest or dividends
beyond
for checks
required
interest
special
that delay accrual
requirement
is
the
of
interest
The
credit
respect
to
accrual of interest or dividends on deposits.
Section 229*19
Miscellaneous
(a)
When
deposits
funds must be made available under
by the day the deposit is made.
deposit mailed
that
the
This paragraph
depositary
a deposit
considered
received
next
banking
for
different
day.
types
of
bank.
on
This
a day
Different cut-offs
deposits.
A-107
The
provides
that a
is considered made when
closed, or after the bank's cut-off hour,
the
made.
the regulation is determined
to the depositary bank
it is received by
provides
are
For
paragraph
that
also
the bank
is
is considered made on
may be established
example,
a
bank
may
time
-
establish
a
deposits,
but
transfers.
deposits
2:00
a
p.m.
cut-off
received
the
receipt of
check
for
the
receipt of
wire
cut-offs
at
different cut-off
for
cut-off
later
Different
108-
may
different
Availability at
for withdrawals
or
governed
similar
229.12(d),
of
means
a.m.
by
set
or
including
transactions.
start
of
a.m.,
available
forth
in
Thus,
funds
ATMs,
if
must
24 hours
the start of
believes
to
day.
than
can be
Except
rule for withdrawal by
§§ 229.11(b) (2)
and
the depositary bank's
are
a bank
available
has
be
available
a day,
rather
the day with
that
update
no
ATMs
for
their
teller
and its branch
customer
beginning
that are
12:01
sets
a.m.
7:00 a.m.
to ATM withdrawals.
provides
banks
systems
with
to
The
sufficient
reflect
the
available funds in customer accounts for that day.
(c)
subpart
Effect
establishes
on
the
policies
maximum
of
hold
A-108
depositary
that
may
at
withdrawal
has ATMs
this paragraph
accounting
by the
customer
than establishing
respect
this rule
for
transactions
If the bank, however,
as the start of the business day,
time
business
the special
the time
beginning at 9:00 a.m.
Board
a
However, no cut-off hour
facilities are available for customer
as
For example,
the funds must be available for withdrawal
7:00
facilities,
9:00
for
if funds must be made available for withdrawal on a
business day,
later
locations.
established
than 2:00 p.m. local time.
(b)
cash
be
time may be established for ATM deposits
for over-the-counter deposits.
earlier
also
bank.
be
This
placed
on
-109-
customer deposits.
to
its
customers
subpart.
A
as
as
regulations.
policies
bank
for
each
and
may
policy
consumer
its
time
also
availability
prescribed
adopt
the
in this
different
segments
meets
of
funds
its customer
schedules
in
the
a bank may differentiate between its
customers,
consumer
has an overdraft
than
different
For example,
for
customer
a shorter
policies
long
corporate
in
depositary
availability
base,
A depositary bank may provide
or
may
customers based
line of credit
adopt
on
different
whether
associated
the
with
the
account.
This regulation
right
does
not
affect
to accept or reject a check
accepted
for deposit and
bank
the
has
recover
a depositary
bank's
for deposit.
If a check is
subsequently returned,
the depositary
right to charge-back its customer's account, or
the amount of the check from the customer
funds are not
in the customer's
to
if sufficient
account to cover the amount of
the returned check.
Nothing
to have
the regulation
facilities open
specified
the
in
for customers
times or on specified days.
regulation
available
for
states
cash
that
system
and
after 5:00 p.m.,
offices
open.
does
not
bank
a depositary bank
to make
withdrawals
For example,
have
bank
must
make
up
no
later
than
5:00
any
teller
windows
at
even though
to
$400
p.m.
if a bank does not participate
the bank
The
a
withdrawals
specific business days,
ATM
requires
open
on
in an
at or
need not join an AT M system or keep
complies with
A-109
this regulation
if the
-110funds that are required to be available
5:00 p.m.
on a particular
the start of business on
depositary bank
for cash withdrawal
day are available
the
is closed
for withdrawal at
following day.
for customer
Similarly,
transactions,
ATMs, on a day funds must be made available
at
if
a
including
for withdrawal,
the
regulation does not require the bank to open.
The special cash withdrawal rule in the Act recognizes
that
the
$400
that must be made
available
for cash withdrawal
by 5:00 p.m. on the day specified
in the schedule may exceed
bank's daily ATM cash withdrawal
limit and explicitly provides
that
the
Act
regard.
does
not
As a result,
supersede
a
bank's
policy
in
this
if a bank has a policy of limiting cash
withdrawals from automated teller machines to $250 per day,
regulation would not
customer's
deposit
a
the
require that the bank dispense $400 of the
that
must
be
made
available
for
cash
withdrawal.
Even
ATM
though
withdrawal
availability
available,
limit
rules
the
the Act clearly provides
Act
is
on
not
the
does
superseded
day
not
funds
by
must
specifically
The
of
Board
provision
by
the
the
deposit must be made
believes
that a bank's
requirement
withdrawal
that
applies
that
on
the
ATM withdrawal
funds
be
subsequent
made
days
A-110
the
bank's
federal
be
made
apply this rule
available
rationale
the
first
withdrawals made at ATMs on subsequent days,
amount
that
when
the
to
entire
for withdrawal.
behind
the
Act's
limit is not superseded
available
and
for
to other
cash
types of
-111-
cash withdrawal.
of
secure
cash
A number of small credit
facilities,
withdrawal
institutions
bonding
keep no cash
capability
limit
to
unions,
due
to lack
on hand and hence offer no
their
customers.
Other
the amount of cash on their premises due to
requirements
and
consequently
reserve
the
right
limit
the amount
of cash each customer can withdraw on
day.
Nothing
the regulation
from limiting
in
the amount of cash
the
could
as
of
time
long
apply
as
however,
otherwise
the
the
to staffed
regulation,
are
a bank
and
is applied equally to all customers of the bank,
length
account,
to prevent
that may be withdrawn,
based on security or bonding requirements,
on
a given
the amount of cash withdrawals if the bank has a
policy limiting
that policy
is intended
to
funds have been
hold
has
teller
facilities
by
This
limitation
as well as ATMs.
such
statutory,
is not dependent
in the customer 's
expired.
does not authorize
prohibited
and
is
policies
regulatory,
if
The
they
or common
law.
(d)
may
provide
determine
Use of calculated avai la bi lit y.
availability
the
day
from
to
their
which
nonconsumer
interest
must
accounts, on a calculated availability basis.
availability,
a
deposits may be
business
day,
subsequent
deposited
made
with
days.
funds
specified
percentage
available
the
The
to
remaining
the
A-lll
of
accounts,
accrue
customer
the
available
on
Under
funds
percentage
determination
that will be made
of
Depositary bank
those
calculated
from
on
check
the
deferred
day
next
until
percentage
each
or
of
is based
-112on
the
customer's
availability
must
be
paid
calculated
typical
is permitted
on
deposit
mix.
in order
deposited
funds
availability results
the time provisional credit
Use
of
calculated
to determine
only
if,
on
when
interest
average,
the
in interest being computed from
is actually received on
the average
deposit of the nonconsumer customer.
(e)
accounts.
Limitation on placing holds on certain
Section 607(d)
of
the
Act
(12
U.S.C.
4006(d))
provides that once funds are available for withdrawal
Act,
such
funds
subsequent
deposit
available
for
designed
shall
to
not
of
be
additional
withdrawal.
prevent
frozen
checks
This
evasion
solely
that
provision
of
the
due
Act's
to
are
of
under
the
not
the
the
Act
yet
is
availability
requirements.
The
deposits
regulation
a check,
the
customer's
funds
exceed
amount of
the
to
are held are made
clarifies
bank
the
may
that,
place
extent
that
if
a hold
the
for
and
withdrawal
customer
on any of the
funds
the check deposited,
available
the
held
the
within
do
funds
the
not
that
times
required in this subpart.
If a customer cashes over-the-counter a check
another
for
bank,
the bank may hold funds in the customer's account
the amount of
exceed
the
drawn on
hold
the
that
check,
could
as
be
long
as
the
placed
on
that check,
check had been deposited in the account.
A-112
hold
does
not
if the
funds
in
-113(f)
banks
requires
Employee
to
training
take
such
inform
fully each employee
Act
the
of
maintain
requirements
procedures
and
actions
com plia nce .
as
may
be
The
Act
necessary
to
that performs duties subject to the
of
the
Act,
and
reasonably designed
to
establish
to assure
and
and monitor
employee compliance with such requirements.
This
provision
provides
guidance
their employee training and compliance
to banks
regarding
requirements.
Each
bank
must provide a statement of the requirements of this subpart to
all employees
that perform
compliance
with
procedures
to ensure
provide
these
carrying
at
compliance
procedures
to
the
to
govern
when
banks
stating
1989,
on
in
September
availability
Conference
bank's
requirements
its
and
responsible
a bank must conduct
In g e n e r a l .
effect
supersede
the
compliance
for
an audit
with
the
Relation to state law
those
available to their customers.
prompt
these
employees
determine
(a)
in
to
it established.
Section 229.20
law
relate
Banks must also establish
with
In addition,
least annually
that
that
these requirements.
them out.
procedures
duties
than
Report
that
any
on
the
state
may supersede
states
must
make
The Act provides
1,
1989,
provided
the time periods
A number of states have
that
in
funds
that any state
provides
this
for
regulation
more
will
in the Act and the regulation.
Act
clarifies
this
provision
law enacted on or before
federal
law
to
A-113
the
extent
enacted laws
The
by
September 1,
that
the
law
-114relates
to
the
withdrawal.
time
H .R.
funds
Rep.
must
No. 261,
be
made
available
100th Cong.
1st
for
Sess.
at
182
(1987).
Thus,
availability,
after
for
shorter
federal law.
availability
after
it must do so by September 1, 1989.
that date will not supersede
provide
under
if a state wishes to adopt a law governing
availability
If a state
than
state
deposited
for
a shorter
is provided
requirement will
most
September
law,
Laws adopted
even
than
are
for
supersede
laws base
1,
under
holds
on
in-state
they
provided
funds
1989 amends its law
for
federal
law.
a certain category
federal
law,
that
the federal provision.
their
is drawn on an
hold
if
a law governing
the amendment will not supersede
If a state provides
of checks
periods
that has
in effect before
that date,
federal
funds
whether
the
state
For example,
check
being
or out-of-state institution.
If a state is located in more than one check
processing
region,
the state's hold period for in-state checks may be shorter than
the federal maximum hold period for nonlocal
checks.
Thus,
state
schedule
to
schedule
would
supersede
the
federal
the
the
extent that it applies to in-state, nonlocal checks.
The Act also provides that any state law that provides
for availability
federal
in
that
This
law
in a shorter
period of
time
than
required
by
is applicable to all federally insured institutions
state,
provision
including
subjects
federally
chartered
federally chartered
to those provisions of state
law governing
A-114
institutions.
institutions only
the
time
funds must
-115be
available
for
withdrawal;
chartered
institutions
Federally
chartered
to
it does
state
institutions
availability requirements on
not
subject
disclosure
will
be
federally
requirements.
subject
September 1,
1988,
to
when
state
the
Act
becomes effective.
(b)
reflects
Preemption
of
inconsistent
law.
This
paragraph
the statutory provision that other provisions of state
law are preempted that are inconsistent with federal law.
(c)
preemption
party
preemption
de termi na ti on s.
determinations
in a state.
provisions of
upon
the
request
The determinations
Subpart B;
The Board will
generally
an
interested
will relate only
the
individual preemption determinations
of
Board
will
regarding
issue
to the
not
issue
the relation of
state U.C.C. provisions to the requirements of Subpart C.
(d)
Standards
for pre em p t i o n .
The Board has proposed
certain standards that will be used in making determinations
whether
federal
availability
will
law
will
preempt
in effect prior
be considered
state
laws
to September 1,
will
be
law will also be deemed
preempted,
1989.
funds
State
law
inconsistent with federal law if it provides
for a longer hold than is provided for under
State
governing
on
if
availability schedule
it
provides
for
that addresses
federal law.
inconsistent,
and
an
to
exception
its
the same situation as the
federal exception, but in a different manner.
a state provides an exception
thus
For
example,
if
to its schedules to address risk
related to large-dollar checks or large-dollar
A-115
deposits
that
is
-116different
$5,000,
from
the
the
federal exception
state
exception
exception.
Thus,
a
checks of
state
$2,500 or
greater
is
for deposits
preempted
by
law that provides
in excess of
the
federal
an exception
would be preempted by the
for
federal
large-dollar deposit exception.
(e)
provision
request
by
Procedures
sets
by an
forth
Given
and
becomes
provisions
that
determination
time between
it will
finalize
spring 1988,
this proposed
for preemption determinations
final.
preemption determination
regulation,
d e t e r m ina tion s.
the September 1, 1988 effective date,
will accept requests
regulation
for a preemption
the short lead
when the Board anticipates
regulation,
preemption
the information that must be included in a
interested party
the Board.
for
If
prior
an
the Board
before
the
interested party requests
to the
final
approval
of
a
this
the comparison of the state law provisions with the
of
the Act and regulation
should
be
based
on
the
requirements of this proposed regulation.
Section 229.21
(a)
Civil liability
Civil
liability.
This paragraph
statutory penalties for failure to comply with
sets
forth
the
the requirements
of this subpart.
(b)
the provision
Class action awards.
This paragraph
sets
forth
in the Act concerning the factors that should be
considered by the court in establishing the amount of a class
action award.
A-116
This
-117-
(c)
from
Bona fide e r r o r s .
liability
requirement
of
under
this
this
section
subpart
if
preponderance of the evidence,
a bona fide error and
avoid
such errors.
that
A depositary bank
for
it
a
can
demonstrate,
violation
of
a
by
a
that the violation resulted from
it maintains
Examples
is shielded
procedures designed
of what constitutes,
to
and does not
constitute, a bona fide error are provided.
(d)
jurisdiction
Ju risd ict ion.
This
paragraph
and statute of limitations
for
provides
civil
the
actions
for
violations of this subpart.
(e)
shields
on
Board
rulings.
on
even
any
rule,
regulation,
if it were
or
provision
interpretation
subsequently determined
Banks may rely on the commentary to this
be
This
banks from civil liability if they act in good faith
reliance
Board,
Reliance
issued
as an official
Board
to be
regulation,
interpretation,
of
in
the
invalid.
which
will
as well as on
the regulation itself.
(f)
Ex cl us ion s.
liability under
this
This
provision
clarifies
that
§ 229.21 does not apply to violations
of
the requirements of Subpart C of this regulation, or to actions
for wrongful dishonor of a check by a paying b a n k ’s customer.
(g)
Record
show compliance with
least
two years.
retention.
Banks
must
keep
the requirements of this
This
record
retention
period
records
subpart
is extended
the case of civil actions and enforcement proceedings.
A-117
for
to
at
in
-118Subpart C —
Collection of Checks
Section 229.30
Paying B a n k ’s Responsibility for Return of
Checks
(a)
paragraph
check
Return of checks or notice of n o n p a y m e n t .
requires
a paying bank
to return the check
required.
Generally,
transportation
ordinarily use
for
requirement of an
selected
under
more expeditiously
the
method
that determines
paying
and
banks
bank
for
return
than
is currently
use
the
that
"expeditious"
return,
provided
agrees
to handle
the
return
standards
for
returning
banks
in
would not be expeditious,
that of other
effect,
it
same
would
however,
that
the
the bank
return
§ 229.31.
paying bank's normal method of sending a check
than
to pay a
forward collection of checks and satisfy the
to process
the
may
not
The
for collection
if it is materially slower
banks of similar size in its community.
the paying bank
acts as an agent
or
subagent
of
In
the
depositary bank in selecting the means of return.
The paying bank must handle,
check
being returned
route,
in a way that returns
and
the check
the depositary bank in a manner designed to be at
as
transport
back
least as
a
to
fast
the paying bank would collect a forward collection check
of similar
amount,
(2)
drawn on
the depositary bank,
and
(1)
(3)
received by the paying bank
for
on the banking day following
the banking day of presentment of
the returned check.
banks
to
indicate
This
a
forward collection before noon
section
general
refers
minimum
A-118
to similarly situated
community
standard.
A
This
-119similarly
size,
situated bank
in the same
is defined
community
and
with
activity as a paying or returning
bank
returning
banks
The
that
handle
similar
that
inefficient
means
their
paying
has
believes
Board
improve
a check
may
this
handling
not use
returned
of
Under
standard
less
this
payments
activity
checks
returned
check
For example,
payments
volumes
under
similar
bank.
similar
procedures.
banks
transporting
of
as a bank of similar asset
a paying
to other
for collection.
banks
checks
that
will
standard,
use
have
to
ordinarily
efficient means of routing
checks than
they use
for
or
forward
collection checks.
A number
of
of examples
will
this duty to paying banks.
to a paying bank on
paying
bank
are
Monday
paying bank should deliver
bank
by Wednesday,
First,
and
participants
illustrate
the
in
the
if a check
depositary
the
same
application
is presented
bank
and
the
clearinghouse,
the returned check
the
to the depositary
which would be the same day it would deliver
a forward collection check
drawn on
the
depositary
bank
that
the paying bank received for deposit by noon on Tuesday.
Second,
Monday and
if a
check
is
the depositary bank
presented to a paying
is a bank in another city,
the paying bank ordinarily sends
drawn
on
the
ordinarily
returned
depositary
the
check
paying
to
the
bank
bank
bank
its (forward collection
direct
would
depositary
A-119
be
on
but
checks
to the depositary bank,
expected
bank
with
to
the
send
the
forward
-120collection checks drawn on
the depositary bank
that
the paying
bank received for deposit early on Tuesday.
Third,
Monday
and
if a check
the
paying
is presented
bank
to
a paying
bank
would ordinarily collects
on
forward
collection checks drawn on
the depositary bank by sending
forward
collection
to
Reserve
Bank
by
returned
check
provided
that
checks
courier,
to
its
a
the
correspondent
paying
correspondent
bank
or
or
a Federal
could
Federal
the correspondent has agreed
the
send
the
Reserve
to handle
Bank
returned
check under the standards established for returning banks in
§ 229.31.
the
The paying bank must deliver
correspondent
or
c o r r e s p o n d e n t ’s or
returned
checks
Federal
Federal
that
the returned check
Reserve
Reserve
corresponds
Bank
to
its
the
cut-off
Bank's
by
hour
cut-off
received
check cut-off hour
hour
if it applies
has
similar
the
or
a
requirements.
Federal
satisfies
correspondent
or
Reserve
returning
may
check
Federal
returned
a
returned
Reserve
check
Bank even
to
a
to
Bank
by
to
the
Bank
the check.
is
A returned
a correspondent
Reserve
A-120
Bank
and
the
appropriate
not
if
the
use
of
most
Thus a paying bank
if the correspondent
Federal
that the
the same banks
Delivery
Reserve
expeditious means of
send
for
the paying bank's duty even
Federal
for
to a forward collection cut-off
to checks destined
sorting
correspondent
cut-off hour
for deposit early on Tuesday.
corresponds
for
hour
forward collection checks drawn on the depositary bank
paying bank
to
as
instead
of
then sends
a
qualified
a
the
-121returned check.
by
courier
to
Where
forward collection checks are delivered
the correspondent or
the Federal
mailing returned checks would not meet
Reserve
Bank,
the duty established by
this section for paying banks.
Fourth,
if apaying bank ordinarily
its forward
collection checks
to
in order
to avoid
the costs of a courier delivery,
banks
similar
of
its correspondent or
mails
size and handling
Federal Reserve Bank
similar
but
other
volumes of checks
for collection in the paying bank's community use a courier
deliver
the
checks
paying
courier
to
bank
its
to their
would
correspondent or
have
to
correspondent
send
or
to
Federal Reserve Bank,
its
returned
Federal
Reserve
checks
Bank.
by
(The
Board believes that these situations will be unusual.)
The dollar
amount of
on how it must be returned.
large
dollar
checks
the depositary bank,
small dollar
expected to
checks,
send
Thus,
drawn on
if the paying bank
the Federal
ordinarily
large
presents
the depositary bank directly
but uses
the
its
the returned check has a bearing
dollar
Reserve
paying
returns
to
bank
to
collect
would
directly
be
to
the
depositary bank but could use the Federal Reserve for its small
dollar returns.
In
paying
bank
those of
meeting
is
requirements
responsible
for
the depositary bank or
if the paying bank
manner
the
but return
starts
its
of
own
this
section,
actions
but
returning banks.
the return of the check
not
the
for
For example,
in a timely
is delayed by a returning bank, generally the
paying bank has met its requirements
A-121
(See § 229.38).
-122The
paying
bank
is
return if the method results
to the depositary bank
a check
drawn
authorized
1.
on the
free
to use alternate
in delivery of
as quickly
depositary
bank.
the check
which
it
It may send
check
It may send
bank
is
that
or through the clearinghouse
was
presented
as
currently
of the U.C.C.;
directly
to
the
bypassing intermediaries;
the returned
willing
bank
to the bank
the returned check
depositary bank,
3.
paying
in a variety of ways:
required by section 4-301(4)
2.
the returned check
The
It may send the returned
through
of
as the forward collection of
to route the returned check
presented
methods
to handle
check
to any returning
the returned
the standards established for
check under
returning banks
in
§ 229.31; or
4.
It may
send
Reserve
Bank
the
Bank,
whether
handled
collection.
proposed
banks
to
returned
the
Reserve Bank
to
a
Federal
or not the Federal Reserve
check
(Docket
return
check
during
No.
forward
R-0621
discusses
services
checks
to enable
through
the
paying
Federal
Reserve Banks.)
If the paying bank elects to return the check directly
to
the
return
depositary
the check
bank,
it
is not
necessarily
to the branch of first deposit.
A-122
required
to
The check may
-123be returned
under
to the depositary bank
at
any
location
permitted
§ 229.32.
Except
for
the
exceptions
discussed
below,
this
section does not relieve a paying bank from the requirement for
timely
and
return
4-302
of
(i.e.,
the
midnight
U . C . C . , which
section 4-302 a paying bank
a demand
deadline)
is
continue
deadline.
"accountable"
item or
apply.
for
Under
send notice of dishonor
section 3-418
of
the
constitutes payment and would be final
course
position
to
sections 4-301
Under
the amount of
item other than a documentary draft if it does not pay
or return the
due
under
or
in
requirement
a person
reliance
gives
who
on
the
the
paying
has
in
bank
U.C.C.,
its midnight
late
return
in favor of a holder
good
payment.
by
faith
Thus,
changed
retaining
an additional
in
his
this
incentive
to
make a prompt return.
This
regulation
creates
a number of exceptions
to the
paying bank's midnight deadline in the U.C.C.:
1.
Under
U.C.C.
§ 229.30(a),
midnight
a paying bank may satisfy the
deadline
by
sending
notice
of
nonpayment;
2.
Under
§ 229.30(b),
a paying
bank
may
extend
the
midnight deadline for small-dollar checks; and
3.
Under
§ 229.30(c),
midnight
deadline
a paying bank may
in
expedite delivery.
A-123
a
good
faith
extend
effort
the
to
-124If the paying bank cannot start return of the check
soon enough to comply with this section,
of
nonpayment
that
meets
the
it may send a notice
requirements
including the timeliness of the notice,
of
§ 229.33,
and the notice may be
given on checks of less than $2,500.
The
provides
liability
that
a
"accountability"
U.C.C.
section of
paying
bank
for missing
is
this regulation
not
subject
the midnight
(§ 229.38)
to
deadline
both
under
the
and 1:ability for missing the timeliness requirements of
this regulation.
This
provisions of
paragraph
directly
the U.C.C.,
and may
affects
the
affect other
following
sections
or
provisions;
1.
Section 4-212(2),
in that direct
return
by
the
paying bank
is now permitted in all jurisdictions
even
not
though
this optional
all
jurisdictions
provision.
Also
have
adopted
the paying bank
does not have to create a draft on the depositary
bank •
2.
Section 4-301(4),
returning
a check
in
that
in
addition
through a clearinghouse or
the presenting or last collecting bank,
bank
may
return
depositary bank,
a
returned
to a returning
Federal Reserve Bank.
A-124
to
a paying
check
bank,
to
or
to
the
to a
-1253.
Section 4-301(1),
in
that
in
section
additional
that
may
time
be
requirement
limits
shortened
to
make
an
specified
by
the
expeditious
return.
The Board requests comment on:
1.
Whether
the
duty of
the
paying
bank
stated in a more concrete manner,
paying
bank
reaches
must
the
return
depositary
business day following
a
such
check
bank
should be
so
on
as
that a
that
the
it
second
the day of presentment for
local checks and the third business day
following
the day of presentment for nonlocal checks;
2.
Whether
paying
banks
should
be
required
prepare qualified returned checks
for all checks
being returned through a returning bank;
3.
Whether
notice
to
and
the option allowing a paying bank to send
of
nonpayment
effective
should
alternative
be
retained
to expeditious
as
an
return
of
the actual check,
(See
also
the
discussion
of
returning
banks'
duties
under
§ 229.31.)
(b)
Extension
of
deadline
for
Over one half of all returned checks are
less.
due
Today,
to
many of these
insufficient
redeposited
or
in an effort
returned
uncollected
to obtain
A-125
small-dollar
checks.
in amounts of $100 or
checks
that are returned
funds
are
payment.
routinely
On average,
over
-12660 per cent of these redeposited
presentment.
Thus,
a
significant
today would not be returned
check
for
an
accountable
drawer
of
additional
for
it under
the check
and
avoid
possible
the
checks
to
the paying
checks
bank
returned
could
without
of
necessity
of
bank
hold
the
becoming
the U.C.C.
could pay
returning
the
If
the
is not
it at
check
This paragraph
and
permits
(under $100)
limited
that
the
to achieve
to checks
drawn
funds and could be used by the paying bank to
be
returned
for
other
that this extension of the
to reduce
of
the second
its account shortly after the paying
The extension
insufficient
believes
time
to hold small-dollar checks
this efficiency.
hold
of
subsequent representment.
paying bank
on
number
section 4-302
funds
are paid on
if the paying
period
bank's midnight deadline,
time
checks
the number
reasons.
time
The
Board
for return will help
of returned checks,
thereby allowing
the
remaining returned checks to be handled more efficiently.
This
notice
of
extension
nonpayment
applies
under
bank's midnight deadline
The
paying
bank
check-by-check
under
extend
$100
may
basis?
the same.
to
the
§ 229.30(a)
under
extend
these
is,
This
provision
one
day
return
as
§§ 4-301
time
it need
for
as well
the U.C.C.
that
the time limits by
time
limits
not
treat
or
the paying
and
on
all
4-302.
a
checks
allows the paying bank to
rather
than
two
days.
A
one-day extension may be operationally easier to implement than
a two-day extension.
provision
This
right
(section 4 - 1 0 8 ( 1 ) (b))
to extend
is
similar
to
a
in a proposed revision of the
A-126
-127-
U.C.C.
being
developed
by
the
National
Commissioners on Uniform State Laws
If the paying bank
return,
paid
as
notice
elects
of
of
the
day
on
nonpayment.
under
which
The
to extend
this
it returns
bank
of
("NCCUSL").£/
it must reexamine the basis on which
reexamination
need
provision,
its deadline
the check
the check
not
pay
however,
original basis for nonpayment no longer
bank
Conference
the
exists.
was not
or
sends
check
even
for
if
on
the
If the paying
did not comply with the requirements of this section,
as the requirement to review its initial decision
check,
it could be accountable
for
provision
§ 4-301,
(12 CFR 210.12), or this section.
to reexamine the original
decision not
in draft section 4-402(2)
to return
the
the amount of the check for
exceeding the time for return under U.C.C.
Regulation J
such
to pay
§ 210.12 of
The requirement
is similar
to a
of the NCCUSL proposal.
This small-dollar extension may be used by the paying
bank
in combination with
the extension
for expedited
delivery
(§ 229.30 (c) ) .
£/
The NCCUSL is the organization responsible for drafting and
revising the uniform Commercial Code.
It has commissioned an
effort to draft amendments to U.C.C. Articles 3 and 4 , which
address many of the issues raised in Regulation CC.
The NCCUSL
proposal has been helpful in drafting this regulation and the
commentary to the regulation refers to the parallel provisions
in the NCCUSL proposal.
The NCCUSL proposal referred to is the
draft prepared for the NCCUSL meeting on July 31 - August 7,
1987.
This proposal has not been approved by the Commissioners
on Uniform State Laws.
A-12 7
-128-
This
4-302
of
210.12)
paragraph
the
U.C.C.
directly
(and
at the option of
affects
§ 210.12
of
sections 4-301
Regulation J,
the paying bank
and
12
CFR
for checks of $100 or
less and may affect other sections.
(c)
Many
paying
courier
Extension
banks
with
the courier
returns
leaves
of
after
under
the
expedited
returned
Instead,
U.C.C.,
but
checks
by
they
mail
on
the
banking
deadline
it is sent
day
or
later
doing
if the
west
even
checks
if
the
the
applicable
if the check
by
their
so
delay
check
the
removes
reaches
expiration
time
reaches
for
the
the
of
it is
the
return.
the bank
The
to which
the close of that bank's banking day,
means
coast
returned
following
other
than
expeditious
example,
delivery.
to meet their legal
This paragraph
the midnight deadline
extension also applies
banks
for
the depositary bank or the returning bank to which
midnight
ship
their
midnight.
the return process.
constraint of
highly
dispatch
by their midnight deadline in order
completion
sent
not
deadline
the checks that are sent for forward collection if
responsibility
either
do
of
of
banks
by
checks
transportation
may
air
use
this
courier
arrive
are
further
directly
after
to
used.
For
extension
east
the close of
if
to
coast
the east
coast banks' banking day.
The
time
limits
that
the paying bank
may extend
are
the paying bank's midnight deadline in sections 4-301 and 4-302
of
the U.C.C.
(and § 210.12 of Regulation J, 12 CF R 210.12)
A-128
and
-129-
the
time
bank
for the start of return
may
deadline
use
this
provision
for checks
regulation.
Even
of
in § 229.30(a).
to add
$100
or
The
to the extended midnight
less
in
§ 229.30(b)
of
this
if the return deadlines are not extended,
paying bank satisfies its midnight deadline under
dispatching
paying
returned
checks
to
another
including a courier under contract with
bank
the
the U.C.C.
by
by
courier,
the paying bank,
prior
to expiration of the midnight deadline.
This
4-302
of
210.12)
the
paragraph
U.C.C.
directly
(and
affects
§ 210.12
of
sections 4-301
Regulation J,
and
12
CFR
to the extent that this paragraph applies by its terms
and may affect other provisions.
(d)
banks
Identification
currently
for return.
particular
use
some
of
returned
form of stamp
This paragraph makes
form
of
stamp
is
check.
Most
indicating
paying
the reason
this practice mandatory.
required;
but
the
stamp
No
must
indicate the reason for return.
(e)
this
Depositary
regulation
transaction-type
apply
of
without
only
to
"accounts."
time or savings accounts
requirements
bank
Subpart B.
they
checks
drawn
Consequently,
means
have
in
a depositary bank with only
Collecting
to
The Act and
deposited
need not comply with
checks
not
"checks'*
Thus,
couriers delivering
do
acco u n t s .
these
on
the availability
banks
depositary
them
to
will
not
banks
have
because
present.
the costs of using a courier or other expedited
to deliver
returned
checks
A-129
directly
to
the depositary
-130-
bank
may
not
requirement
be
of
justified.
§ 229.30(a)
Thus,
does
the
not
expedited
apply
to
returned to banks that do not hold accounts.
midnight
deadline
in
sections 4-301
and
to these checks.
Returning
checks
being
The paying
4-302
(and § 210.12 of Regulation J, 12 CFR 210.12)
apply
return
of
the U.C.C.
would continue
to avoid complicating
generally,
standard
banks
without
indorsement,
returning banks and paid
same
rules
as
exception of
checks
Further,
the process of return of checks
accounts
and
are
their
required
checks
are
to
use
deposited
in
other
return
the
returned
for by the depositary bank
the expeditious
to
banks would also be required
to act on such checks within their midnight deadline.
in order
bank's
banks,
by
under
with
requirements
of
the
the
§§ 229.30
and 229.31.
(f)
Notice
or otherwise
a notice
of
indicates
unavailable
nonpayment
for
in lieu of r e t u r n .
that
return may be returned by sending
complying
it is a substitute
A check
with
for
§ 229.33
that
the returned check.
clearly
However,
the time and amount limits of § 229.33 do not apply to a notice
in
lieu
of
substitute
returning
return.
for
and
the
The
indication
returned
depositary
check
banks
carries value.
The
requirement
are
section 4-301(1)
and
of
information
nonpayment.
requirement of
required
of
of
a
that
is
the
notice
necessary
informed
so
that
is
that
a
the
the notice
this section supersedes
the U.C.C.
notice
of
the
as to the form
dishonor
or
A photocopy of the returned check would constitute
A-130
is lost
-131-
a notice in lieu of return if identified as
the
a
regulation
notice
in
and
lieu
such.
Reference
in
this commentary to a returned check includes
of
return
unless
the
context
indicates
ot her w i s e .
The
provisions
notice
of
in
lieu
of
return
is
subject
to
the
§ 229.30 and is treated like a returned check for
settlement purposes.
If the original
the notice of nonpayment
under
check
§ 229.33
was
over
$2,500,
is still required, but
may be satisfied by the notice in lieu of
return
if the notice
in lieu meets the time and information requirements of § 229.33.
The Board
requests comment on whether
information would be desirable on
to make
it
useful
transmission
of
an
cause
accounting
banks
that
must
to
the
electronic notice
settle
for
for
additional
the notice in lieu of return
depositary
problems
any
the
bank,
and
whether
the
in lieu of return could
returning
these notices
and
depositary
as they settle
for
returned checks.
(g)
and
Reliance
Appendix D
contain
its
require
nine-digit
that
in
fractional,
routing
depositary
routing number,
returned check will bear
bank
the
on
the
number.
bank
permits
returned
paying
depositary bank
banks
as
to
in
rely
that a
routing number of the depositary
eight-digit,
items,
indorsement
it is possible
nine-digit,
or
The routing number may also be in regular ink or,
qualified
Although
magnetic
on
it appears on
the
ink.
A-131
form.
especially on
This
routing
the check
other
paragraph
number
of
the
(in the depositary
§ 229.35
-132-
bank's indorsement or
in magnetic characters on a qualified
returned check) when it is received by the paying bank.
If there are inconsistent routing numbers,
the paying
bank may rely on any routing number designating the depositary
bank.
That is, the paying bank is not required to resolve the
inconsistency prior to processing the check.
The paying bank
remains subject to the requirement to act in good faith and use
ordinary care under § 229.38(a).
Section 229,31
Returning ba n k ’s responsibility for return of
checks
(a)
checks
Return of checks.
established
by
The
this
similar
section
are
requirements on paying banks in § 229.30(a).
must
handle
a returned
same manner that it
standards
to
community.
size
For
the
check or notice of nonpayment in the
(or a similarly situated collecting bank)
case of a paying bank,
asset
return of
A returning bank
would handle a similar check for forward collection.
similar
for
a similarly
and check
situated
payments
a returning bank,
bank
activity
another
bank
As in the
is one of
in the
has
same
similar
payments activity if it handles a similar volume of checks for
collection.
subagent of
In effect,
the
returning
bank
is
an
agent
or
the paying bank and a subagent of the depositary
bank.
Under
returned
checks
checks
this
section,
including
("raw returns")
a
both
returning
qualified
bank
must
and other
accept
returned
at the same general times and process
A-132
-133-
them according to the
for
same general
forward collection.
process
even
extends
its time
a qualified
raw
Thus,
returns
on
schedules
a returning
an
as checks handled
bank generally must
overnight
basis,
unless
it
limit by one day to convert the raw return to
returned
check
as
provided
in
§ 2 29 , 3 1 (b).
A
returning bank may establish earlier cut-off hours for receipt
of
returned checks
collection
than
it established
checks provided
checks is not earlier
may set different
accept
receipt of
that the cut-off hour
than 2:00 p.m.
for
forward
returned
The returning bank also
sorting requirements for returned checks than
those applicable to other checks.
not
for
returned
checks
Thus,
as late
a returning bank need
in the day as
it accepts
forward collection checks and may set an earlier cut-off hour
to
allow
extra
processing
time
for
returns.
checks received by that cut-off hour on
be processed
and dispatched
that
it would dispatch
that
time
on
the
depositary bank.
returned
checks
on
the
that banking day must
collection
day
that
checks
are
received
drawn
on
the returning bank should
by
the
same
used
transportation
drawn
banking
Generally,
returned
by the returning bank by the time
forward
same
All
route
for
forward collection of checks
depositary bank.
and
at
the
send the
by the same means of
The Board
that
are
requests comment on
whether the 2:00 p.m. limit on the cut-off hours established by
returning
process
or
banks
is
whether
adequate
a
later
to avoid
limit
delays
is necessary
ensure the expeditious handling of returns.
A-133
in
the
return
in order
to
-134-
A number
of
this
duty
receives
a
of examples will
to returning
returned
checks on Monday
illustrate
banks.
by
check
First,
cut-off
its
hour
for
returned
and the depositary bank and the returning bank
the returned check
it would deliver
the returning bank
to the depositary bank
clearinghouse exchange on Tuesday,
that
application
if a returning bank
are participants in the same clearinghouse,
should deliver
the
in a
which would be the same day
a forward collection check drawn on the
depositary bank and received by the returning bank at the same
time on Monday,
Second,
by
its
cut-off
if a returning bank
hour
for
returned
receives a returned check
checks
on
in another
bank
sends
forward collection checks drawn on
the depositary bank direct
the
to the depositary bank,
returning
ordinarily
returning bank would be expected to send the returned check
to the depositary bank with
the
the
the
is a bank
its
but
and
depositary bank
ordinarily
city,
Monday
depositary
bank
forward collection checks drawn on
received
by
the
returning
bank
for
collection at the same time on Monday.
Third,
by
if a returning bank
its cut-off hour on Monday,
ordinarily
collect
depositary bank
correspondent
returning
or
a
or
send
Federal
a returned check
returning
checks
bank
drawn
would
on
the
the forward collection checks
Federal
could
the
collection
by sending
bank
correspondent
forward
and
receives
Reserve
Bank
by
courier,
the
returned
check
Reserve
Bank,
provided
A-134
to
to a
the
its
that
the
-135-
correspondent has agreed to handle the returned check
standards
established
for
returning
The returning bank must deliver
or
Federal
Reserve
Reserve
Bank's
corresponds
to
Bank
by
cut-off
its cut-off
the check
the
hour
banks
this
to the correspondent
returned
for
the
§ 229.31.
cor re spon den t’s or
for
hour
in
under
checks
Federal
that
forward collection checks
drawn on the depositary bank and received by the returning bank
for
collection
at
the
same
time
on
Monday.
However,
a
returning bank may take a day to convert a check to a qualified
returned
check.
delivered by
Where
courier,
the
forward
mailing
the
collection
returned
checks
checks
are
would
not
meet the duty established by this section for returning banks.
The returning bank may convert the returned check
qualified
returned check
§ 229.31(b)
and
thus extend
to a
its time limits under
by one day, but may not satisfy
its duty to return
in an expeditious manner by substituting a notice of nonpayment
for the returned check.
A returning bank must handle a notice
in lieu of return within
the same time
limits
as for returned
checks.
The
returning bank
is authorized to route the returned
check in a variety of ways:
1.
It may send
had
sent
the returned check
the
check
collection
(if
check
forward
for
the
required by U.C.C.
to
it
during
returning
collection)
§ 4-212;
A-135
to the bank
bank
as
that
forward
handled
the
currently
-136-
2.
It may send
the returned
check
directly
to
the
depositary bank;
3.
It may send
bank
the
the returned check
willing
to handle
standards
the
established
to any
returning
returned check
for
returning
under
banks
under this § 229.31; or
4.
It may
send
the
Reserve Bank,
returned
whether
check
or not
to
a
Federal
the Federal Reserve
Bank handled the check during forward collection.
If
the
returning
bank
elects
check directly to the depositary bank,
return
the check
check may be
to return
it
the returned
is not
required
to the branch of first deposit.
returned
to the depositary bank
at
to
The returned
any
location
permitted under § 229.32.
In
meeting
returning bank
the
requirements
of
this
section,
the
is responsible for its own actions but not those
of the paying bank,
other
bank.
if the paying bank has delayed the start of
For example,
the return process,
returning
bank
but
returning banks,
the
has satisfied
returning
the
acts
the requirements of
even if the delayed return results
bank.
bank
or
(See § 229.38.)
A-136
in a loss
depositary
timely,
the
this section
to the depositary
-137-
The
returning
Board
banks
recognizes
by
this
changes
at
returning
returns
as
late
checks,
the
duty
returning banks
hours
unless
check,
in
section
banks.
the
that
If
day as
established
to process
the returning
the
will
the
duty
require
returning
it accepts
by
this
unsorted,
bank
check.
expediting
forward
creates
collection
could
a qualified
The Board considered alternate
the
return
of
checks.
require
returned
into qualified
returned checks.
impose burdens on paying banks,
be
ill-equipped
alternative would
for
the benefits
in processing
sent to returning
This requirement would
conversion
process.
for
This
returning banks at
The Board does not believe
in terms of reduction
reductions
the
including many small banks that
the
banks.
to
This alternative might
facilitate compliance
the expense of paying
approaches
Under one alternative,
result in faster returns in some cases.
and
accepts
raw returns in only a few
paying bank would have to convert all returns
may
operational
bank
section
on
in which case it will have a day to create the qualified
returned
banks
imposed
that
in risk to depositary banks
requirements on
returning
banks,
clearly warrant the increased burden on paying banks,
A second alternative would be to rely on the
for
prompt
charge-back.
charge-back
checks
payment
reach
return
created
Currently,
prior
by
the
banks
collecting
removal
returning
banks'
for
returned checks
A-13 7
the
right
checks
accounts
the prior collecting banks.
is made
of
incentive
often
even before
Under
the
of
the
proposal,
upon their delivery to the
-138-
depositary bank.
incentive
to
send
expeditiously.
to
process
midnight
burden
being
Therefore a paying or
returned
and dispatch
returned
for
the
alternative
banks
but
would
would
under
the
result
Act.
comment on whether the proposal strikes
between
the
also
in
funds
The
reduce
fewer
time
its
the
checks
must
Board
an
bank
limited only by
to depositary banks before
withdrawal
depositary
a returning bank's
returns would be
This
returning
available
to
Under this alternative,
deadline.
on
checks
returning bank has
be
made
requests
the appropriate balance
interests of depositary banks
in receiving prompt
returns and the burdens imposed on paying and returning banks.
This
provisions
of
paragraph
the
directly
U.C.C.,
and
affects
may
affect
the
following
other
sections
or
provisions:
1.Section 4-212(2),
returning
in
bank
that
is
jurisdictions even
direct
now
return
permitted
though
not
all
by
in
the
all
jurisdictions
have adopted this optional provision;
2.Section 4-202(2),
subsection
to
states
the
extent
that
this
a shorter time limit for action
than the midnight deadline.
(b)
checks.
its
time
Extension
of
deadline
for
qualified
returned
This paragraph authorizes the returning bank to extend
limits
to prepare
qualified
returned
check).
automated
handling
will
be
a check
A
for automated handling
returned
handled
A-138
by
check
prepared
subsequent
(a
for
returning
-139-
banks
more
efficiently
handled manually.
than
This
a
returned
check
paragraph gives
a qualified
is sending
the
this
day
is
returned check.
returned check direct
not
available
because
must
the returned check
If the returning bank
to
the
depositary
preparing
a
recognizes
that
identifying
those
extension.
The
returning
banks.
requests
that
are
comment
eligible
on
whether
banks
returned directly to depositary banks.
also
because
banks,
of
they
wish
will
to
be
the extension
the
longer
check.
check
may
time
handled
qualified
at
a
lower
this
returns
for
Although paying
returned
cost
by
checks
returning
is not available to paying banks because
that
Ordinarily,
to
prepare
for
in
returning
banks should be permitted a day to create qualified
checks
The
banks may have difficulty
returned checks
Board
bank,
qualified
returned check will not expedite handling by other
Board
be
a returning bank a day
beyond the time otherwise required to handle
to prepare
that
a paying
paying
a qualified
banks
returned
bank
has
will
check
be
at
to dispatch
able
any
the
to convert
time
after
a
the
determination is made to return the check until late
in the day
following
receive
presentment,
returned checks
while
a
late on one day
returning
and
be
bank
expected
may
to dispatch
them early the next morning.
This paragraph directly affects
midnight
deadline
in
section 4-202(2)
of
the
the
returning
U.C.C.
bank's
and may
affect other sections or provisions.
(c)
provides
Acceptance
by
collecting
bank.
This
that a collecting bank may not refuse to accept
A-139
the
paragraph
-140-
return of a check that it handled for forward collection.
is consistent with section 3-414 of the U.C.C.,
an
indorser
Further,
to
take
up a check
which requires
been dishonored.
if a paying bank cannot identify the depositary bank,
return of
the check
to the presenting bank may be its most
expeditious means of return,
chain
that has
This
should be best
able
as each
to
bank
identify
in the collection
the bank sending the
check to it.
(d)
Settlement.
Under the U.C.C.,
receives settlement for a check when
paying bank.
it
is presented
a collecting bank
to
the
The paying bank may recover the payment when the
paying bank returns the check to the presenting
this regulation,
however,
bank.
Under
the paying bank may return the check
directly to the depositary bank or through returning banks that
did not handle the check for forward collection.
On these more
efficient return paths,
recover
payment
requires
made
the
the paying bank does
to the presenting bank.
Thus,
returning
for
bank
to settle
not
the
this paragraph
a returned
(either with the paying bank or another returning bank)
check
in the
same way that it would settle for a similar check for forward
collection.
Thus,
any
handled
check
for
the
availability
for
returning
forward
returned
bank,
including
collection,
checks pursuant
may
that
provide
to an availability
schedule as it does for forward collection checks.
uniformity,
one
To achieve
this paragraph applies even if the returning bank
handled the check for forward collection.
A-140
Under
§ 229.32(b),
-141provisional credits between banks for the
the check
become
forward collection of
final upon expiration of the time for payment
for a returned check by the depositary bank.
A special
banks.
rule applies to checks returned by insolvent
(See § 229.39(a).)
This paragraph affects
section 4-212(1)
of
the U.C.C.
in that a paying or collecting bank does not have a right to
charge-back
against
returned check,
returns
the
bank
although
it
the returned check
from
is
which
entitled
it
to
to that bank,
received
settlement
the
if
it
and may affect other
sections or provisions.
(e)
bank,
Charges.
even one
This
that handled
paragraph
the check
permits
for
any
returning
forward collection,
to impose a fee on
the paying bank for its service in handling
a returned check.
The depositary bank may not charge
such
a
fee to a prior returning bank.
(f)
Reliance on
similar
to
§ 229.30(g)
routing
numbers
routing
number.
and permits
appearing
on
a
This
paragraph
is
a returning bank to rely on
returned
check.
(See
the
comment to § 229.30(g).)
(g)
is similar
Depositary bank without a c c o u n t s .
to § 229.30(e)
and relieves
This paragraph
a returning bank of its
obligation to make expeditious return to a depositary bank
does
not
maintain
any
accounts.
(See
the
comment
that
to
§ 2 2 9 . 3 0 ( e ) .)
(h)
similar
to
Notice
in
§ 229.30(f)
lieu
and
of
return.
authorizes
A-141
a
This
paragraph
returning
bank
is
to
-142originate a notice
in lieu of
unavailable for return.
Section 229.32
return
if the returned check
is
(See the comment to § 229.30(f).)
Depositary b a n k ’s responsibility for returned
checks
(a)
seeks
and
Acceptance of
returned
result
depositary
in
a
number
of
banks
sending
notices
locations
at
of
the U.C.C.,
which
nonpayment.
which
electronic notices.)
It
a
to where
states
is
at
the
and
(These
derived
locations
bank
from
accept
section 3-504(2)
instrument or,
place of business of the party
can
must
differ
of
specifies that presentment for payment may be
case of returned checks,
check
as
to
This paragraph
depositary
made at the place specified in the
none,
regulation
the depositary bank is required to accept returned checks
written
from
checks
banks with no preexisting arrangements
the returned checks should be delivered.
and
This
to encourage direct returns by paying and returning banks
may
where
checks.
only
to pay.
the depositary bank does
specify
the
place
of
if there are
In the
not print
"payment"
of
the
the
returned check in its indorsement.
The
paragraph
specifies
four
locations
at which
the
depositary bank must accept returned checks:
1.
If
the
depositary
bank
indorsement
states
name and address of the depositary bank,
accept
returned
checks
at
the
office indicated by the address.
is too general
branch
or
the
it must
head
If the address
to identify a particular branch or
A-142
-143-
the
head
accept
office
returned
office,
then
checks
consistent
example,
the
the
at
with
address
depositary
any
the
was
bank
branch
or
address.
"New York,
2.
for
New York,"
returned
The address may be a processing center.
If no address
indorsement,
returned
appears
the
checks
associated
number.
number
head
If,
each branch in New York City must accept
checks.
must
any
the
The offices
of
a bank are
Rand McNally,
the
depositary
at
with
in
depositary
bank
branch
or
depositary
must
accept
head
office
bank's
associated with
found
bank's
routing
the routing
in a publication of
Key to Routing N umb e r s , which
lists
a city and state address for each routing number.
3.
If no
routing number or
indorsement,
the
address
depositary
bank
returned check at any branch
the
bank.
§ 229.35
The
and
indorsement contain both
and
well
location.
as
bank
failed
this
office
that
comply
a
of
of
the
name,
provision,
applies
to
its
accept
requirement
responsibility for indorsement.
A-143
head
in
a routing number,
(2) , only
has
must
requires
Consequently,
provision
depositary
or
indorsement
Appendix D
appears
as
where
the
with
its
-144-
4.
In addition
bank must
to
(1),
(2), or
(3),
the depositary
accept returned checks
at the location
at which it accepts checks as a paying bank.
(b)
§ 229.31(e),
does
by,
P aym e n t .
under this
not obtain credit
As
regulation,
check
This paragraph
that
in
the
comment
to
a paying or returning
the returned check
to the depositary
imposes an obligation to "pay" a returned
is similar
to payment of a check,
except that
depositary bank may not return a returned check for which
the
depositary
remittance
bank
drafts
bank
for a returned check by charge-back but
in effect, presenting
bank.
discussed
and
certain
means
of
can only be used with
payment
such
the
it is
as
the agreement of the
returning bank.
The depositary bank must pay
for a returned check by
the close of the banking day on which
it received
check.
check
The
determined
day
on
pursuant
permits
the
earlier
than
bank
which
to
to
a
returned
section 4-107
establish
2:00 p.m.,
and
a
of
is
the
cut-off hour,
treat checks
the returned
received
U.C.C.,
is
which
generally not
received
after
that
hour as being received on the next banking day.
Payment must be made
for use by the bank
returning
on the day the check
example,
a depositary
transfers
account
funds
of
the
so that the
funds are available
the check to the depositary bank
is received by the depositary bank.
bank meets
this
requirement
to the Federal
Reserve
or
returning
on
day
bank
A-144
the
if it wire
correspondent
it
For
receives
bank
the
-145-
returned check,
even
if the returning bank has closed
day or net settles with
with current Federal
net
the
for
returning bank on that day.
Reserve
net
settlement
the
Banks
agreements
could
the appropriate credits and debits for returned checks with
the accounting entries for cash
items
if they so desired.
If,
for purposes of establishing additional control or to establish
a new
settlement
separate
arrangement,
settlement
settlement
for
agreement
the
returned
would
have
banks
involved
checks,
to
be
a
desired
separate
established
a
net
with
the
local Federal Reserve office.
If
payment
accountable,
i.e.,
the amount of
returned
is
not
liable,
that
the
depositary
check.
If
the
returned
check
should
A
as
a returning bank would pay
handle
the misrouted
returning bank may agree
if,
for example,
returned
payment.
check
Thus,
it does
or
checks
check
is
item as
but must pay
for
the check
indicated
to accept payment
not believe
warrants
that
the
in
—
for
it
§ 229.32(d).
at a later date
the
costs
a returning bank may agree
through an automated
is
is not the depositary bank, that bank
has no obligation to pay under this paragraph,
the
bank
to the paying or returning bank for
the returned
to a bank
made,
to
amount
of
same
accept
of
the
day
payment
clearinghouse credit or debit that settles
the day after the returned check
is received
transfer that settles on the same day.
A-145
instead of a wire
-146-
This paragraph
the
NCCUSL
proposal,
section 4-212(2)
of
is similar to draft
which
the
in
turn
U.C.C.
is
section 4-301(5)
based
concerning
on
of
optional
direct
return
of
checks.
The Board
required
to
requests
ensure
that
comment
payment
on
whether
is made
a penalty
is
as required by this
paragraph.
(c)
bank.
Recovery
by
depositary
bank
from
A depositary bank may not have received
settlement
for
collecting
full provisional
the check when it was sent for collection or may
have
received no settlement at all.
pays
the
returning bank
for
When
the depositary bank
the returned check,
it will have
lost the difference between what it paid the returning bank and
what
it received
from the bank
forward collection.
to recover
the
check
it sent the check for
This paragraph permits
the difference
settlement.
to which
the depositary bank
from the bank that did not make full
This rule applies whether the depositary
to
the
next bank or merely transferred
bank
sold
it to that
bank as an agent for collection.
(d)
Misrouted
returned
checks.
Today
receiving a misrouted returned check often sends
to
the
party
that
sent
it so that party can
identify the correct bank.
the
process
by
requiring
a
the check
research
This paragraph attempts
a bank
that
bank
received
it and
to
hasten
the misrouted
returned check to send it to the correct depositary bank
can
identify
the
correct
depositary bank.
bank receiving the misrouted
Failing
returned check would
A-146
back
that,
return
if it
the
it to
-147-
the
returning or paying
bank
sending
the check
to
it.
In
either case the bank to which the returned check was misrouted
could
receive
settlement
for
the check.
If the check was
originally received "free," that is, without a charge for the
check,
the bank
incorrectly receiving the check would have to
return the check,
without a charge,
to the bank from which it
came •
Section 229.33
Notice of nonpayment
(a)
different
provided
Requirement.
functions
for must
in
this
follow
Notice of nonpayment serves several
regulation,
the
general
but
each
notice
requirements of
this
section:
1.
The paying bank may send a notice of nonpayment
as a way of meeting its duty to initiate return
under § 229.30.
with
If the notice is used to comply
§ 229.30, nevertheless
within
the
section.
time
limits
it must be provided
prescribed
by
This notice carries no value
this
and does
not relieve the paying bank of the requirement to
return the check?
2.
The paying bank must send a notice of nonpayment
complying with this section if it decides not to
pay
a
check
of
$2,500
carries no value,
or
more.
and the check
The
notice
itself must
be
returned; and
3.
A paying or
returning bank may send notice
in
lieu of return if the check itself is unavailable
A-147
-148-
for
return
regardless
under
of
§§ 229.30(f)
the
amount
of
and
the
229.31(h)
check.
This
notice is subject to the content requirements of
this
section
§§ 229.30
The
and
notice
substitutes
is not
but
to
the
229.31
in
lieu
for
timing
rather
requirements of
than
this
of return carries value and
the returned check
returned.
Because
the check cannot be returned,
used
if
recover
The
notice of nonpayment
regulation
collected
paying
is
even
bank
is
be
to
if
the notice
except the notice
the
check
and
to the depositary bank
Under this section,
that the notice
they must
is modeled after
(12 CFR 210.12)
required
notice
business day.
were
the
time
in
not
limit
is shorter by one
the paying bank must ensure
is received by the depositary bank by 4:00 p.m.
on the second business day
currently requires
of
returning
through a Federal Reserve Bank,
for providing
third
or
which
its settlement for the check.
required by Regulation J
this
itself,
these notices are used
when
the
section.
banking day
following presentment.
Regulation J
the notice to be received by midnight of the
following
the NCCUSL proposal
presentment.
Draft
section 4-304
contains a similar provision on notice
of nonpayment.
The
Board
requests comment on whether notices should
be required for checks of $2,500 and over or $5,000 and over.
A-148
-149-
(b)
follows
Content
the content
of
the
identify
the notice of nonpayment
forward
paragraph
The
currently required
the paying bank cannot
send
n oti c e s .
collection
to the
that,
under
specified
Regulation J.
the depositary bank,
process
also provides
content
that
it should
first collecting
it can
If
bank in
identify.
This
in the case of written notices,
the name and routing number of the depositary bank are required.
(c)
Acceptance
of
notice.
follows current practice under
written
notice,
the
This
paragraph
Regulation J.
depositary
bank
is
In the case of a
required
to
notices at the locations specified in § 229.32(a).
of
telephone
at these
notices,
also
accept
In the case
the bank may not refuse to accept notices
numbers but may transfer
calls,
or
use
a recording
device.
(d)
Cha rg e -ba ck.
Appliance
Buyers
F .2d
(7th
290
notice
of
Cir.
nonpayment
timely manner
the
Credit
1983)
to
This paragraph
Corp
v.
that
the
Prospect
sending
account
section 4-212(2)
of
the
by
the
NCCUSL
returned
check
bank's customer
to
depositary
proposal
of
B a n k , 708
is not a condition precedent
customer's
view
National
a
depositary
adopts the
or
in a
charge-back
bank.
contains
to
Draft
a
similar
This paragraph
follows
provision.
(e)
similar
on
Cancellation of n o t i c e .
provision
whether
other
in Regulation J.
provisions
nonpayment should be adopted
from
The Board
requests comment
Regulation J on
in this regulation.
A-149
a
notice
of
-150-
Section 229,34
Warranty by paying bank and returning bank
(a)
Warranty.
warranties of timely
CFR
210.12(b))
and
returning bank
This
return
adds
paragraph
incorporates
in § 210.12(b)
the
is authorized
warranties
to return
the
of Regulation J
that
the
the check
paying
and
(12
or
that the
returned check has not been materially altered.
(b)
warranties
D a m a g e s . This
in
§ 229.34(a)
section 4-207(3)
(c)
paragraph
warranty
of d e f e n s e .
This
of
the
blurred,
Indorsement
in returning
and
from them.
incomplete
the
a check
collecting
Current
indorsement
required to
place
checks.
The
components of
the
for
banks
and obtaining
problems
and
often
by
are
required
indorsement
the standards developed,
A-150
major
useful
faint,
specifying
its location
returning
confusion
regulation's
the
The indorsement standards
to avoid
not
of
indorsements
their indorsements on checks as
In order
paying
banks,
indorsement must contain and
Depositary, collecting
checks,
is reading
One
indorsements are
ink color.
Appendix D.
adopts
(12 CFR 210.5).
sta nd a r d s .
and overlapping.
in Appendix D address
information
of
Indorsements
depositary
information
damages
new
the vouching-in provisions of section 3-803 of
(a)
difficulties
the
paragraph
the U.C.C. or section 210.5 of Regulation J
Section 229.35
for
of the U.C.C.
Tender
this regulation
the
adopts
in
to
requirements
and
banks
are
specified in
routing
indorse
the
returned
returned
adopt
the
but not finally adopted,
-151-
by The American National Standards Institute
("ANSI").
An ANSI
working
of
check
group,
processing
parties
comprised
equipment
adopted
of
representatives
manufacturers,
those
standards
and
over
banks,
other
interested
the past two years.
regulation does not incorporate the ANSI
standard by
however,
have
but
requires
For
many
that
indorsements
This
reference,
these particular
elements.
standard would
stamps.
For
collecting
entail
some
bank
customers
banks,
on
compliance
replacement of
equipment.
applying
may
indorse
encoding
(This
does
depositary
need
different
equipment:
two
bank,
the
by
its
and/or
its
bank
transit
not
prohibit
and a transit
a
indorsement
and
Alternatively,
on
indorsement,
bank
transit
the
its
bank
may
high-speed
where
indorsement when
from
it
is
the
it acts as a
collecting bank.
Second,
prior
to
where
deposit,
indorsement
high-speed
corporation
and
the
the
equipment.
or
the
A
retail
depositary
and apply
indorsements
the depositary bank
depositary
deposited
using
bank
same check.)
apply
indorsement plates
regulation,
indorsement on the
to
indorsement
sent by its respondents on its high-speed
section
a
checks
equipment
to checks
both
the
banks additional changes may be necessary.
indorsement required by this
indorsement
with
a corporation
corporation
bank
applies
Under
the
depositary
encodes
often
its
its
own
applies
indorsement
proposal,
checks
its
own
on
its
either
the
bank must apply the depositary
A-151
-152-
bank indorsement.
deposit
or
For
lock-box
locations or corporations
into multiple depositary banks,
lock-box depositor
indorsements
would
have
either
that
the corporation
to apply the depositary bank
to the checks being collected by each bank, or the
depositary bank must apply its depositary bank indorsement.
Third,
capable
of
location
to
placing
specified
indorse
When
on
a
sorters
depositary
by
other
depositary
equipment,
the
high-speed
bank
the standard.
equipment,
bank
indorsements
required
by
not
be
immediately
indorsement
in
the
Depositary banks may wish
such
as
encoding
equipment.
are
applied
on
to use
banks are encouraged
information
may
special
ink and
the
standard
even
high-speed
if
include
the
indorsements are not placed in the correct location initially.
Fourth,
the proposed
developed by ANSI,
avoid
standard,
requires all depositary bank
the carbon band
location.
An
it more difficult
to the paying
checks with carbon bands.
either
would
a carbon
have
technique
depositary bank
required
to
indorsements
This
to
a
restriction will
for depositary banks to comply with the
location requirements of the standard.
is to shift the burden
the approach
indorsement placed over
carbon band often would not be legible.
make
following
An alternative
approach
bank whose customers use
Under this approach,
the paying
bank
to stop issuing carbon band checks or select
that would not
indorsement.
qualify
all
interfere
Further,
carbon
band
A-152
with
reading
the
the paying bank might be
returns
as
qualified
-153-
re turned
checks
rather
than depositing
these
returns
raw with
an intermediary.
The Board
be
minimized.
whether
the
the
requests comment on how these problems might
In
addition,
the
Board
indorsement standard
indorsement
in
responsibilities
the
should
should
carbon
be
requests
on
restrict placement of
band
placed
comment
area,
on paying
and
banks
what
that
issue
carbon band checks.
As discussed
failure
paying
in connection with § 229.38 on liability,
to follow these
or
returning
indorsements
bank of
check where the delay
standards
liability
is due
to the
may
relieve
a
for delay in returning a
failure
to use
the proper
indorsement.
(b)
U.C.C.,
an
Contract of indorser.
indorser
engages
the
instrument.
When
the
collection
process
extending
banks
indorsement
banks
a check
is sent
results
in
through
the
and would permit each
returned
section,
bank
that
check
from
in the event of
accepted
the
forward collection,
through
paying
of
the collecting
bank
to
unable
depositary
for
A-153
and
the
returning
from prior indorsers if
to obtain
bank.
the depositary bank's
the check
indorsements
This section extends the
to recover
the paying or returning bank were
the
for
a chain
to the paying bank.
chain
section 3-414 of
that upon dishonor he will take up
from the depositary bank
presenting
Under
payment
Under
this
insolvency,
forward collection
for
the
from the
the
-154-
depositary bank
would
ultimately be
as the next prior indorser,
Section 229.36
responsible
for
the
as is the case under U.C.C.
check
§ 3-414.
Presentment of checks and delivery of returned
_______checks
(a)
Payable
regulation defines
a payable
could
be designated
bank)
as a paying
under
this
of
bank.
or payable at bank.
of
time
for
at
checks.
though or payable
at bank
such
as
are
as payor banks
return
or
notice
the
may have
effect,
a significant
payable
through
share
expeditious
the U.C.C.
dishonor.
for
at
return
treats payable
under
time
(which
imposed on a paying bank
imposed on a payable
of
The
through or collectible
the
This paragraph
substantially shortens
using
payable
The duties
§ 229.30(a),
at banks
and
the collectible
regulation,
requirements
payable
through
through
through and
for purposes
This
treatment
return of these checks and
for example,
drafts
and
on
credit
insurance
unions
companies
using payable through drafts.
(b)
provision
to
Receipt
seeks
promote
depositary
presentment
§ 229.32(b)
to facilitate efficient presentment
early
bank
by
at bank office or processing c e n t e r .
return
and
or
notice
clarifies
routing
the
number.
of
law
This
nonpayment
as
to
the
paragraph
because presentment of checks differs
of
to
The
checks
the
effect
differs
of
from
from delivery
of returned checks.
The paragraph
specifies
four
locations
paying bank must accept presentment of checks:
A-154
at
which
the
-155-
1.
If the check specifies
the name and address of a
branch or head office,
the check may be presented
by delivery
too
to that office.
general
to
identify
presentment may be made
with
the address.
"San Francisco,
Francisco
must
designation
of
a
If
address
particular
at any office
For example,
California,"
accept
an
the
office,
consistent
if the address is
each
office
in
presentment.
address
is
on
the
San
The
check
is
generally in the control of the paying bank.
2.
If the
bank
check
but
specifies
no
presentment
trade off
address,
at
for
any
the
the
name
of
bank
must
office.
Thus,
the bank
for the check.
existing
states
that presentment
specified
to pay.
and address
there
is
and simply
This provision
there are none,
party
accept
a
stating
to encourage wider currency
section 3-504(2)
at the place
paying
a paying bank between specifying a
particular address on a check
the name of
the
of
is consistent with
the
U.C.C.,
for payment may
in the
which
be
instrument, or,
at the place of business of
Presentment according
(if any)
be made
by
banks.
Collecting
on
individuals,
banks
routing number.
A-155
than
generally
if
the
to the name
a check would
rather
made
generally
collecting
rely
on
the
-1563.
Presentment may also be made at an office of
the
paying bank associated with the routing number on
the
check.
routing
The
number
publication
of
of
routing
a
Rand
N u m b e r s , which
each
office
bank
with
found
Key
the
in
to
a
Routing
lists a city and state address for
number.
routing
number
Checks
by collecting
in
form
magnetic
if
are
generally
banks on the basis of
the
characters
magnetic
obliterated)
on
the
printed
or
address.
name
is
McNally,
handled
fractional
associated
check,
(or
in
characters
rather
The
the
than
are
the
definition
of
a
paying bank in § 229.2 includes a bank designated
by routing number,
whether or not there is a name
on
whether
the
check,
and
consistent with the
requirement
address
the
with
the
number
generally control
not
any
routing number.
in the regulation
agree
routing
or
on
There
that the
address
the
A
with
the
processing center.
may
have
with
would
the
not
routing
routing
number.
may
and
with
may
be
a
a paying bank
in the city associated
In
such
a
be reasonable or efficient
A-156
is no
The address
number
In some cases,
several offices
bank
is
its routing number,
just as it does the use of its name.
associated
name
associated
check.
the use of
name
case,
it
to require
-157-
the presenting bank
specific
branch
addresses
on the checks, and
branch.
deliver
to sort
checks
a
checks
by
more
that might be printed
to deliver
Generally,
all
the
the checks
collecting
to one
to each
bank
location.
would
In
cases
where checks are delivered to a branch other than
the branch on which
and
courier
permit
the
they may be drawn,
communication
paying
bank
among
to
computer
branches
quickly
should
determine
whether to pay the check,
4,
In addition, delivery of checks may be
presentment
location,
is
considered
presented
would
adopt
by
the
the
agent
(c)
the physical
Truncation.
check
banks
of
the
This
processing
paying
bank
the time
(See also U.C.C.
Truncation
This
process
partly
requested
provision
center
to
of
acts
accept
for processing
is a procedure
in
which
is held by the depositary or collecting bank
has
the
efficiency of check processing,
limited,
a
§ 4-204(3),)
and the information from the check is transmitted
bank.
at
law rule of a number
to begin
and
is the way most checks
today.
that the
presentment and
of the check.
This
common
legal decisions
as
occur,
such as a processing center,
by the paying bank.
are
to
made,
because
of
potential
but
improving
the
use of truncation has been
uncertainties
A-157
of
to the paying
about
whether
the
-158-
U.C.C.
permits
paragraph
however,
prior
it without
allows
such
all parties.
truncation by agreement with
agreement
parties
the agreement of
to
the
may
not
check.
agreement may not extend
prejudice
For
the
the paying bank?
the
interests
example,
a
bank's
time
paying
This
of
truncation
for
return.
Such an extension could damage
the depositary bank, which must
make
customers
funds
available
availability
to
schedules.
its
Draft
under
section 4-109
of
mandatory
the
NCCUSL
proposal has similar provisions on "electronic presentment."
Section 229.37
Under
available
Inquiry to paying bank
§ 229.10,
for cashier's,
business day after
checks
cannot
available
obtain
for
telephone
check.
be
certified,
bank
and
must
presented
and
some
returned
before
depositary
from the paying bank
make
banks
that
Because
with
available
may
want
the checks
information
With respect to teller's checks,
these
funds must be
This paragraph requires the paying bank
inquiries
funds
teller's checks on the
the banking day of deposit.
withdrawal,
assurance
fraudulent.
to
a depositary
to
are not
to respond
about
the drawing
the
bank must
also respond to inquiries from the depositary bank.
The Board requests comment on:
1.
Whether
this
is
a
proposed
or
example,
to guarantee the information;
whether
A-158
workable
it
should
arrangement
be
revised,
as
for
-159-
2.
What
standard of promptness
paying
and
drawing
banks
should be
in
placed
responding
on
to
inquir i e s ?
3.
Whether
the
paying
bank
should
be permitted
to
charge for providing information; and
4.
Whether
this
requirement
should
be
limited
to
checks over a certain dollar amount.
Section 229.38
Liability
(a)
Standard of care;
liability;
measure of d a m a g e s .
The standard of care established by this section applies to any
bank
covered
by
regulation.
229.33,
and
depositary
the
Thus,
of
Subpart C
of
the
it applies to a paying bank under §§ 229.30,
229.37;
bank
requirements
to a returning bank
under
§§ 229.32
and
under
§ 229.31;
229.33;
to
a
to
a
bank
erroneously receiving a returned check or notice of nonpayment
as
depositary
check under
bank
under
§ 229.35.
§ 229.32(d);
The
and a bank
standard of care
indorsing
is similar
a
to the
standard imposed by sections 1-203 and 4-103(1) of the U.C.C.
A bank not meeting this
the depositary bank,
to
the
check.
The
sections 4-103(5)
the owner of the check,
measure
of
bank's
the U.C.C.,
customer
of
and 4-202(3)
This paragraph
paying
standard of care
liability
damages
stated
to
another party
derives
from
of the U.C.C.
also states
that
it does not affect
to its customer.
for example,
or
is liable
a paying
bank
Under
is
a
section 4-402
liable
to
its
for wrongful dishonor, which is different from failure
A-159
-160-
to
exercise
ordinary
care
and
has
a
different
measure
of
damages.
The
liability
Board
under
requests
this
comment
paragraph
on
should
whether
be
a
bank's
limited
to
the
depositary bank and owner of the check.
(b)
Paying
Section 229.30(a)
expeditious
bank's
imposes
return
of
failure
to make
timely
return .
requirements on the paying
a check
and
leaves
in place
bank
for
the U.C.C.
time limits, which may allow return at a different
time.
This
paragraph
liable
for
failure
both.
clarifies
to meet either
The
regulation
"accountability"
U.C.C.,
that
the paying bank could be
standard but
intends
for missing
a concept that
not
for
to preserve
its
is not
midnight
failure
the
to meet
paying
deadline
bank's
under
the
incorporated in this regulation,
but may be useful in other circumstances.
(c)
Comparative
establishes
a
"pure"
liability under
negligence .
comparative
negligence
returning
difficulty
will
is
bank
in identifying
illustrate
assumed
depositary
delays
liability
that
bank
customer,
that
customer,
and
the
after
it may
that
the
in
it
in such cases.
no
has
check
made
longer
inability
This comparative
a check
depositary
returned
for
application where a paying
returning
the
paragraph
standard
Subpart C of this regulation.
negligence rule may have particular
or
This
is
funds
recover
bank.
because
Two
of
examples
In each example,
received
by
available
the
funds
it
the
to
from
its
its
to recover the funds from the
A-160
-161customer
is due
the standards
to a delay
established
if a depositary bank
this
regulation
returning
identify
paying
the
the
or
in returning
by §§ 229.30(a)
fails
to use the
and a paying or
check
because
depositary
returning
the check contrary
bank's
returning bank
find
liability
First,
indorsement required
additional
bank or
or 229.31(a).
to
time
is delayed
is
required
its routing number,
to
the
by
depositary
in
to
the
bank
would be reduced or eliminated.
Second, if
indorsement
but
the
that
depositary
indorsement
bank
uses
is obscured
in
required
number,
returning
to
check
because
or
However,
find
bank
time
its
is
was
routing
returning bank may not be liable to the
bank because
negligence.
returning
additional
identify the depositary bank or
the paying
depositary
the
standard
by a subsequent
collecting bank's indorsement and a paying or
delayed
the
the
delay
was
the collecting
depositary bank to the extent
that
not
due
to
its
bank may be liable to the
its negligence
in indorsing
the check caused the paying or returning bank's delay.
(d)
certain
Timeliness
delays.
section 4-108(2)
It
of
action.
This
incorporates
paragraph
the
standard
of the U.C.C. with the addition of
of
"failure of
equipment"
and
of delay.
The addition of these two causes makes explicit what
was
"interruption of computer
excuses
previously
section 4-108(2)
generally
accepted
under
facilities"
the
U.C.C.
as causes
Draft
of the NCCUSL proposal makes a similar change.
A-161
-162-
(e)
civil
Exclusion.
This
liability and class
paragraph
provides
action provisions,
(12 U.S.C.
provisions
adopted
mechanism.
of
to
and
(b)) do
improve
not
where
no
actual
litigation
and 611(b)
apply
to
the efficiency of
Allowing punitive damages
checks
encourage
4010(a)
damages
and provide
of the
regulatory
in the return
incurred
little or no
the
the payments
for delays
are
the
particularly
punitive damage provisions of sections 611(a)
Act
that
would
only
benefit
to
the
check collection system.
(f)
from
Bona fide e r r o r s .
liability
requirement
of
preponderance
bona
under
this
such
and
errors.
section
subpart
of evidence,
fide error
avoid
this
that
An
A depositary bank
if
it
that
for
a
can
demonstrate,
violation
the violation
it maintains
error
in
is shielded
judgment
a
by
resulted
procedures
legal
of
a
from a
designed
does
to
not
constitute a bona fide error.
(g)
J u r i sdiction.
jurisdiction
and
This
section
statute of limitations
provides
the
for civil actions
for
violations of this subpart.
(h)
Reliance
shields banks
reliance
Board,
on
even
Board
rulings.
This
provision
from civil liability if they act in good faith in
any
if
on
rule,
it were
regulation,
or
interpretation
subsequently determined
to be
Banks may rely on the commentary to this regulation,
be
issued
as an official Board
interpretation,
the regulation itself.
A-162
of
the
invalid.
which
as well
will
as on
-163Section 229.39
Insolvency of bank
If a paying
bank fails without having made provisional
settlement with the presenting bank for checks
its
trustee could
presented,
theoretically return the checks directly to
the depositary bank or through a returning bank other
presenting bank
under
§ 229.30(a).
in the paying bank, or its estate,
checks
for which
inequity
and
depositary,
results
returning
receiving
value
for
returned
This section avoids this
involving
banks.
than the
This situation would result
it never gave value.
similar
and
it or
This
failed
section
collecting,
is similar
to
the insolvency provisions from section 4-214 of the U.C.C.
Section 229.40
Relation to state law
This section specifies that state
collection of checks
inconsistent with
not
a
complete
law relating
to the
is only preempted to the extent that it is
this
regulation.
replacement
for
Thus,
this
state
laws
account
of
regulation
relating
to
is
the
collection or return of checks.
Section 229.41
Exclusions
Checks drawn
Treasury,
or
upon
indorsed by
money orders are excluded
the
the Treasury,
the
United
States
and U.S. Postal Service
from the coverage of
the expeditious
return requirements of Subpart C of this regulation.
APPENDIX A —
This
Routing Number Guide to Local Checks
appendix
lists
the
considered local to each check
routing
processing
A-163
numbers
region.
that
are
The numbers
-164-
in the Appendix represent the first four numbers of
the
routing
numbers of paying banks in each region,
APPENDIX B —
Time Period Adjustments for Nonlocal Checks
The
Act
directs
the
Board
to
reduce
the
statutory
schedules for any category of checks where most of those checks
can
be
returned,
system,
in
schedule.
a
under
shorter
an
period
Appendix B
categories of checks
improved check collection and return
of
time
describes,
for which
time period adjustments
by
than
routing
reduced
are listed
provided
number,
schedules
to determine
that bank.
apply
those adjustments
In a number of cases,
to banks
located
these
those
apply.
The
in which
it has
that are applicable
the reduced
schedules
to
only
in the same city as the Federal Reserve
check processing office.
which
the
by check processing region,
so that a bank need only refer to the region(s)
offices
in
The
routing numbers of
reductions apply are provided.
the banks
In other cases,
to
the
reductions would apply to all banks located in the region.
The
by
each
proposed
Federal
Reductions
significant
are
reductions
Reserve
proposed
Bank
for
in schedules were determined
check
certain
improvements can be made
processing
nonlocal
to
the
office.
checks,
Act's
where
schedules.
For the most part, shorter schedules are provided for:
1.
Checks
deposited
in
banks
Federal Reserve cities
located
in
and drawn on banks located
in certain other Federal Reserve cities;
A-164
certain
-165-
2.
Checks drawn on certain banks
that are served by
two Federal Reserve Bank offices; and
3.
Checks deposited
in and drawn on banks
York City metropolitan
of
the
Federal
area,
where
in the New
the proximity
Reserve Bank offices
facilitates
faster clearing and return of these checks.
Appendix
schedule
that
Appendix
B-2
B-l
are
provides
applicable
provides
the
the reductions to the nonlocal
during
the
reductions
temporary
schedule.
that will be applicable
when the permanent schedule becomes effective.
Model Forms
APPENDIX C —
Appendix C contains
used
by banks
to meet
the regulation.
indicated
thirteen model
their disclosure
forms
that
may
responsibilities
Each form is designed for a particular
in the titles
identifying each
form.
be
under
use,
as
Information to
be inserted by a bank using the forms is highlighted by the use
of parentheses and bold type.
Although use of the model forms is not required,
using
them properly will be deemed to be in compliance with the
regulation with
regard
to
may make certain changes
the
particular
in the
the Act's
protection
disclosures.
inapplicable without
from liability.
or
making
meaningful
revisions
sequence
with
of
that
A-165
losing
The rearrangement of the
model forms may not be so extensive as to affect
clarity,
Banks
format or content of the forms
and delete any disclosures that are
Banks
banks
the
effect
forms
will
the substance,
and
clauses.
lose
their
-166protection
from
civil
liability.
Acceptable
changes
include,
for example:
Using
"customer" and "bank"
instead of pronouns.
0
Not using bold type for headings.
0
Incorporating
certain
state
"plain
English"
requirements.
Deleting
inapplicable disclosures by whiting out,
blocking
out, crossing
checking
a box for applicable
out,leaving
blanks,
items,
or circling
applicable items.
Banks
are
cautioned
against
their own
policies
without
reviewing
current
state
andfederal
law
for
availability
of
required
bank's
use
compliance
of
with
disclosures
policy.
a
model
the
actually
Shorter
substituted,
Act
specific
the
correspond
time periods
and,
in
fact,
the
types
to
be
of
the
only
availability
required
the
periods
checks.
its
bank's
forms
and
time
result in
regulation
for
may
the attached
and practices
regarding
form will
and
using
A
being
if
in
the
availability
may
under
always
be
applicable
state law.
Models C-l
the
through C-7 gener a l l y .
specific
regulation.
policy
The
disclosure
Models
described
forms were designed
of availability practices
periods) .
These
(within the
C-3 and
C-4
A-166
forms
in
are models
§ 229.16
of
for
the
to accommodate a variety
regulation's maximum
reflect the
time
alternative
-167-
disclosure for banks with case-by-case hold policies described
in § 229.16 (b).
Model
C-l.
policy
is to make
customers
Use
of this form
is
appropriate when a
bank's
funds
after
the day
from any type of deposit available to
the
deposit
is made,
with
no
holds
placed on deposited funds.
Model
C-2.
policy
Use
of this form
is to make
funds
is
bank
that the bank
would
Under the special rules for new accounts
should
insert,
availability of
accounts
except
that
where
deposits
are
indicated,
other
available
on
than
the
its outside
those
limit
deposits
requirements referred to with regard to the checks
that
requirements outlined
checks
new
some cases,
Model
—
specifically,
into an account of
Use
of this form
is to routinely make
available
that
the payee and,
the day after
is
in
funds
appropriate when a
b a n k ’s
from all types
deposits
the deposit
is made,
form
is assumed
not
safeguard
exceptions
in
of
but occasionally
to delay availability on a particular deposit.
this
receive
be made with a special deposit slip.
C-3.
policy
The
in new accounts are those
in § 229.10(c)(1)
be deposited
for
into
day.
next-day availability when deposited
next
section,
business
the
take
the regulation's new account and other exceptions
in § 229.13.
a
bank's
from any type of deposit available the
day after the deposit is made,
advantage of
appropriate when a
A
bank
using
to exercise either the new account or
§ 229.13
A-167
of
the
regulation.
As
a
-168result,
the
delays
imposed
may
not
be
longer
than
the
applicable maximums in §§ 229.11 and 229.12 of the regulation.
Model C - 4 .
Use of this form is appropriate when a bank has the
same policy as described
using
this
form
would
under Model C-3,
take
advantage
except
of
the
that
a bank
safeguard
exceptions found in § 229.13.
Model
C-5.
policy
Use
of
this
form
is to impose delays
schedules
and exceptions
availability
for
local
is
appropriate
to the
in the
checks
regulation.
and
that
to $400 on
after
the
assumes
clearinghouse.
that
a bank's
full extent allowed by
customer's cash withdrawals
deposit
when
bank
The disclosure of
the
the
bank
limits
the
third business day
is not
(Banks that are members of
the
a member
of
a
a clearinghouse may
restrict cash withdrawals until the fourth business day only as
to non-clearinghouse
local checks.)
In making this disclosure,
a bank must insert a time after which the customer may withdraw
up
to
$400.
A
bank may not,
under
the
regulation,
insert a
time of day later than 5:00 p.m.
Model C - 6 .
same
Use of this form is appropriate for a bank with the
policy as outlined
between
the
availability
substituted
forms
policy
for
is
under Model C-5.
that
for
a
The only
chart
showing
and
nonlocal
local
the narrative material
the
difference
bank's
checks
in Model C-5
is
regarding
the availability times for local and nonlocal checks.
Model
C-7.
Use
of
this
form
is
appropriate
when
a bank's
policy is to delay availability based on the deposit categories
A-168
-169(next-day
availability
deposits
at automated
the delay periods
under
except
the
items,
teller
(The
the pertinent
and
machines)
are shorter
regulation,
that
local
than
form
time
checks,
in the regulation,
the
is
nonlocal
maximum
times
identical
limits
have
but
allowed
to Model C-5
been
deleted
and
reminders for inserting the information added.)
Model
C-8.
Use
requirement of
of
form may
an
be
placed on more
check
form
satisfies
the
written
notice
§ 229.13 (g) of the regulation when a bank places
a hold based on
The
this
exception
modified
than
one
must be described
apply to the checks,
to
to
the
availability
indicate
check
in
a
separately,
a separate
that
a hold
deposit.
and,
schedules.
is being
However,
if different
reason must be given
each
reasons
for each
hold placed.
Model C - 9 .
of
Use of
§ 2 2 9 . 1 6 ( b ) (2)
this
form satisfies
when a bank
with
imposes a delay on a deposit.
specific
reason
for
Model C - 1 0 .
of
the
Use of
§ 229.18(b),
bank's
schedules
this
(A specific
is placed.
policy
reason
is required
See Model C-8).
form satisfies the notice requirement
notice at branch
actual
a case-by-case hold
This notice does not require a
the hold.
only when an exception hold
the notice requirement
availability
locations.
policy
is
The
the
form
same
as
assumes
the
in the regulation.
Model C - l l .
Use of this form satisfies the notice requirements
for preprinted
deposit
slips
under
A-169
§ 229.18(a)
and
the
notice
-170-
requirements
at
proprietary
§ 229.18(c)(1).
facilities
in
requirements
automated
it may also be
lieu
of
of
used
Model C-8
§ 229.18(b).
teller
at
to
The
machines
drive-through
satisfy
bracketed
the
under
teller
notice
material
is
not
required on preprinted deposit slips.
Model c - 1 2 .
Use of this form satisfies
of § 229.18(c)(2)
Model c - 1 3 .
union's
interest
requirements
for nonproprietary automated teller machines.
Use of this form,
specific
requirement
the notice
policy
under
incorporated as part of a credit
disclosure,
§ 229.14(b)
for
satisfies
credit
from the date of provisional
the
notice
not
accruing
unions
credit.
This disclosure
is only an example based on a hypothetical policy.
APPENDIX D —
Indorsement Standards
This
depositary
appendix provides
banks
and
transit
regarding the content,
the
indorsement
It
banks.
standards
includes
for
rules
location, and color of the indorsements.
Initial Regulatory Flexibility Analysis
Of
regulatory
the
items
required
flexibility
("a description
of
analysis
the
reasons
being considered")
and
objectives
legal
of,
and
to be contained
by 5 U.S.C.
why
the second
basis
action
in
an
603(b),
by
the
initial
the
first
agency
is
("a succinct statement of the
for,
the proposed
rule")
are
found elsewhere in this preamble.
The proposed
that
rule
are also described
contains
elsewhere
A-170
a number
of
requirements
in the preamble.
The Board
-171proposes
banks
and
size.
that
that all of
other
these requirements
entities
subject
to
be
the
applicable
rule
to
regardless
The Board considered exempting very small banks,
fall
under
below
the
the
Board's
according
for
Regulation D
those with deposits
requirements.
threshold
of less
However,
filing
(12 CFR
than
Part 204)
$2.9 million)
all banks,
to
their
depositors
from the rule's
exemption
regardless of size,
according
schedules, and all banks must make
their
customers.
these
requirements,
subject
to
the
Subpart C.
would mean
accept
believes
small
by
the
current
to
deposit
that
the
return of checks
checks
from
losses
drawn
availability
can be made
to
Act's
size,
from
must
be
established
these
to
by
requirements
small banks would continue to
inefficient
increased
of
procedures
banks
that checks drawn on
the
the risks arising
regardless
return
to
to provide
the required disclosures
to minimize
banks,
expedited
leading
for
all
Exemption of
be returned
returns
In order
those
(currently
that maintain transaction-type accounts are required
availability
of
reports of deposit
the Act does not provide an
to the size of bank;
all
on
manual
processing
for depositary banks
small
schedules
work
only
banks.
and
The
of
that
Board
the expeditious
if all
banks
are
subject to the same rules.
The
would
impose
institutions
available
to
Board
does
reporting
not
or
believe
recordkeeping
that require specialized
them.
Many
that
small
the
burdens
professional
institutions,
A-171
proposed
on
rule
small
skills
not
particularly
-172credit
unions,
disclosure,
are
and
not
subject
payment
of
to
the
Act's
availability,
interest requirements,
fact that they do not hold transactions accounts.
provide
the
relief
Act,
for
certain credit unions
generally
sophisticated
accrual of
those
operations,
interest.
provisions
that
that
from
The
will
are
proposed
small
facilitate
compliance
requirements for small institutions,
subject
and
requirement
regulations
to the
The Act does
that are
very
the
due
to
lack
regarding
contain
with
other
Act's
particularly pertaining
to
their disclosure responsibilities.
REGULATION J AMENDMENTS
The
Subpart A
Board
proposes
(12 CFR Part
210)
Items and Wire Transfers of
amendments
to
its
Collection
of
Checks
Fund,
checks by Federal Reserve Banks,
proposed
Regulation CC,
amendments,
governing
so
that
Subpart C.
including checks
and
Other
the collection of
it conforms
Under
the
Federal Reserve Banks would accept
returned checks,
Regulation J,
to
the
proposed
for handling all
(as defined in Regulation CC)
not handled by Federal
Reserve
Federal
like other returning banks, would handle
Reserve Banks,
returned
checks
The details of
in
uniform
currently
in
with
for
forward
Regulation CC,
collection.
Subpart C.
their returned check services would be set forth
Federal
the
accordance
Banks
case.
Reserve
These
Bank
operating
details
A-172
will
circulars,
as
is
include availability
-173schedules, cut-off hours, charges, and provisions governing
the
handling of notices of nonpayment.
Except
Regulation J
govern
the
as
required
would
remain
handling
collection,
of
unchanged.
items
by
it
to
Regulation CC,
It would
Reserve
Banks
continue
for
in Regulation J,
such as
to
forward
including both cash and noncash items.
terms currently defined
"cash
to conform
Most of the
"sender"
and
item," would continue to apply only to forward collection
of
items
through
is
proposed
(including
to
Reserve Banks.
include
cash
items
all
and
A new
checks
other
term,
subject
checks)
"returned check"
to
Regulation CC
that
are
returned
through Federal Reserve Banks.
A
new
provide
that
§ 229.2
of
paragraph
when
has
been
added
to
§ 210.7(b)
to
Reserve Banks present checks as defined
Regulation CC,
they
may
make
presentment
in
in
accordance with Regulation CC.
Section 210.2 has been revised
Regulation CC
for
the terms governing
to refer
generally
the handling of returned
checks.
Also included in § 210.12 are provisions
handling
of returned checks
that parallel other
governing
provisions
Regulation J.
These include the agreement of a bank
returned check
to a Federal
tender
of
defense
of
also
will
warranty
claims,
and
a
used
to
settle
in
sending a
provision
Section 210.12(g)
that automatic charge agreements covering
be
the
Reserve Bank, provisions governing
authorizing direct sends of returned checks.
provides
to
for returned
A-173
checks.
cash
items
The Board
-174-
proposes
notice
to delete
of
nonpayment
Regulation J
checks
the
notice
collected
provision
for
§ 210.12
of
checks
requirement
through
of
$2,500
currently
a Federal
would
cover
all
checks,
the
or
requires
more.
covers
Reserve
is proposing a similar notice requirement
that
Bank.
The
only
those
As the Board
in Regulation CC that
Regulation J
notice
requirement
would be redundant.
At a later
definitions
of
date,
terms
to avoid confusion between different
in
Regulation J
and
Regulation CC,
a
further revision of Regulation J may be desirable.
As
regulation
the
to
Regulation J
Regulation CC,
Board not to exempt
not
incorporating
small
similar
amendments
the
same
entities
concerns
from
exemptions
merely
for
conform
that
Regulation J
led
that
the
justify
small entities
into
Regulation J.
List of Subjects in 12 C FR Part 210 and 229
Banks, banking;
For
the reasons
set out
Federal Reserve System.
in the preamble,
of the Code of Federal Regulations
Part 229 is added to read as follows:
A-174
12, Chapter II
is proposed to be amended
follows.
1.
Title
as
-175-
PART 229 - AVAILABILITY OP FUNDS AND COLLECTION OF CHECKS
Subpart A - General
229.1
Authority and purpose; organization.
229.2
Definitions.
229.3
Administrative enforcement.
Subpart B - Availability of Funds and Disclosure of Funds
Availability Policies
229.10
Next day availability.
229.11
Temporary availability schedule.
229.12
Permanent availability schedule.
229.13
Exceptions.
229.14
Payment of interest.
229.15
General disclosure requirements.
229.16
Content of specific availability policy disclosure.
229.17
Initial disclosures.
229.18
Additional disclosure requirements.
A-175
-176229.19
Miscellaneous.
229.20
Relation to state law.
229.21
Civil liability.
Subpart C - Collection of Checks
229.30
Paying bank's responsibility for return of checks.
229.31
Returning bank's responsibility for return of checks.
229.32
Depositary bank's responsibility for returned checks.
229.33
Notice of nonpayment.
229.34
Warranties by paying and returning banks.
229.35
Indorsements.
229.36
Presentment of checks.
229.37
Inquiry to paying bank.
229.38
Liability.
229.39
Insolvency of bank.
229.40
Relation to state law.
229.41
Exclusions.
A-176
-177-
APPENDICES
Appendix A to Part 229 —
Routing Number Guide to Local Checks
Appendix B -1 to Part 229 —
Reduction of Schedules for Certain
Nonlocal Checks Under
the Temporary
Schedule
Appendix B -2 to Part 229 —
Reduction of Schedules
for Certain
Nonlocal Checks Under the Permanent
Schedule
Appendix C to Part 229 —
Model Disclosure Forms
Appendix D to Part 229 —
Indorsement Standards
Authority:
Title VI of Pub. L. 100-86, 101 Stat. 552, 635,
12 U.S.C. 4001 et seq.
A-177
-178Subpart A —
§ 229,1
General
Authority and purpose; organization.
(a) Authority
12
CFR
Federal
Part
229)
Reserve
and p u r p o s e .
is issued by
System
(Regulation CC?
the Board of Governors
("Board")
Funds Availability Act
This part
("Act"),
to
implement
which
the
is contained
of
the
Expedited
in Title VI
of Public Law 100-86.
(b) Organization .
This
part
is divided
into subparts
and appendices as follows:
(1)
Subpart A contains
general
information.
It
sets forth —
(i)
The
authority,
purpose,
and
organization ;
(ii) Definition of terms; and
(iii)
Authority
for
administrative
enforcement of this part's provisions.
(2)
Subpart B
regarding
the
duty
of
of
this
banks
into accounts available for
temporary
and
Subpart B of
exceptions
permanent
this part
to
the
of banks
part,
for
failure
contains
to make
availability
also contains
including both
schedules.
rules
disclosure
payment of
rules
funds deposited
withdrawal,
schedules,
availability policies,
part
regarding
of
interest,
funds
liability
to comply with Subpart B of this
and other matters.
A-178
-179-
(3)
Subpart C
expedite
These
must
this
part
contains
rules
the collection and return of checks by banks.
rules
manner
of
in
cover
which
return
the
direct return
the paying
checks
to
bank and
the
indorsements
of banks for failure
checks,
the paying
and presentment,
to comply with
the
returning
depositary
notification of nonpayment by
regarding
of
banks
bank,
bank,
rules
the liability
Subpart C of
this
part, and other matters.
$ 229,2
Definitions.
As
used
in
this
part,
unless
the
context
requires
otherwise:
"Account"
means
a
deposit as
defined
in
12
204 .2(a ) (1)(i) that is a transaction account as described
CFR 204.2(e).
"Account"
generally
includes
accounts
from which the account holder
is permitted to make
withdrawals
transferable
by
negotiable
order of withdrawal,
other
similar
holder may make
telephone transfer,
means
transfers to third
or
for
the
purpose
third party payments
unit, or other electronic device,
the
term
described
in
does
12
not include
CFR
instrument,
making
payments
or
or
the account
an ATM, remote service
deposits
even though
A-179
or
payment
including by debit card,
savings
204.2 (d) (2)
at a bank
transfers
orfrom which
at
in 12
electronic payment,
of
persons or others,
CFR
but
or
accounts
such
accounts
to
-180-
perm.lt
third
party
transfers.
An account may be
in the
form
of —
(1) A demand deposit account,
(2) A negotiable order of withdrawal account,
(3) A share draft account,
(4) An automatic transfer accounts or
(5) Any other
CFR 204.2(e)
that
transaction account described
are
not
time or
savings
in 12
deposits
under 12 CFR Part 204.
"Account" does not include an account where the account
holder
is a bank.
"Automated
that
processes
debit
established by
automated
clearinghouse"
and
a Federal
clearinghouse
or
credit
Reserve
items
"ACH"
transfers
Bank
or
means
under
operating
under
a
facility
rules
circular
on
rules of an automated
clearinghouse association.
"Automated
teller
machine"
or
"ATM"
means
electronic or mechanical device
at
make
an
to accounts and perform
deposits
by cash or check
which a natural person may
other
transactions.
"Available
deposited means
the
depositor
for
available
for
withdrawal"
for
actually
any
and
use
with
respect
generally
finally collected
A-180
to
funds
permitted
to
funds under
-181the bank's account agreement or
of
checks
drawn
on
withdrawals by cash,
the
policies,
account,
such as
electronic
for payment
payments,
and transfers between accounts.
"Bank” means —
(1)
An "insured bank" as defined
the Federal Deposit
Insurance Act
a bank that is eligible
to apply
A
section 3
"mutual
of
the
savings
Federal
(12 U.S.C. 1813)
to become an
bank under section 5 of that Act
(2)
in section 3 of
or
insured
(12 U.S.C. 1815);
bank"
as
Deposit
defined
insurance
in
Act
(12
U.S.C. 1813);
(3)
A
"savings bank"
as defined
the Federal Deposit Insurance Act
(4)
An
"insured
credit
in section 3 of
(12 U.S.C. 1813);
union"
as
defined
section 101 of the Federal credit union Act
1752)
or
a
application
credit
union
to become
an
section 201 of that Act
(5)
A
that
insured
An
"member" as defined
section 401
1724)
or
an
application
"insured
of
the
section 403 of that Act
to make
union
under
section 2 of
that
an
as
Housing
is
insured
defined
Act
in
(12 U.S.C.
eligible
to
institution
(12 U.S.C. 1726); or
A-181
the
(12 U.S.C. 1422);
National
become
in
institution"
institution
to
credit
(12 U.S.C.
(12 U.S.C. 1781);
Federal Home Loan Bank Act
(6)
is eligible
in
make
under
-182-
(7)
A
"branch"
section 1(b)
of
the
of a "foreign bank" as defined in
international
Banking
Act
(12
U.S.C. 3101) ?
that
is
located
specified,
the
in
term
the
United
"bank"
States.
includes
Unless
otherwise
all of a bank's offices
in
the United States.
"Banking day"
means
that part of any business day on
which an office of a bank is open to the public
for carrying on
substantially all of its banking functions.
"Business
day"
Saturday or a Sunday,
the third Monday
the
first
Monday
November 11,
If January 1,
Sunday,
means
a
January 1,
in February,
July 4,
the
day
Thursday
other
third Monday
the last Monday
in September,
the fourth
calendar
in May,
November 11,
or
or
a
in January,
the second Monday
in November,
than
July 4,
in October,
December 25.
December 25
fall
on a
the next Monday is not a business day.
"Cash" means United States coins and currency.
"Cashier's check" means a check that is —
(1)
Drawn on a bank;
(2)
Signed by an officer or employee of
on behalf of the bank as drawer; and
(3)
A direct obligation of the bank.
A-182
the bank
-183-
"Certified check"
the drawee
officer
bank certifies
means
by
a check with
signature
on
the
respect to which
check
of an
or other authorized employee of the bank that
(1)
(i) The signature of the drawer
on
—
the check
is genuine; and
(ii) The bank has set aside funds that —
(A)
Are
equal
to the
amount
of the
c h e c k , and
(B)
Will be used to pay the check;
or
(2)
The bank will pay the check upon presentment.
"Check" means —
(1)
A
negotiable
demand
draft
drawn
on
or
payable through or at an office of a bank;
(2)
A
negotiable
demand
draft
drawn
on
the
Treasury of the united States;
(3)
A negotiable demand draft drawn on a state
government;
(4)
A negotiable demand draft drawn on a Federal
Reserve Bank;
(5)
A negotiable demand draft drawn on a Federal
Home Loan B a n k ;
(6)
A United
States
postal
(7)
A traveler's check.
or
A-183
Service money order;
-184The term "check" does not include a noncash
be a
"check"
A draft may
even though it is described on its face by another
term, such as "money order."
part,
item.
the term
c
For purposes of Subpart
of this
"check" also includes a demand draft of the type
described above that is no n n e g o t i a b l e •
"Check
arrangement
specified
by
clearinghouse
which
area.
The
include arrangements
Bank,
but
it
does
association"
participants
means
exchange
any
checks
in
a
term "check clearinghouse association" may
using
not
the premises
include
the
of
a
handling
Federal
of
Reserve
checks
for
forward collection or return by a Federal Reserve Bank.
"Check processing
region"
served by an office of a Federal
means
the geographical
Reserve Bank
area
for purposes
of
its check processing activities.
"Consumer
for personal,
account"
is transferred
the payee.
term
any
account
used
primarily
family, or household purposes.
"Depositary
check
means
For
bank"
even
means
though
the purposes of
also
includes
a Federal
Loan Bank
to which
a check
the
first
bank
to
which
a
it is also the paying bank or
Subpart C of
Reserve
A-184
part,
Bank or a Federal
is transferred
than a bank.
this
by
a
person
the
Home
other
-185-
"Depository check"
means
a cashier's
check,
certified
check, or teller's check.
"Electronic payment"
means
a wire transfer or
an
ACH
credit transfer.
"Forward
depositary
bank
collection"
sends
a
means
the
process
check on a cash basis
by
to
which
a
the paying
bank for payment.
"Local
check"
means
a
check
through or at a local paying
bank.
on
appears
the
routing
number
that
characters
to
determine
whether
Appendix A
to
this
lists
part
a
the
drawn
on
or
payable
A depositary bank may rely
on
a check
check
is
routing
a
in magnetic
local
numbers
check..
that
are
considered local to each check processing region.
"Local
check
is sent
same check
paying
for
bank"
means
forward collection
processing
region
check,
that
bank
is
to which
located
in
a
the
as the branch or proprietary ATM
of the depositary bank in which
"Noncash
a paying
item" means
that check was deposited.
an item that would otherwise be a
except that —
(1)
A
passbook,
certificate,
is attached;
A-185
or other
document
-186-
(2)
It
is
accompanied by special
such as a request
for
special
advice
instructions,
of
payment
or
dishonor;
(3)
It consists of more than a single
of
paper, except a check
by
automated check processing equipment; or
(4)
that qualifies
thickness
It has not been preprinted or
in magnetic characters with
for
handling
post-encoded
the routing number
of
the
paying bank,
"Nonlocal check" means a check payable by,
through,
or
at a nonlocal paying bank.
"Nonlocal paying bank" means a paying bank
that
is not
a local paying bank with respect to the depositary bank.
"Nonproprietary
ATM"
means
an
ATM
that
is
not
a
proprietary ATM.
"Notice of nonpayment"
means
the notice of nonpayment
given as provided in § 229.33.
"Participant" means a bank that —
(1)
is located
in
the geographic area served by
a check clearinghouse association; and
A-186
-187-
(2)
checks
Both
through
collects
the
check
and
receives
clearinghouse
for
payment
association
either directly or through an intermediary.
"Paying bank" means —
(1)
The bank
the check
by which a check
is payable,
is payable at or through another
bank
unless
and
is
sent to the other bank for payment or collection;
(2)
payable
The
and
bank
to
at
which
or
through
it
is
sent
which
for
a
check
payment
is
or
collection;
(3)
check
The bank
whose
routing number
appears on a
in magnetic characters or in fractional
to which the check
(4)
is sent for payment or collection;
The Federal Reserve
Loan Bank by which a check
(5)
form and
Bank
or
Federal
Home
is payable; or
The state on which a check
is drawn.
"Proprietary ATM" means an ATM that is —
(1)
Owned
or
exclusively for,
(2)
Located
outside wall)
(3)
operated
by, or
operated
the depositary bank;
on the
premises
(including
the
of the depositary bank; or
Within
50
feet
ofthe
premises
of
the
depositary bank.
An ATM is not considered
unaffiliated
bank.
If
to be proprietary
the criteria provided
A-187
to more
than
one
in paragraphs
(1)
-188through
with
(3) of
respect
this definition
to
any ATM,
are met by more than one
the ATM will
be proprietary
bank
to
the
bank that satisfies the criterion stated in the lowest numbered
paragraph
in
owned
operated
or
definition,
this definition.
If more
criterion
of
than one bank meets the
paragraph
(1)
the ATM is considered proprietary
of
this
to the bank that
operates it.
"Qualified
prepared
for
returned
for handling
return
c h e c k " means
by automated
check
to the depositary bank.
identifier
National
MICR
check
in
the dollar
Printing,
need not contain other
depositary bank,
depositary
is
equipment
of
the
and a return
the American
for Placement and Location of
1983).
A qualified
returned
elements of a check drawn on the
such as the name of the depositary bank.
"Returning
or
(Sept. 8,
that
the routing number
in position 44 of
Specifications
X9.13
processing
amount of the check,
the form of a 2
Standard
check
A qualified returned check
must be encoded in magnetic ink with
depositary bank,
a
bank
bank"
but
Federal Home Loan Bank)
means
a bank
including
handling
a
(other
Federal
than
Reserve
the paying
Bank
or
a returned check or notice in
lieu of return.
A-188
-189-
"Routing number" means —
(1)
The number printed on the face of a check
fractional
form
or
in
magnetic
identifies a paying bank;
(2)
The
number
in
characters
in
that
or
abank's
indorsement,
in
fractional or nine-digit form.
"Similarly
size,
located
situated
in the
same
bank"
means
community,
and
a bank
with
of
similar
similar
check
payments activities as the paying bank or returning bank.
"State"
means
a
state,
the District of
Columbia,
Puerto Rico, or the U.S. Virgin Islands.
"Teller's
check"
means
a check
drawn
by
a bank
on
another bank.
"Traveler's check" means an instrument
for
the payment
of money that —
(1)
Is
"traveler's
designated
check"
or
on its
by
any
face by
the
substantially
term
similar
term or is commonly known and marketed as a traveler's
check
by
a corporation
or
traveler's checks;
A-189
bank
that
is an
issuer of
-190-
(2)
whole
Is
in
multiple
dollars
the
sum
of
thereof
($100),
or
if
in the
ten
dollars
less
than
($10)
one
or a
hundred
sum of one hundred
dollars
($100) or a whole multiple thereof;
(3)
Provides
for
a
specimen
signature
of
the
purchaser to be completed at the time of purchase; and
(4)
Provides
for
a
countersignature
of
the
purchaser to be completed at the time of negotiation.
"Uniform Commercial
the
Uniform
purposes
of
commercial
uniform
Code,"
code
as
citation,
"Code,"
adopted
all
or
in
"U.C.C." means
a
citations
state.
For
to the U.C.C.
this part will refer to the Official Text as approved
to
time
by
the
American
Law
institute
and
the
from
in
time
National
Conference of Commissioners on Uniform State Laws.
"United
States"
District of Columbia,
"Unit
of
county,
parish,
purpose
political
include special
means
the
states,
including
the
the U.S. Virgin islands, and Puerto Rico.
general
town,
local
township,
subdivision
purpose
government"
village,
of a state.
units
of
districts or water districts.
A-190
means
or
other
The
government,
any
city,
general
term does not
such
as
school
-191"Wire transfer" means
by
electronic
or
amount of money
order
other
to
means
an order
to a bank
transmitted
to pay a fixed or determinable
a beneficiary
if
is unconditionally permitted
the
bank
to pay
receiving
the
the beneficiary upon
receipt or on a day stated in the order.
Unless
defined
the
in this
context requires
section
have
the
otherwise,
meanings
the
set
terms not
forth
In
the
U.C.C.
§ 229.3
Administrative enforcement.
(a)
Enforcement
agenc i e s .
Compliance with
this part
is enforced under —
(1)
Act
Section 8 of
(12 U.S.C. 1818)
(i)
the Federal
Deposit
insurance
in the case of —
National
banks
by
the
Comptroller
of
the Currency;
(ii)
Member
System (other
banks
of
the
Federal
than national banks)
by
Reserve
the Board;
and
(iii)
Banks
insured by the Federal
Insurance corporation
(other
Federal Reserve System)
Deposit
than members of
the
by the Board of Directors
of the Federal Deposit insurance corporation;
(2)
1933
Section 5(d) of
(12 U.S.C.
1464(d)),
A-191
the Home Owners Loan Act of
section 407 of
the National
-192-
Housing Act
(12 U.S.C.
Federal
Home
Loan
Federal
Home
Loan
through
the
Bank Act
(3)
section 17
(12 U.S.C.
Board
by
the
directly
Loan
or
insurance
institution subject
to
and
the National
with
the
by
1437),
(acting
Savings and
of
The Federal Credit Union Act
seq.)
Board
and
in the case of any
those provisions?
et
Bank
Federal
Corporation)
1730),
respect
to
(12 U.S.C 1751
Credit Union Administration
any
federal
credit
union
or
insured credit union.
(b)
Additional p o w e r s .
(1)
For
the
purposes
of
the
agency referred to in paragraph
its
powers
under
paragraph,
a
under
Act
this
any
statute
violation
is
of
deemed
(a) of
this
referred
any
to
exercise
to
by
section of
in
requirement
be
a
any
that
imposed
violation
of
a
requirement imposed under that statute.
(2)
in
addition
provision
of
law
paragraph
(a)
referred
purposes
to
of
in
to
its
specifically
powers
under
referred
this
section,
that
paragraph may exercise,
of enforcing
each
compliance with
imposed under this part,
any other
of
to
any
in
the agencies
for
any requirement
authority conferred
on it by law.
(c)
Enforcement
(1)
by the B o a r d .
Except to
requirements
imposed
the extent
under
A-192
this
that enforcement
part
is
of the
specifically
-193committed
to
some other
government agency,
the Board
shall enforce such requirements.
(2) If the Board determines that
(i) Any bank
paragraph
that is not a bank
described
in
(a) of this section, or
(ii)
Any
authority
of
other
the
person
Board
subject
under
the
to
Act
the
and
this
part,
has
failed
to comply with
this part,
the Board may
any
any
bank,
person
subject
engaging
or
Federal
the
of
an
order
Reserve
Bank,
authority
of
involves
(including
involving
clearing
the
issue
in any activity or
indirectly
person
to
any requirement
such
prohibiting
or
the
transaction
imposed by
any
other
Board
from
that directly
noncomplying
bank
any
activity
or
receipt,
payment,
collection,
checks
and
any
related
or
transaction
function
and
of
the
payment system with respect to c hecks)•
Subpart B —
Availability of Funds and Disclosure of Funds
Availability policies
§ 229.10
Next day availability.
(a)
in an account
cash d e p o s i t s .
by cash
available
A bank shall make
for withdrawal not
A-193
funds deposited
later than
-194the business
day after
the banking day on
which
the
cash
is
deposited.
(b)
Electronic p a y m e n t s . —
(1)
in
received
payment
general.
for deposit
available
business
bank
in an
for
day after
A
shall
account
withdrawal
by
not
make
an
funds
electronic
later
than
the banking day on which
the
the bank
received the funds.
(2)
When an electronic
electronic payment
that,
the
payment
bank
in
payment
is received when,
receiving
actually
and
the
is r e c e i v e d .
and to the extent
payment
finally
An
has
received
collected
funds
for
the electronic payment.
(c)
Government
checks,
drawn on the depositary bank,
(1)
than
checks,
checks
and certain other c h e c k s .
A depositary bank shall make funds deposited
in an account by check
later
depository
available
the business
day
after
which the funds are deposited,
(i)
A
check
drawn
for
withdrawal
the banking
not
day on
in the case of —
on
United States and deposited
the Treasury of
the
in an account held by
a payee of the c h e c k ;
(ii)
deposited
A
in
an
U.S.
Postal
Service
money
account held by a payee of
money o r d e r ;
A-194
order
the
-195(iii)
A
check
Bank or Federal
drawn
on
Home Loan
a Federal
Reserve
Bank and deposited
in
an account held by a payee of the check;
(iv)
A check drawn by a state or a unit of
general local government and deposited —
(A)
In an
account held
by
a
payee
of
the check;
(B) in a depositary bank
state
that
state
as
issued
the
the
unit
located
check,
of
or
general
such
With
slips
a
are
special
required
bank under paragraph
(v)
deposit
by
the
the
same
local
government that issued the check;
(C)
in the
and
slip,
if
depositary
(c)(2) of this section;
A depository check deposited —
(A)
In an account held
by
a payee
of
the check; and
(B)
such
With
slips
a
are
special
required
bank under paragraph
(vi)
by
the
slip,
if
depositary
(c)(2) of this section;
deposited
in a branch
of
depositary bank and drawn on
the same or
another
branch
located
of
in
A check
deposit
the
the
same
same
processing region;
bank
state
and,
A-19 5
if both
or
the
branches
same
the
are
check
-196-
(vii)
The
deposited
checks
on
other
paragraph
(2)
any
lesser of $100 or
one
banking
checks
than
(c)(1)(i)
day
subject
through
by
the
aggregate
check
or
to
(vi) of this section.
Special deposit s l i p .
(i)
As
available
day,
a
for
condition
withdrawal
a depositary bank
or
local government
be
deposited
with
to making
on
next
may require
check
a
the
or
the
funds
business
that a state
a depository
deposit
special
check
that
slip
identifies the type of check.
(ii)
If a depositary bank
of a special deposit
provide
the
customers
may
be
or
slip,
special
inform
prepared
requires
the use
the bank must
deposit
slips
to
either
its
its customers how
obtained
or
the
the slips
and make
slips
reasonably available.
§ 229.11
Temporary availability schedule.
(a)
schedule
Effective
contained
September 1, 1988,
availability
date.
in
this
The
section
through August 31,
schedule,
which
is
temporary
is
effective
1990.
effective
availability
For
from
the permanent
September 1,
1990,
see § 229.12.
(b)
Local c h e c k s .
(1)
In g e n e r a l .
funds deposited
A
depositary
bank
shall
make
in an account by a check available for
A-196
-197-
withdrawal not later than
the third business day
banking day on which funds are deposited,
(i)
the
in the case of --
A local check;
(ii)
United
following
A check
States
drawn on
that
is
not
the Treasury of
subject
to next
the
day
availability under § 229.10(c); and
(iii)
that
is
A
not
U.S.
Postal
subject
Service
to next
day
money
order
availability
under § 2 2 9 . 1 0 (c).
(2)
Time
cash or
similar m e a n s .
by one business day
an
period
account
by
withdrawal
a
for
withdrawal
A depositary bank may
the
time
local
by cash or
adjustment
that funds
check
are
extend
deposited
available
similar means
unless
for
the check
is drawn on a paying bank that is a participant
same
bank.
check
clearinghouse
Similar
issuance
of
means
include
depositary
bank
shall, however,
withdrawal
5:00 p.m.
available
by
on
electronic
check,
commitment to pay, but do not
Federal Home Loan
or other
irrevocable
include the granting of
for
that presents
payment.
The
make $400 of these
or
similar
the business
under
payment,
to a bank, Federal Reserve Bank, or
Bank
cash
in the
association as the depositary
a depository
provisional credit
in
paragraph
A-197
a check
depositary
the
bank
funds available
means
not
day on which
(b)(1)
to
of
later
the
this
for
than
funds are
section.
by
-198-
This
$400
is in addition
to the $100 available
under
§ 229.10 (c) (1) (v i i ) .
(c)
Nonlocal c h e c k s .
(1)
in
an
A depositary bank shall make funds deposited
account
withdrawal
following
by
not
a
nonlocal
later
than
check
the
available
seventh
for
business
day
the banking day on which funds are deposited.
(2)
Nonlocal
checks
this part must be made
specified in Appendix B-l to
available
for
withdrawal
not
later than the times prescribed in that Appendix.
(d)
bank
shall
Deposits
make
at
funds
nonproprietary
deposited
nonproprietary
ATM by cash or
not
the seventh
later
than
in
check
ATMs.
an
A
account
available
business
day
for
following
depositary
at
a
withdrawal
the banking
day on which the funds are deposited.
(e)
Extension
of
Alaska, Hawaii,
Puerto Rico,
depositary bank
may extend
schedule
section by one
business
and
the
day
for
certain
the U.S.
deposits
in
Virgin
isl a n d s .
The
time periods
in the case
set
any
of
forth
in this
deposit
that
is —
(1)
depositary
Deposited
bank
in an
located
account
in
at
Alaska,
a branch
Hawaii,
of
a
Puerto
Rico, or the U.S. virgin islands; and
(2)
Deposited
by a check
drawn on or payable at
or through a paying bank not located
as the depositary bank.
A-198
in the same state
-199-
§ 229*12
Permanent availability schedule,
(a)
Effective
schedule contained
in
date.
this
The
section
permanent
is
availability
effective
September 1,
1990.
(b)
deposited
Local c h e c k s .
in an
A depositary bank
shall make
funds
account by a check available for withdrawal not
later
than the second business day following the banking day on
which
funds are deposited,
in the case of —
(1)
A local check;
(2)
A check
States
that
drawn on
the Treasury of the United
is not subject
to
next
day
availability
under § 229.10 (c); and
(3)
A U.S.
Postal
Service
money
order
that
is
not subject to next day availability under § 229.10(c).
(c)
Nonlocal c h e c k s .
(1)
in
an
A depositary bank shall make funds deposited
account
withdrawal
following
(2)
not
by
a
nonlocal
later
than
check
the
Nonlocal checks
specified
available
later than the times prescribed
Time period adjustment
similar
means.
day the
time
for
A
that
withdrawal
fifth
for
business
day
the banking day on which funds are deposited.
this part must be made
(d)
available
in Appendix B-2 to
for
withdrawal
not
in that Appendix.
for withdrawal by cash
or
depositary bank
may extend by one business
funds deposited
in an account are available
by cash or similar means.
A-199
Similar means
include
-200-
electron ic
payment,
depository
commitment
to
but
provisional
Federal
bank
of
pay,
credit
Home Loan
for payment.
these
funds
to
do
not
a bank,
Bank
check,
a
Federal
paragraphs
(b)
and (c)
of
this
(e)
Deposits
at
ATMs,
funds deposited
except
not
later
day on which
Extension
Hawaii,
depositary bank
section
a
later
make
than
$400
5:00
This
$400
is
under
in
ATMs.
The
to deposits
made at
that the depositary bank shall make
at a nonproprietary
business
ATM by cash
available for withdrawal
day
following
the banking
the deposit is made.
(f)
Alaska,
or
are available
apply
in § 229.10(c)
than the second
Bank,
§ 2 2 9 . 1 0 ( c ) (1)(vii).
229.12
in an account
or by a check described
not
section.
of
to the depositary
nonproprietary
requirements of §§ 229.10 and
nonproprietary
granting
however,
the funds
addition to the $100 available under
irrevocable
Reserve
shall,
withdrawal
p.m. on the business day on which
the
a check
A depositary bank
for
other
include
that presents
available
or
by one
of
schedule
Puerto Rico,
may extend
business
than a deposit described
(1)
depositary bank
day
and
the
for
certain
deposits
the U.S. virgin I s l a n d s .
time periods
set
forth
in
in the case of any deposit,
in § 229.10,
Deposited
located
in
an
account
Alaska,
at
Hawaii,
Rico, or the U.S. Virgin Islands* and
A-200
this
other
that is —
in
in
The
a branch
Puerto
of a
-201-
(2)
through
Deposited by check drawn on or payable
a paying
bank not located
at or
in the same state as
the depositary bank.
$ 229*13
Exceptions.
(a)
New a c c o u n t s .
(1)
A deposit in a new account —
(i
)
Is
§ 229.10(a)
by
cash
subject
and
and
withdrawal
(b)
to
to make
electronic
on
the
the
requirements
funds
payments
business
day
in
from deposits
available
following
for
the
banking day of deposit;
(ii)
Is
subject
§ 229.10 (c) (1) (i)
to
the first
of
the
through
(v)
requirements
only
with
of
respect
$5,000 of funds deposited on any one
banking day;
excess
to
but
the
$5,000
amount
shall
withdrawal not
later
following
the
banking
deposited;
(iii)
Is
be
the
deposit
available
requirements
of
the ninth
in
for
and
not
than
of
day
subject
on
to
which
the
business
funds
day
are
availability
§§ 229 .10 (c)(1)(v i ) and
(vii),
229.11, and 229.12.
For
purposes
of
this
paragraph,
subject to § 2 2 9 . 1 0 ( c ) (1)(v)
A-201
depository
checks
include traveler's checks.
-202-
(2)
during
An
the first
established.
account
days
if
before
is
considered
a
new
account
30 calendar days after the account
An
the
account
account
customer
the
is
not
has had,
account
is
considered
within
a
is
new
30 calendar
established,
another
account at the depositary bank for at least 30 days.
(b)
not
apply
Large
to
deposits.
the aggregate
Sections 229.11
amount
of deposits
and
229.12
do
by one or more
checks that is in excess of $5,000 on any one banking day.
For
customers
the
that have multiple accounts at a depositary bank,
bank may apply this exception
accounts of
the customer
are the same.
in
an
to the aggregate deposits
if all of the holders of each account
A depositary bank may not aggregate
individual
to all
and a joint
account
for
the deposits
the purpose of
this
exception.
(c)
do not
apply
redeposited
Redeposited
to
by
a
check
the
checks.
Sections 229.11
that
customer
has
or
been
the
and
returned
depositary
229.12
unpaid
bank.
and
This
exception does not apply —
(1)
missing
To a check
indorsement
indorsement
has
and
been
redeposited
obtained,
return stamp on the check
due to a missing
that has been
states
indorsement;
A-202
or
if
returned
after
the
that
due
the missing
reason
for
it was returned
to a
-203(2)
was
To a check
postdated,
if
the
that has been
check
is no
returned
longer
because
postdated
when redeposited.
(d)
combination
been
of
of
the
"repeatedly
instances
of
overdrawn,
the last such
any
ov e r d r a f t s .
accounts
repeatedly
after
to
Repeated
then
accounts.
within
for
there
to negative.
Periods
during
an
which
of
account
may
have
a given six-month
to the account had
been
period
returned
instance.
negative
or
or
A
is
negative
balance
considered
or
more
in which the balance
if checks
or other
(or zero)
charges
are considered part
than
days
due to overdrafts,
if
an
or
to the account
of
the
account
same
has
a
three consecutive banking days
if charges or checks are rejected or
of longer
do not apply
from positive
instance occurs
for more
has
months
up to three consecutive banking
rejected,
separate
six
three
have gone
paid,
or
customer
of
be
been
during which additional checks or other
are
bank's
a period
account
of the account has gone, or would
charges
account
§§ 229.11 and 229.12
An
if
any
a depositary
instance,
overdrawn"
If
returned over
a period
than three consecutive banking days.
(e)
Reasonable cause to doubt collectibility.
(1)
(v),
229.11,
any check
if
in
is
and 229.12
deposited
the bank
check
general.
has
Sections 229.10 (c) (1) (iii ) and
do not apply with
respect
to
in an account at a depositary bank
reasonable
uncollectible
A-203
cause
from
to believe
the
paying
that
bank.
the
it
-204-
Reasonable cause
requires
the
existence
well-grounded
person.
that
facts
in
the
shall
check
is
by
particular
deposited
for
a
the
under paragraph
(2)
of
a
b a n k ’s
uncollectible shall
not
of
belief
Such belief
the
reason
to believe a check
(including
class
class
of
included
fee
or
fact
is
the
The
check
is
in the notice required
fees.
for
any
The depositary bank
subsequent
unpaid charge,
The
period between
the
available
for
periods provided
and
that the check
(ii)The
the
written
of
this
overdraft
or return of a
bank
time when
has
extended
the
funds are deposited
and when
withdrawal
those
beyond
funds
the
based
on
the
bank's
are
time
in §§ 229 .10 (c)(1)(iii) and
229.12
(v),
belief
is uncollectible;
depositor
notice
section
was
required
with
not
provided
with
under
paragraph
(g)
respect
to
such
determination at the time the deposit was made;
(iii)
or
The overdraft or return of
other unpaid
charge
A-204
shall
if —
depositary
in an account by check
229.11,
the
persons.
that
a
reasonable
not be based on
the use of a line of credit)
(i)
cause
(g) of this section.
any
check or other
made
would
a
particular
Overdraft
assess
that
uncollectible
mind of
belief
be
is
would not
have
the check
occurred
-205-
except
for
were not
the
fact
available
that
the
funds so
deposited
but would have been available
if the exception were not invoked? and
(iv)
The
check
was
finally
paid
by
the
paying bank,
(f)
Emergency condi t i o n s .
do not apply
to funds
deposited
by
Sections 229.11 and 229.12
check
in a depositary bank
in the case of —
(1)
An
interruption
of
communications
or
computer or other equipment facilities?
(2)
A suspension of payments by another bank?
(3)
A war ? or
(4)
An emergency condition beyond
the control of
the depositary bank,
if
the
depositary
bank
exercises
such
diligence
as
the
circumstances require.
(g)
Notice of e x cept ion.
(1)
in
the times
general.
for
availability
§§ 2 2 9 . 1 0 (c)(1)(iii)
on
the
If
application
paragraphs
(b)
depositary
bank
and
of
through
a depositary bank extends
beyond
(v),
an
(f)
those
provided
in
229.11, or 229.12, based
exception
of
this
shall provide notice
contained
section,
to
the
in
the
customer
of —
(i) The reason the exception was invoked?
A-205
and
-206-
(ii.)
The day
withdrawal,
exception
been
faith
unless
in
invoked
does
the
emergency
paragraph
and
not
provided,
the funds will be available for
the
at
the
duration
consequently,
when
of
this
depositary
know,
the
(f)
of
the
conditions
section
bank
in
time notice
the
funds
good
must
emergency
will
be
has
be
and,
available
for withdrawal.
(2)
Timing
of
notice.
The
notice
shall
provided as follows —
(i)
to
an
In
the case of a deposit made in person
employee
depositary
of
bank
the
depositary
shall
provide
bank,
the
the
notice
in
writing to the depositor at the time of deposit.
(ii)
In
if the facts
the case of
upon
which
applicability
of
paragraphs
deposit
after
only become
the
time
paragraph
depositary
as
than
shall
first
the
calendar
day
depositary
of
soon
the
bank,
is
or
A-206
the
the
in
section
required
this
to any
the
day
become
under
section,
the
notice
as practicable,
facts
or
to the depositary bank
mail
business
of
contained
(f) of this
notice
bank
depositor
exception
known
(g)(2) (i)
deposit,
the determination
through
(b)
an
any other
to
but not
following
known
deposit
is
to
the
later
the
the
made,
be
-207-
whichever
Is
paragraph
later,
(g)(2)(ill)
depositary
bank
the
facts
upon
when
the
is
facts
for making
from
the
brought
of
this
deemed
which
are
the person(s)
subject
the
section.
determination
brought
when
their
the
is made
to the attention of
in the depositary bank
time
The
to have knowledge of
the determination,
to
to
and,
facts
attention
in any event,
would
if
responsible
have
the
been
bank
had
exercised due diligence.
(iit)
delayed
If
under
provided
in
the
the
paragraph
funds
available
be
sent
of
funds
the emergency conditions
depositary bank
if
availability
(f)
of
this
is not required
subject
to
for withdrawal
under
the
paragraph
exception
section,
the
to provide notice
exception
before
is
the
(g)(2)(ii)
become
notice
of
must
this
section.
(3)
Record
retain a record,
each
notice
in
provided
the reasonable cause
retention.
accordance
pursuant
exception
A depositary bank
with
to
§ 229.21(g),
shall
of
its application of
under
paragraph
(e) of
this section.
(h)
Availability of deposits subject to e x ce pt io ns .
(1)
through
If an exception
(e)
of
this
section
A-207
contained
applies,
not
in paragraphs
more
than
(b)
-208four
business
days
shall
be added
to any time period
established under §§ 229.11 and 229.12.
(2)
If
contained
is
a depositary
to
§ 229.10(c) (1) (i)
depositary
bank
withdrawal
not
the
invokes an exception
in this section with respect to a check
subject
day
bank
funds
shall
later
make
the
through
funds
that
(v) , the
available
for
than four business days after the
would
have
become
available
had
the
check been subject to §§ 229.11 or 229.12.
(3)
of
If
this
the exception
section
applies,
the
make the funds available
four
business
the
period
whichever
$ 229.14
funds,
established
In
interest
or
withdrawal
bank
in
§§ 229.11
shall
not more
the emergency has
except
For
may
on
rely
as
general.
dividends
account
the depositary bank
section.
Bank,
after
depositary
and
(f)
than
ceased or
229.12,
Payment of interest.
interest-bearing
which
days
for
in paragraph
is later.
(a)
accrue
contained
provided
not
on
later
receives
in
A
depositary
funds
than
deposited
the
(b)
the purposes of this section,
the availability
Federal
Home
Loan
schedule of
Bank,
or
begin
an
day on
for
(c) of
the
this
the depositary bank
its Federal
correspondent
determine the time provisional credit
A-208
credit
and
shall
in
business
provisional
paragraphs
bank
bank
Reserve
to
is actually received.
to
-209-
(b)
this
section
described
Special rule for credit
does not apply
to any
un io ns .
account
Paragraph
at a credit union
in section 19(b) (1) (A) (vi.) of the Federal
(12 U.S.C. 461(b)(1)(A)(vi)),
(1)
at
Begins
alater
paragraph
funds,
(a)
than
of
this
the
interest or dividends
date
section
payment
Provides
policy
in
notice
the
described
with
including cash, deposited
(2)
Reserve Act
if the credit union —
the accrual of
date
(a) of
of its
manner
in
respect
to
all
in the account;
and
interest or
required
dividend
under
§ 229.18 (f).
(c )
Exception
for
checks
returned
unpaid.
Th i s
.
subpart does not require a bank to pay interest or dividends on
funds deposited by a check
$ 229.15
General disclosure requirements.
(a)
Form
disclosures required
in
that is returned unpaid.
writing.
by
this
Disclosures,
of
d i s c lo su re s.
subpart clearly
other
and ATMs and printed on deposit
than
A
bank
make
and conspicuously
those posted
slips,
shall
must be
at branches
in a form
that
the customer may keep.
(1)
and
shall
The
disclosures
not
contain
any
shall
be
grouped
information
not
together
directly
related to the disclosures required by this subpart.
(2)
that
The disclosures,
sets
forth
other
if contained
account
A-209
terms
and
in a document
conditions,
the
-210-
shall
be
example,
(b)
disclosure,
the ______
a bank shall
the
the
business
document
by,
for
after"
first
is
to day of ava il ab il it y .
describe
day
banking
day
the
use of a separate heading.
business
following
within
Uniform reference
calculation,
last
highlighted
funds as being
the
business
day
the
the
day
day
day
deposit
on
available
of deposit.
is
the
was
which
In
business
received,
the
In its
funds
"on
this
day
and
are
the
made
a va il a b l e .
(c)
A
bank
Multiple
accounts
multiple
need not give multiple disclosures
holds multiple accounts
availability
separate
if
and
acc oun t- hol der s.
to a customer
if the accounts are subject
policies.
Similarly,
a
bank
that
to the same
need
not
give
disclosures to each customer on a jointly held account
thebank
gives
the disclosures to one of the primary
account
holders.
(d)
Dormant
or
inactive
a cc o u n t s .
A bank
give availability disclosures to holders of dormant
need not
or
inactive
accounts.
§ 229*16
Content of specific availability policy disclosure.
(a)
Specific availability policy di sc l o s u r e .
the requirements of a specific
under
§§ 229.17
and
229.18(d),
disclosure describing when
availability
a
bank
shall
funds deposited
A - 210
policy
disclosure
provide
in an
account
a
are
To meet
-un
available
for withdrawal.
Unless
hold policy as discussed
bank
must
enable
particular
following,
the
deposit
the bank
in paragraph
customer
will
be
(b)
has a case-by-case
of
this section,
to determine
available
when
by
funds
the
for a
disclosing
the
as applicable:
(1)
A summary of the bank's
general
availability
policy;
(2) A description
used by
local
the bank
when
and nonlocal
of
the categories
of
deposits
it delays availability
(such as
c h e c k s ) , and how to determine
the
category of a particular deposit;
(3)
A
description
corresponding
including
to
of
each of
a description
and when a deposit
the
availability
the categories
of
the
bank's
that
ATMs,
may
to
to certain
days
is considered received; and
schedules,
apply
of deposits,
business
(4) A description of any exceptions
availability
period
including
deposits
made
any
at
types of deposits
to the bank's
special
rules
nonproprietary
or
accounts
(such
as new ac cou nts ), and to cash withdrawals.
(b)
Alternative
disclosure
for
banks
that
have
case-by-case hold p ol ic ie s .
(1)
for
If
withdrawal
banking
day
by
a bank
the
generally
business
funds are deposited,
A-211
day
makes
funds available
following
the
the bank may give the
-212-
following
disclosures
to
meet
the
disclosure
requirements under §§ 229,17 and 229.18(d):
(i)
A
summary
of
the
bank's
general
availability policy?
(ii)
cases
A statement
delay
withdrawal
the
and
time
the
that the bank may
funds
are
maximum
in some
available
delay
that
for
may
be
imposed?
(iii)
forth
in
right
to
A description of
§ 229.13
invoke,
that
the
the
if any,
exceptions
bank
and
the
reserves
maximum
that may be imposed under the exceptions?
(iv)
A statement
that
the bank
set
the
delay
and
will notify
the customer
if funds deposited in the customer's
account will
not be available
the
business
day
following
for
the
withdrawal
banking
day
on
of
deposit•
(2)
required
A
bank
by paragraph
paragraph
(a)
of
that
(b)
this
of
is made.
under
the deposit
funds
will
shall
(b) (1) (ii)
state
is being delayed
be
available
A-212
shall
disclosures
instead
also
for
and
of
of
provide
the time a deposit
paragraph
The notice
the
this section
section,
customers with a notice at
to a delay
provides
subject
this section
that availability of
indicate the day the
withdrawal.
If
the
-213-
deposit was not made
in person
depositary
notice
customer,
bank,
the
provided
day the deposit
deposit
after
made
may
the notice
is made.
in person
if
to
to an employee of the
be
is sent on
to
to delay a
employee
a delay may be
the
the banking
the decision
a bank
the time of deposit,
mailed
is
made
imposed only
if -(i)
the
The customer
deposit
that
the
subject to a delay;
(ii)
The
has
bank
been
told
particular
at
the
time
deposit
of
may be
and
notifies
close of business on
a delay
was
the
the day of
imposed
and
of
customer
by
the deposit
the day
that
funds
will be available for withdrawal.
$ 229.17
Initial disclosures.
(a)
account,
a
Disclosure
bank
shall
to
new
provide
ac co u n t s .
a
potential
Before
opening
customer
with
an
the
applicable specific availability policy disclosure described
in
§ 229.16.
(b)
Disclosure to existing accounts.
(1)
In
customers after
October
31,
customers
disclosure
the
first regularly
September 1,
1988,
a
bank
the applicable
described
1988,
shall
specific
in § 229.16,
A-213
scheduled
mailing
but not later
send
to
existing
availability
unless
than
policy
the bank has
to
-214-
previously
given
disclosures
that
meet
the
requirements of that section.
(2)
If
paragraph
the
(b)(1)
disclosure
of
this
disclosure of other
bank
must
direct
section
account
the
required
is
terms
by,
included with a
and conditions,
customer's
availability disclosures
by
attention
for
example,
to
the
the
the
use of
an insert or a letter,
(3) The
of
this
disclosure
section may not be
promotional material,
product
required
or
service,
by
included
paragraph
in a mailing of
such as a solicitation
unless
(b)(1)
the mailing
for a new
also
includes
that
delays
the customer's account statement,
$ 229*18
Additional disclosure requirements,
(a)
availability
Notice
on
on
deposit
deposits
shall
slips,
A
include
on
deposit
slips
furnished
to
its
customers
deposit
slips
provided
to
customers
bank
all
(other
under
preprinted
than
special
§ 229.10(c)),
notice that deposited checks may not be available
for
a
immediate
w i th dr aw al ,
(b)
a conspicuous
Notice at branch lo ca t i o n s .
time
deposited
shall
post
in
place at each branch location where its employees
receive deposits to consumer
the
A bank
periods
applicable
accounts a notice that sets
to
the
in a consumer account.
A - 214
availability
of
forth
funds
-215-
(c)
Notice at or on A T M s .
(1)
shall
post
that
for
The owner
funds
or
or
operator
of
a notice
at each ATM location
provide
deposited
one
or
more
ATMs
in the ATM may not be available
immediate withdrawal.
(2) If an ATM
certain
customers
is considered
making
nonproprietary
on
the ATM,
and
to
deposits at the A T M , the bank
to which the ATM i s proprietary shall
.
or
as
a notice
funds may not be available
be
identified at
posted or provided
until
the seventh
that
business
day after deposit.
(d)
upon
oral
Disclosure
or
written
upon
request.
request,
a
A bank
notice
shall
provide,
containing
the
applicable specific availability policy disclosure described
in
§ 229.16.
(e)
customers
Changes
at least
in p o l i c y .
30 days
before
bank's availability policy,
the availability of
days after
made
Notice of
begins
in
an
at a later
notice
to
implementing a change to the
except that a change
shall
a notice
that
expedites
be disclosed not later
than 30
implementation.
(f)
union
funds
A bank shall send
to accrue
interest
interest
interest-bearing
time
required
than
to
be
the
payment
or dividends
account,
day
under
A- 215
on
including
specified
provided
policy.
in
If a credit
all
deposits
cash
deposits,
§ 229.14(a),
§§ 229.17
or
any
229.18(d)
•16shall contain an explanation of when the credit
union
begins
to
accrue interest or dividends on the funds.
$ 229.19
Miscellaneous.
(a)
When
deposits
are
considered
made.
For
the
purposes of this pa r t—
(1)
A deposit mailed
considered made when
bank?
to the depositary bank
it is received by
is
the depositary
and
(2)
A
deposit
banking day,
is
considered
made
on
the
next
in the case of a deposit that is made —
(i)
On a day that
is not
a banking
day
for
the depositary bank? or
(ii)
After
depositary
bank
2:00 p.m. or
cut-off
for
the
later.
be established
deposits,
a
or
for
hour
receipt
Different
set
by
of deposits
cut-off hours
receipt of different
receipt
of
the
deposits
of
may
types of
at
different
day.
Except
locations.
(b)
otherwise
Availability at start of business
provided
in
§§ 229.11(b)(2)
and
229.12(d),
provision of this subpart requires that funds
for
withdrawal
available
on
any
business
day,
the
funds
for withdrawal by the later of —
(1)
7:00 a.m.
(local time)? or
A-216
be made
as
if any
available
shall
be
-217(2)
The
facilities
time
the
(including ATMs)
depositary
bank's
teller
are available for customer
account withdrawals.
(c)
Effect on policies of depositary b a n k .
does not —
(1)
Prohibit
available
a depositary bank
to a customer
for
from making
withdrawal
in
a
funds
shorter
period of time than the time required by this part;
(2)
Affect a depositary bank's right —
(i)
To accept or reject a check
(ii)
made
by
To
the
revoke
any
depositary
for deposit;
provisional
bank
with
settlement
respect
check accepted by the bank for deposit;
back
the depositor's
account
for
a notice
of
nonpayment
of
to charge
the amount of a
check based on the return of the check
of
to a
or
the check;
receipt
or
to
claim a refund of such provisional credit; and
(iii)
to
its
which
To
charge
customer
the
back
an
has
bank
for
not
funds made
electronic
received
available
payment
for
payment
in
actually and finally collected funds;
(3)
otherwise
Require
to
make
a
depositary
its
bank
facilities
to
open
available
or
for
customer transactions on a given business day; or
(4)
Supersede
that limits
any
policy
of
a depositary
bank
the amount of cash a customer may withdraw
A-217
This part
-218from its account at an ATM or a staffed
on any one day,
(i)
teller
station
if that policy —
Is
applied
without
discrimination
to
all customers of the bank;
(ii)
have
the
is not dependent on the
been
deposited
have
funds
period
in
on
been
specified
time
the account,
deposit
for
the
funds
as long as
the
time
in §§ 229.10, 229.11, or 229.12;
and
(iii)
Is
related
to
security requirements
or bonding limitations of the depositary bank.
(d)
use
of
calculated
av ai l ab il it y.
depositary
bank may provide availability
to,
on,
based on a sample of checks that
its non-consumer
accounts
represents the average
provided
that
the
and begin
A
composition of
terms
to accrue
the customer's
for availability or
based on the sample are equivalent
interest
deposits,
interest payment
to or more prompt
than
the
availability and interest payment requirements of this part.
(e)
accounts.
Limitation on placing holds on certain
A depositary bank
that receives
a check
funds
in
for deposit
in an account or purchases a check for cash, other
than a check
drawn
for payment
on
that bank
and presented over
in cash, may place a hold on any
bank,
the counter
funds of the customer
at the
if —
(1)
The amount of
funds
exceed the amount of the check, and
A-218
that
are
held
do
not
-219-
(2)
within
The
the
times
funds
are made
specified
available
in §§ 229.10,
for withdrawal
229.11,
and
229.12.
(f )
Employee
(1)
training and co m pl ia nc e .
Each
detailing
bank
the
shall
requirements
provide
of
this
a
statement
subpart
employees who perform duties that relate
compliance with
(2)
ensure
this
to the bank's
bank
shall
establish
procedures
to
the bank complies with the requirements of
subpart,
performs
all
the requirements of this subpart.
Each
that
to
and
duties
subpart with
shall
subject
provide
each
employee
to
the
of
the procedures
a statement
requirements
who
of
this
applicable
to that employee.
(3)
shall
Not
conduct
employees'
internal
with
each
review
year,
each
bank
to determine
the procedures
its
established
(f)(2) of this section.
In g e n e r a l .
in effect on or before
September
1,
Any law or
1989,
regulation
that requires
of any
funds
in an account at a bank chartered by the state to be
made available
provided
once
Relation to state law.
(a)
deposited
an
than
compliance
in paragraph
§ 229.20
less
for withdrawal
in a shorter
time
than
in Subparts A and B of this part shall --
A-219
the
time
state
-220(1)
supersede
the
provisions
Subparts A and B to the extent
to the time by which
of
the
Act
the provisions
and
relate
funds deposited or received
for
deposit in an account are available for withdrawal;
(2)
Apply to all federally
insured
banks
and
located
within the state.
No
amendment
to
availability of
1989,
shall
part,
but
a
state
funds
or
regulation
governing
the
that becomes effective after September
supersede
unamended
law
the
Act
and
provisions
Subparts A
of
state
and
B of
1,
this
law shall remain
in
effect.
(b)
provided
in
Subparts A
Preemption
paragraph
and
B
of
of
(a)
inconsistent
of
this
this
part
law.
section,
supersede
Except
the
any
Act
as
and
provision
of
inconsistent state law.
(c)
Preemption
determine,
upon
the
interested
party,
d e t e r m in at io ns .
request
whether
of
any
the Act
The
state,
and
this
Board
bank,
or
subpart
shall
other
preempt
state laws relating to the availability of funds.
(d)
on or
before
Act and
for
September 1,
this part
in a shorter
subpart.
Standards
p r e em pt i on .
1989,
is not
if it requires
period of
time
A state
law in effect
inconsistent
with
the
that funds shall be available
than
the
time
provided
in
this
Inconsistency with the Act may exist when state law —
(1)
by cash,
Provides
that
electronic payment,
A-220
funds deposited
or
in an account
a particular category
-221of check
may be available
for withdrawal
in a longer
period of time than provided in this subpart? or
(2)
Provides
account
exception
funds
for
the same
general
that addresses
the same
type of risk as an exception
or
available
time
withdrawal
exception,
be
the
in
in this subpart,
must
to
deposited
provided
an
an
class
of
deposit
but the time allowed
the exception
itself,
for
or
for
the
is different from
the exception provided in this subpart.
(e)
Procedures
for
preemption
det er mi n at io ns .
Any
request for a determination shall include the following —
(1)
A copy of
question,
the
full
including* any
text of the state law in
implementing
regulations
or
judicial interpretations of that law? and
(2)
the
with
A comparison of the provisions
corresponding
Subparts
A
discussion
state
and
of
B
of
this
part,
in
the
together
Act
consistent
sections
of
or
law
and
with
a
the reasons why specific provisions
law are either
corresponding
provisions
of state
inconsistent
of
with
the Act and Subparts A and B
of this part.
§ 229.21
Civil liability.
(a)
to
comply
Civil
with
any provision
l ia bi li ty.
any requirement
of state
law
that
imposed
Any depositary bank
under
supersedes
A-221
this subpart or
any
provision
of
that
fail
-222-
this
subpart
person
with
respect to
any
person
is
liable
to
that
in an amount equal to the sum of —
(1)
Any
actual
damage
sustained
by
that person
as a result of the failure;
(2)
Such
additional
amount
as
the
court
may
allow, except that —
(i)
In the
case
of
an
individual
liability under this paragraph
than
$100 nor greater
(ii)
shall
than $1,000;
action,
not be less
and
In the case of a class action
(A)
No
minimum
recovery
—
shall
be
applicable to each member of the class;
(B)
The
paragraph
class
to
arising
by
more
be
the
enforce
the
action,
together
case
foregoing
with
the
of
a
of
than
the
a reasonable
the
of
same
depositary
lesser
of
worth
of
net
and,
successful
the
this
series
the
involved;
liability,
or
same
1 percent of
the depositary bank
In
out
not
shall
under
action
comply
$500,000 or
(3)
recovery
in any class
actions
failure
bank
total
and
action
costs
to
of
a t t o r n e y ’s
the
fee
as
determined by the court.
(b)
of
any
award
Class
in
any
class
action
action,
among other relevant factors —
A-222
awards.
the court
In determining
shall
consider,
the
amount
-223-
(1)
The amount of any damages awarded;
(2)
The frequency and persistence
of
failures
of
co m pl ia nc e;
(3)
The resources of the depositary bank;
(4)
The number of persons adversely affected;
(5)
The
extent
to
which
the
failure
and
of
compliance was intentional.
(c)
Bona fide e r r o r s .
(1)
General
rule.
liable in any action
violation
of
demonstrates
this
fide
depositary
brought
subpart
under
if
error,
is
intentional
the
and
not
section
depositary
of
notwithstanding
bank
this
the
by a preponderance
the violation was not
bona
A
for a
bank
evidence
that
resulted from a
the
maintenance
of
procedures reasonably adapted to avoid any such error.
(2)
include
Examples.
clerical,
and programming,
error
of legal
Examples
of a bona
calculation,
and printing
fide
computer
errors,
error
malfunction
except
that
an
judgment with respect to the depositary
bank's obligation
under
this
subpart
is
under
this
not
a bona
fide error.
(d)
be brought
Jur i sd ic ti on.
Any action
section
may
in any united States district court, or in any other
court of competent jurisdiction, within one year
of the occurrence of the violation involved.
A-223
after
the date
-224(e)
Reliance on
Board r u l i n g s .
subpart
imposing any liability shall
omitted
in good faith
or
interpretation
by
any reason after
(f)
claims
apply
in conformity with
thereof by
such rule, regulation,
or determined
No provision
to any act done or
regulation,
regardless
or interpretation
other
this
any rule,
the Board,
judicial or
of
of whether
is amended,
rescinded,
authority to be invalid for
the act or omission has occurred.
Exclusions.
that arise
under
This
section
Subpart C or
does
not
to actions
apply
for
to
wrongful
d ish on or .
(g)
Record r e t e n t i o n .
(1)
A
bank
shall retain
with the requirements
imposed
less
Records
than
two years.
microfiche,
capable
..microfilm,
of
accurately
evidence of compliance
by this
subpart
for not
may be stored by use of
magnetic,
or
retaining
other
and
methods
reproducing
inf or mat io n.
(2)
If a bank has actual notice that it is being
investigated,
or
proceeding
an agency charged
bank's
compliance
has been
this
by
served
section,
is
subject
with
with
the Act
an
enforcement
with
and
monitoring
this
it shall
retain
unless
the
an earlier
order of the agency or court.
A-224
records
pending
that
subpart,
notice of an action
to the action or proceeding
of the matter,
to
filed
or
under
pertaining
final disposition
time
is
allowed
by
-225Subpart C —
§ 229.30 —
Collection of Checks
Paying bank's responsibility for return of checks.
(a)
paying
check
Return of checks or notice of n o n p a y m e n t .
bank determines not
or
provide
manner.
manner
The
if
it
notice
paying
sends
of
bank
the
to pay a check,
nonpayment
returns
it shall return the
in
an
the check
returned
check
in
expeditious
in an expeditious
a manner
that
a
similarly situated bank would normally handle a check:
(1)
Of similar amount as the returned check,
(2)
Drawn on the depositary bank,
(3)
Deposited
similarly
situated
for
bank
forward
and
collection
in
the
before noon on the banking day
following the banking day on which
the returned
check
was presented to the paying bank.
Subject
bank
may
to the requirement
send
for expeditious
the returned check
check being returned,
(including
Bank)
agreeing to handle the check
as expeditiously as
check
The
a Federal
drawn on
paying
Reserve
it would
the depositary bank
bank
may,
but
is not
returned check to a qualified
provides
notice
of
Bank
handle
as
or
paying
a forward
specified
required
to,
check.
Home Loan
to the depositary
in
collection
§ 229.31.
convert
the
The paying bank
in an expeditious
A-225
to any other
or Federal
for return
returned
nonpayment
the
to the bank that presented the
to the depositary bank,
bank
bank
return,
manner
if
it
If the
-226provides
notice
regardless
returns
the
paragraph
timely
of
of
nonpayment
amount,
check
does
in
respect
in
accordance
with
a
reasonably
to
prompt
not
affect
under
return
with
the
a paying
U.C.C.
check,
§ 229.33,
bank's
or
the
and also
manner.
This
responsibility
Regulation J
(12
for
CFR
Part 210) .
(b)
Extension of deadline
paying bank,
in an effort
amount
of
$100
or
less,
notice
of
nonpayment
than
small-dollar
to avoid dishonor
may
under
Part 210) , or paragraphs
for
extend
the
the
(a) or
of a check
time
U.C.C.,
checks.
for
in an
return
Regulation J
(c) of this section
A
or
(12 CFR
by not more
two business days without liability to or discharge of any
other
review
based
party.
If
the
factors
on
the paying
on
bank
which
the business day
extends
such
a decision
on
which
it
times,
to pay or
returns
it shall
return
is
check
or
the
sends notice of nonpayment.
(c)
paying
check
bank,
in an
to a bank,
nonpayment
and
Extension of
under
paragraphs
expedited
may extend
the
the
U.C.C.,
time
(b) of
this
would
returned check being
received
by
before that
otherwise
would
bank's next
applicable
result
delivery.
A
from the
time
use
banking
to which
day
of
or
such
it
later
of
highly
expeditious
the
in the
following
return
A-226
that
result
for
transpor ta ti o n .
notice
provided
ordinarily
the bank
or
(12 CFR Part 210),
section,
delivery
or
for return
Regulation J
of
on
for expedited
effort to expedite delivery of a returned
(a) or
method
deadline
is sent
the
time
means
of
as
-227-
(d)
returning
check
Identification
a check
shall
of returned
clearly
check.
indicate
on
A paying bank
the
face
that it is a returned check and the reason
(e )
expeditious
Depositary
return
bank
requirements
section do not apply
without
of
the
for return.
accounts.
paragraph
to checks deposited
of
(a)
The
of
this
in a depositary bank
that does not maintain accounts.
(f)
Notice
unavailable
its place
without
subject
of
a notice of nonpayment
regard
notice
lieu
in
to
return.
for return by a paying
clearly state
A
in
to the
that
lieu
the
time or
time
a
amount limits.
a notice
return
is
considered
limits
of
this
check
the bank
in accordance
it constitutes
of
bank,
If
is
may send
with
in
§ 229.33,
The notice shall
in lieu of return.
a returned
section
and
to
check
other
requirements of this subpart.
(g)
return
the
Reliance on routing n u m b e r .
a returned
depositary
A
paying
bank
may
check based on any routing number designating
bank
appearing
on
the
returned
check
in
the
depositary bank's indorsement.
§ 229.31
Returning bank's responsibility for return of
checks.
(a)
and
return
Return of c h e c k s .
a
returning bank
returned
check
in
returns a check
an
A returning
expeditious
in an expeditious
A-227
bank
manner.
manner
shall handle
A
if it
-228sends
the returned
check
in a manner
that a similarly situated
bank would normally handle a check —
(1)
Of similar amount as the returned check,
(2)
Drawn on the depositary bank, and
(3)
Received
for
forward
collection
similarly situated bank at the time
by
the
the returning
bank
received the returned check.
A returning bank may set
a cut-off
returned
earlier
checks
checks
received
cut-off
hour
requirement
return
bank
forward
not
earlier
than
expeditious
check
sent
the
collection,
to
would
check
the
to
for
provided
that
the
Subject
returning
prior
returning
bank,
Reserve Bank
of
hour
immediate
depositary
receipt
cut-off
p.m.
the
the
the
bank
may
collecting
bank
or
to the
during
to any other
or a Federal
Home Loan
to handle the returned check as expeditiously as
handle
depositary
to
the
2:00
return,
for
its
collection,
returned
agreeing
than
forward
(including a Federal
Bank)
it
is
had
is
for
for
the
that
bank
that
hour
a
bank
as
bank may convert
forward
collection
specified
the
in this
returned
check
check
section.
to
drawn
on
The
the
returning
a qualified
returned
check.
(b)
check.
A returning bank,
to a qualified
the
time
Extension
for
returned
return
in order
check,
under
Part 210), and paragraph
the
of
deadline
for
qualified
returned
to convert a returned check
may extend by one business day
U.C.C.,
Regulation J
(a) of this section.
A-228
(12 CFR
A returning bank
-229-
may
not,
however,
extend
these
times when
it is returning
a
check directly to the depositary bank.
(c)
handled
Acceptance
a check
during
by
collecting
forward
bank.
collection
A
may
bank
not
that
refuse
to
handle that check as a returned check.
(d)
bank
Settl em ent .
sending
a returned
A returning bank shall
check
to
it
for
return
settle with
by
the same
means that it settles or would settle with the sending bank
a check
bank.
the
received
for
for
for forward collection drawn on the depositary
The settlement shall become final upon
time
a
payment
by
the
depositary
the expiration
bank
as provided
of
in
§ 2 2 9 . 3 2 (b).
(e)
Charges.
A returning bank may impose a charge on
a bank sending a returned check for handling the returned check.
(f)
Reliance on routing n u m b e r .
A returning bank may
return a returned check based on any routing number
the
depositary
bank
depositary bank's
appearing
on
indorsement or
the
returned
in magnetic
designating
check
in
the
characters
on
a
qualified returned check.
(g )
Depositary
expeditious
return
bank
without
accounts.
requirement of paragraph
does not apply to checks deposited
with
The
(a) of this section
a depositary bank
that
does not maintain accounts.
(h)
unavailable
Notice
for
in
return,
lieu
the
of
return.
returning
A-229
bank
If
a
may
check
send
in
is
its
-230place notice of nonpayment
regard
to
the
time
or
in accordance
amount
limits
with
of
§ 229.33,
that
without
section.
The
notice shall clearly state that it constitutes a notice
of
return
and
is
considered
a returned
check
subject
in lieu
to the
requirements of this subpart.
§ 229.32
Depositary b a n k ’s responsibility for returned
checks.
(a)
shall
Acceptance
accept
returned
of returned c h e c k s .
checks
and
written
A depositary bank
notices
of
nonpayment -(1)
the name
At any branch or head office
and
consistent
with
address of the bank in its indorsement on
the check;
(2)
If no address appears
any branch or head office
number of the bank
(3)
its
At
on
any
at
the routing
in its indorsement on the check;
office of the bank;
(4)
associated with
If no routing number
indorsement
in the indorsement,
or address
the check,
appears
at any branch
in
or head
and
location
at which
the bank
accepts
checks as a paying bank.
(b)
for
the
return)
Payment.
amount
at
the check
of
A
depositary bank
a returned
check
the close of the banking
or notice
("payment date").
A-230
(or
becomes
notice
in
day on which
Prior
accountable
lieu
of
it receives
to that
time
the
-231depositary
bank
shall
pay
the bank
(the paying or returning bank)
(1)
Debit
returning
the check
to
it
for the amount of the check by —
to an account of
the depositary bank
on the books of the returning or paying bank,
(2)
Cash,
(3)
Wire transfer,
(4)
Any other
or
form
of payment
acceptable to the
returning or paying bank,
provided
that
the proceeds of such payment are available to the
returning or paying bank in cash or by credit
the
returning or
the payment date
paying
bank,
paying bank
is not
payment
on or as of the payment date.
a banking
shall
to an account of
day
be made
for
the
returning
by the next day
banking day for the returning or paying bank.
credit
between
banks
Federal
Home
forward
collection
(including
Loan Banks)
of
for
the
Federal
the
check
shall
or
is a
Any provisional
Reserve
check
that
If
Banks and
arising
become
during the
final
upon
the
expiration of the time for payment by the depositary bank.
(c)
bank.
If,
Recovery
during
the
forward
by
depositary
collection
of
a
bank
from
check,
collecting
the
depositary bank did not receive full provisional settlement for
the check,
the depositary
check
the
from
bank
(including
Federal Home Loan Bank)
collection
bank
to which
may
a
recover
Federal
it sent
the amount of any payment
A-231
for
the
Reserve
the check
returned
Bank or a
for
forward
the depositary bank made
-232-
to the bank
returning
the check
for
any settlement the depositary bank
(d)
nonpayment.
Misrouted
If a bank
checks
a
determines
to the check
and,
or notice
identify
the
as
received
a
depositary
check
pay a check
the
p.m.
bank,
notice
banking
bank,
or
forward
If
it shall,
notice
the
the
returned
bank
cannot
as a returning
to the
bank
from
(local
time)
on
If the day
writing
the
bank,
which
constitutes
or
the check
bank
it
determines not to
provide
timely
form
notice.
of
A-232
of
was
is
day
received
required
by
to
the depositary bank's
including
a photocopy
other
bank
business
is not a banking day for
receipt of notice on
(including
telex,
bank
it shall
second
the paying
to the depositary
day
If a paying
$2,500 or more,
provided by any reasonable means,
Fedwire,
and the
such that it is received by the depositary
the depositary bank,
a
of
the depositary bank
bank.
banking day on which
the paying bank.
next
identify
returning
in the amount of
4:00
following
provide
it shall
Re q ui r e m e n t .
of nonpayment
by
check or notice
Notice of nonpayment.
(a)
bank
of
the check or notice.
§ 229.33
notice
notices
the depositary bank,
to the depositary
the returned
less
it is not the depositary bank with respect
or notice,
thereafter,
check
send
that
and
returned
nonpayment on the basis that it is
bank
check,
received.
returned
receives
the returned
the
Notice
may
the returned
check),
telegraph.
be
check,
telephone,
Notice
of
-233nonpayment
initiated
given as provided
under
§ 229.30 or
in this section,
§ 229.31
but no more
shall
also be
than one notice
is required for a single check.
(b)
Content of n o t i c e .
Notice must include the:
(1)
(2)
Name of the payee (s);
(3)
Amount;
(4)
Date of
(or
bank
Name and routing number of the paying bank;
if given
depositary
bank,
collecting bank
of
the
indorsement
of
the
depositary
to a collecting bank other than the
the
and
date
of
indorsement
of
the
the name, routing number, and date
indorsement of any prior
collecting
bank
and
the
in
the
depositary b a n k ) ;
(5)
Account
number
of
the
depositor (s)
depositary bank;
(6)
Branch name or number of
the depositary bank
from its indorsement;
(7)
Trace number associated
with
the
indorsement
of the depositary bank; and
(8)
The
notice
may
may be useful
depositor,
the name
Reason for return.
include other
in
and,
identifying
the check
of
the
The notice need not
bank cannot determine with
returned
notice,
depositary
include
reasonable
A-233
from the check
being
in the case of a written
and routing number
indorsement.
information
and
that
the
must include
bank
from
its
information that the
certainty
from
the check
-234itself
through
the
exercise
If the paying bank
may,
but
is
question
not
If
depositary
bank,
first bank
that
care
and good
is not sure of a piece of
required
marks.
of ordinary
to,
the
identify
paying
bank
the
faith.
information,
information
cannot
it
with
identify
the
it should send the notice of nonpayment to the
it can
identify
that handled
the check
during
forward collection.
(c)
accept
Acceptance
notices
telephone
or
during
The depositary
its banking day at
telegraph
in
of n o t i c e .
number
the
of
its
branch
designated
return
item unit, at any other number
receipt
of
notice of nonpayment,
notice,
the general
head
indorsement,
at
office
the
shall
purpose
or
of
the
number
of
its
held out by
the bank
for
as specified in § 229.32(a).
(d)
Charge-frack.
and,
bank
in the case of written
If the depositary bank
returned check
(or notice of nonpayment)
returned
or notice of nonpayment
check
the time and manner provided
the amount of any credit
account,
from
but
any
is liable
delay
sufficient
in
given
to the
to
fails
to send
to its customer
in the U.C.C.,
a
the
within
it may charge-back
for the check to its customer 's
customer
charging-back
information
and
receives
allow
if
the
for
the
any loss
notice
depositary
resulting
contains
bank
to
charge-back .
(e)
Cancellation
nonpayment
and
of n o t i c e .
subsequently
If a paying bank
notice
of
check,
the paying bank shall provide a second notice
A-2 34
determines
to
gives
pay
a
as soon
as
-235reasonably
possible,
indicating
that
it
is
cancelling a previous notice and containing
a second
all
the
notice
information
in the original notice.
§ 229.34
Warranties by paying bank and returning bank.
(a)
that
W ar ra n t i e s .
Each
a returned
check
transfers
paying bank
and receives
other
consideration
for it warrants to the
bank,
to any subsequent returning bank,
and to the owner of the check,
(1)
under
The paying
the U.C.C.#
or returning
a
bank
settlement
or
transferee returning
to
the depositary bank,
that:
bank
returned
Regulation
J
the
check
timely
(12 CFR Part 210),
or
§ 229.30 of this part;
(2)
It is authorized to
(3)
The returned
check
return the check;
has not
been
and
materially
altered.
(b)
shall
not
Damages.
exceed
Damages
for breach
of
these warranties
the consideration received by the paying or
returning bank plus finance charges and expenses
returned check,
(c)
for
breach
to the
if any.
Tender
of
related
of d e f e n s e .
a warranty
under
If a returning bank
this
section,
it may give a
prior returning bank or
the paying
itigation,
notified may then give similar notice
and
to any other
notice
states
the bank
prior
that
returning
bank
bank
is sued
or
written notice of
the paying
bank.
the
If the
the paying or returning bank notified may
A-235
-236come
in and defend
and
that
notified does not do so,
if the
it will
paying
unless
after
of
fact
common
reasonable
to
receipt
returning
in any action
the paying or returning bank giving
determination
or
the notice
the
of
two
the
against
the
that
or
Indorsement
a Federal
handles
check,
shall
a
Home
check
indorse
standards.
Loan
Bank,
during
(b)
makes
the
A bank,
or
other
a Federal Reserve
than
a paying
check
in
or
accordance
Contract of i nd o r s e r .
the contract of an
§ 229.36 —
a returned
with
the
A paying bank
or returning
indorser and may have the rights
it handles.
Presentment of checks.
(a)
Presentment
a paying bank
of
by
the
checks.
is considered
for purposes of determining
nonpayment
bank
in Appendix D to this part.
of a holder with respect to each returned check
through
paying
it is so bound.
forward collection
indorsement standard set forth
bank
then
Indorsements.
(a)
Bank,
by any
litigations,
returning bank notified does come in and defend,
§ 229.35
it by
be bound
notice
bank
paying
the
bank
time
under
A
check
payable
to be drawn
on
for return or
the U.C.C.,
at
or
that bank
notice
of
Regulation J
(12 C FR Part 210), and this part.
(b)
check
Receipt at bank
is considered
received
office or
by
the
received:
A-236
processing c e n t e r .
paying
bank
when
it
is
A
\
-237-
(1)
At any branch or
head
identified on the check by
(2)
the
At any branch or
At any address
the routing number
head
office consistent with
bank
on the check,
of the bank
of the bank on
associated
the check,
in magnetic characters or in fractional
(4)
is
name without address,
name and address of the
(3)
office if the bank
with
whether
form, or
At a location to which delivery is requested
by the paying bank.
(c)
T r u n ca t io n.
A
bank,
Federal Home Loan Bank may present a check
transmission
of
information
describing
return
Reserve
tp a paying bank
the check
with an agreement with the paying bank.
may not extend
Federal
Bank,
by
in accordance
A truncation agreement
times or otherwise vary the requirements
of this part with respect
to parties
interested
in
the
check
that are not party to the agreement.
§ 229.37
Inquiry to paying bank.
A paying bank
telegraph
inquiry
whether
depository
a
certified,
paid,
from
a
depositary
check
drawn
or payment stopped
returned,
information on
payee.
shall respond promptly to a telephone or
With
or
the
notice
face of
respect
to a
of
bank
upon
thereon,
it has
teller's
A-237
given,
including
check,
shall respond promptly to a telephone or
respect
been
or whether
nonpayment
the check
with
the
to
issued,
it has been
and
confirm
the amount and
drawing
telegraph
bank
inquiry
from
or
-238a depositary
bank
been
or payment has
issued,
information on
payee.
with
the
respect
face of
to whether a teller's check has
been
stopped
the check,
A paying or drawing
bank
thereon,
and confirm
including the amount and
does
not
agree
to
pay
the
check by responding to such an inquiry.
§ 229.38
Liability.
(a)
A bank
shall
complying
Standard
of care?
exercise ordinary care
with
the requirements
liability;
and act
measure
in good
of this subpart.
faith
A bank
fails to exercise ordinary care or act in good
faith
subpart
the owner
check,
for
may be liable
or
another
failure
incurred,
of
the
to the depositary bank,
party
to the check.
in
that
under
this
of
a
The measure of damages
to exercise ordinary care is the amount of the loss
up to the amount of
loss
the check,
reduced
by
that party would have incurred even
exercised ordinary care.
faith
of d a m a g e s .
under
this subpart
A
bank
may
that fails
the amount
if the bank had
to
act
be liable for other
in
good
damages, if
any, suffered by the party as a proximate consequence.
Subject
to a b a n k ’s duty to exercise ordinary care or act in good faith
in choosing
bank
is
not
mistake,
liable
for
the
possession
of
a
check
of others.
liability
to
or
This
or notice of
insolvency,
or default of another
destruction
bank's
the means of return
bank
notice
or
neglect,
person,
in transit
section does not
its customer
under
A-238
nonpayment,
misconduct,
or for
or
affect
the U.C.C.
the
in
loss or
the
a paying
References
-239-
to
“bank"
in this section
include
a Federal
Reserve
Bank
and
Federal Home Loan Bank.
(b)
Paying bank's
a paying bank
with
the
fails both
requirement
Regulation J
(12
of
CFR
timely
return
in
the paying
under
the
connection
bank
shall
Comparative n e g l i g e n c e .
bank, Federal
U.C.C.
with
be
a
If
or
single
liable
If a person,
Reserve Bank, or Federal Home
exercise ordinary care or act
indorsing
a check
(§§ 229.32(a)
incurred
by that person
proportion
to
the
in good
(§ 229.35)
or notice
in
timely r e t u r n .
under
§ 229.30 or such other provision, but not both.
(c)
in
to make
to comply with § 229.30 and to comply
Part 210)
nonpayment of a check,
either
failure
under
amount
Loan Bank,
faith under
or accepting
and 229.33(c)),
fails to
this
shall
negligence
subpart
a returned
or otherwise,
§ 229.38(a)
of
including a
or
check
the loss
be diminished
bad
faith
attributable to that person.
(d)
Timeliness
Reserve Bank,
beyond
the
failure
control,
of
or a Federal
time limits set
interruption
suspension
of
of
action.
equipment,
by a
or
a bank,
forth
in
or
bank,
other
this
subpart
computer
war,
the action,
Federal
circumstances
if it exercises
circumstances require.
A-239
because
of
facilities,
emergency
its time for acting is extended for
to complete
a
Home Loan Bank is delayed in acting
communication
of payments
If
the
conditions,
beyond
its
time necessary
such diligence as the
-240-
(e)
Exclusion.
Section 229.21
§ 611(a)
and (b) of the Act
appij; to
this
(f)
action
this
4010(a)
part
and
(b))
and
do
not
subpart.
Bona
brought
subpart
(12U.S.C.
of
fide e r r o r s .
under
this
A bank
section
is not liable
for
a
violation
of
in
any
this
if the bank demonstrates by a -preponderance of evidence
that
the violation was not intentional and resulted from a bona
fide
error,
notwithstanding
reasonably adapted
to avoid
the
maintenance
any such
error.
judgment with respect to a bank's obligation
is not a
bona
(g)
be brought
of
procedures
An error of legal
under
this
subpart
this
section
fide error.
Jur is di ct io n.
Any action
under
may
in any United States district court, or in any other
court of competent jurisdiction,
within one year
after
the date
of the occurrence of the violation involved.
(h)
Reliance on Board
rulings.
No provision
subpart
imposing any liability shall apply
omitted
in good faith
or
interpretation
in conformity
thereof by
with
the Board,
by judicial
or other
this
to any act done or
any rule,
regulation,
regardless of whether
such rule, regulation, or interpretation
or determined
of
is amended,
rescinded,
authority to be invalid for
any reason after such act or omission has occurred.
$ 229.39
Insolvency of bank.
(a)
or
coming
into,
Duty of r e c e i v e r .
the
possession
of
A-240
a
A check
paying,
or
returned
collecting,
check
in,
-241-
depositary,
check
is
trustee,
or returning bank
not
finally paid
that suspends
payment and
which
shall be returned by the receiver,
or agent in charge
of the closed bank
to the bank
or
customer that transferred the check to the closed bank.
(b)
Preference against
paying or a depositary
bank.
If a paying or depositary bank finally pays a check or returned
check and suspends payment without making a settlement
check
or
with
its customer
becomes
final,
or
for
the
the prior bank, which settlement is
the customer
or prior
bank
has
a preferred
claim against the paying or depositary bank.
(c)
If
Preference
a collecting
or
against
returning
collecting
bank
receives
subsequent bank for a check or returned
is
or
becomes
settlement
becomes
for
final,
final,
the
and
check
payments
with
prior
returning b a n k .
settlement
check,
suspends
the
or
which
from a
settlement
without making
bank,
which
is
a
or
the prior bank has a preferred claim against the
collecting or returning bank.
(d)
Final
payment
paying bank
gives,
provisional
settlement
occurs
with
provisional
or a collecting bank
for
thereafter suspends payment,
interfere
of
a
or
If a
gives or
receives,
returned
check
a
and
the suspension does not prevent or
the settlement
automatically upon
check
s et tl e m e n t .
the
becoming
final
if such
lapse of a certain
happening of certain events.
A-241
time
finality
or
the
-242-
§ 229.40
Relation to state law.
The
provisions
of
this
subpart
supersede
inconsistent provisions of the U.C.C.
as adopted
or
to
of
any
other
state
law,
but
only
the
any
in any state,
extent
of
the
incons i st e n c y .
§ 229.41
Exclusions.
The expeditious return requirements of
not
apply
to
a
States Treasury,
check
drawn
to a check
upon
the
account
indorsed by,
or
this
of
for
subpart
do
the United
credit
to the
United States Treasury, or to a U.S. Postal Service money order.
A-242
APPENDIX A
Routing Number Guide to Local checks
Each
& Co.,
as
routing
bank
agent
number
nine-digit
is assigned a routing number by Rand McNally
for
the American
takes
form.
two
forms:
of a check
form
(which generally appears
the
check)
and
a
A paying bank
face
by
Bankers
fractional
is normally
its routing number
the
Association.
form
and
the
is
the
fractional
right-hand
(which
a
identified on
in both
in the upper
nine-digit
form
The
corner
printed
of
in
magnetic ink in a strip along the bottom of the c h e c k ) •
The
and
first
four digits of the nine-digit routing number
the denominator
"Federal
Reserve
Funds
used
checks
fractional
the Federal
by
Availability
nonlocal
the
routing number
routing symbol," which
Reserve District,
arrangements
of
the
Act
in terms of
the paying bank,
Reserve office,
paying
and
identifies
bank.
Regulation
and
Because
CC
the
the Federal
the clearing
the Expedited
define
local
and
the Federal Reserve office serving
it is possible to determine whether
local or nonlocal
form
by reference
to the Federal
a check
Reserve
is
routing
symbol.
The
symbols
following
associated
depositary
bank
with
should
below for the Federal
in which
is a
list
each
refer
of
Federal
to
the
Reserve office
the branch of deposit
Federal
Reserve
Reserve
routing
is located,
office.
numbers
that serves
routing
A
listed
the territory
checks with these
Federal Reserve routing symbols are considered local checks.
A-243
-2-
First Federal Reserve District
(Federal Reserve Bank of Boston)
Head Office
Windsor Locks Office
0110 1 /
2110 2/
Lewiston office
0111
0112
21 1 2
0113
2113
0114
2114
0115
2115
0116
2116
0117
2117
0118
2118
0119
2119
0211
2211
2111
Second Federal Reserve District
(Federal Reserve Bank of New York)
Head Office
Buffalo Branch
Cranford Office
0210
0220
2220
0212
2212
0211 3/
2211
0215
2215
0216
2216
0260
2260
0223
2223
1/
The first two digits identify the Federal
Reserve
District.
Thus 01 identifies the First Federal Reserve
District (Boston), and 12 identifies the Twelfth District (San
Fr an cis co )•
2/
Adding 2 to the first digit denotes a thrift institution*
Thus 21 identifies a thrift in the First District, and 32
denotes a thrift in the Twelfth District*
3/
Banks in Fairfield County, Connecticut are members of the
Federal Reserve Bank of New York and therefore have Second
District routing numbers*
Their checks, however, are processed
by the Windsor Locks office*
Thus, checks drawn on banks with
0211 or 2211 routing numbers wuold not be local checks for
Second District depositary banks*
A-244
-3-
jericho Office
0214
2214
0280
2280
0219
2219
Utica Office
0213
2213
Third Federal Reserve District
(Federal Reserve Bank of philadelphia)
Head Office
0310
2310
0360
2360
0311
2311
0312
2312
0313
2313
0319
2319
Fourth Federal Reserve District
(Federal Reserve Bank of Cleveland)
Head Office
0410
2410
0412
2412
Cincinnati Branch
0420
2420
0421
2421
0422
2422
0423
2423
Columbus Office
0440
2440
0441
2441
0442
2442
A-245
Pittsburgh Branch
0430
2430
0432
2432
0433
2433
0434
2434
-4-
Fifth Federal Reserve District
(Federal Reserve Bank of Richmond)
Head Office
0510
2510
0514
2514
Baltimore Branch
0520
2520
0521
2521
0522
2522
0540
2540
0550
2550
0560
2560
0570
2570
Columbia Office
0532
2532
0539
2539
Charleston Office
0515
2515
0519
2519
Charlotte Branch
0530
2530
0531
2531
Sixth Federal Reserve District
(Federal Reserve Bank of Atlanta)
Head Office
0610
2610
0611
2611
0612
2612
0613
2613
Birmingham Branch
0620
2620
0621
2621
0622
2622
Nashville Branch
0640
2640
0641
2641
0642
2642
New Orleans Branch
0650
2650
0651
2651
0652
2652
0653
2653
0654
2654
0655
2655
A* 246
Jacksonville Branch
0630
2630
0631
2631
0632
2632
Miami Branch
0660
2660
0670
2670
-5-
Seventh Federal Reserve District
(Federal Reserve Bank of Chicago)
Head Office
0710
2710
0711
2711
0712
2712
0719
2719
Detroi t Branch
0720
2720
0724
2724
Indianapolis Office
0740
2740
0749
2749
Des Moines Off ice
0730
2730
0739
2739
Milwaukee Office
0750
2750
0759
2759
Eighth Federal Reserve District
(Federal Reserve Bank of St. Louis)
Head Office
0810
2810
0812
2812
0815
2815
0819
2819
0865
2865
Little Rock Branch
0820
2820
0829
2829
Memphis Branch
0840
2840
0841
2841
0842
2842
0843
2843
Ninth Federal Reserve District
(Federal Reserve Bank of Minneapolis)
Head Office
0910
2910
0911
2911
0912
2912
Helena Branch
0920
2920
0921
2921
0929
2929
A-247
Louisville Branch
0813
2813
0830
2830
0839
2839
0863
2863
-
6-
Head office
(Continued)
0913
2913
0914
2914
0915
2915
0960
2960
0918
2918
0919
2919
Tenth Federal Reserve District
(Federal Reserve Bank of Kansas City)
Head Office
1010
3010
1011
3011
1012
3012
1019
3019
Denver Branch
1020
3020
1021
3021
1022
3022
1023
3023
1070
3070
Oklahoma City Branch
1030
3030
1031
3031
1039
3039
Omaha Branch
1040
3040
1041
3041
1049
3049
Eleventh Federal Reserve Distr ict
(Federal Reserve Bank of Dallas)
Head Office
1110
3110
1113
3113
1111
3111
1119
3119
El Paso Branch
1120
3120
1122
3122
1123
3123
1163
3163
A-248
Houston
1130
3130
1131
3131
-7-
San Antonio Branch
1140
3140
1149
3149
Twelfth Federal Reserve District
(Federal Reserve Bank of San Francisco)
Head Office
1210
3210
1214
3214
1211
3211
1212
3212
1213
3213
Los Angeles Branch
1220
3220
1221
3221
1222
3222
1223
3223
1224
3224
Salt Lake City Branch
1240
3240
1241
3241
1242
3242
1243
3243
Portland Branch
1230
3230
1231
3231
1232
3232
1233
3233
Seattle Branch
1250
3250
1251
3251
1252
3252
A-249
Appendix B-l
Reduction of Schedules for Certain Nonlocal Checks
Under the Temporary Schedule
A depositary bank that is located in the following check processing
territories shall make funds deposited in an account by a nonlocal
check described below available for withdrawal not later than the
number of business days following the banking day on which funds are
deposited, as specified below.
Number of business days
following the banking day
funds are deposited_______
Federal Reserve Office
Boston
Depositary
0210
0260
2260
0280
banks (0110, 2110)
0710
0310
2310
2710
0360
2360
to:
5 business days
Windsor Locks
0211
2211
3 business days
Lewiston
None
Hew York
Depositary banks
(0210,0280,0260,2260)
to:
3 business days
0214
2214
0219
2219
Jericho
3 business days
0210
0280
0260
2260
A-250
- 2 Number of business days
following the banking day
funds are deposited_______
Federal Reserve Office
Cranford
0210
0260
0280
2260
3 business days
Buffalo
None
Utica
0210
3 business days
0280
Ph iladelph ia
Depositary banks
0110
2110
0210
0260
2260
0220
2220
0410
2410
0420
2420
0430
2430
0440
2440
0510
0519
2519
0520
2520
0530
2530
0530
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
0740
2740
0750
2750
0810
2810
(0310,2310/ 0360, 2360)
0830
2830
0840
2840
0910
2910
0960
2960
1010
3010
1020
3020
1040
3040
to
5 business days
A-251
- 3
Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Cleveland
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0420
2420
0430
2430
0440
2420
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Cincinnati
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0430
2430
0440
2440
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
(0410,2410) to:
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
1040
3040
1110
3110
1130
3130
1120
3120
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
5 business days
(0420,2420) to:
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1240
3240
1210
3210
1220
3220
1223
3223
A-252
5 business days
- 4 Number of business days
following the banking day
funds are deposited______
Federal Reserve office
Cincinnati C o n 't .
0510
2510
0519
2519
0710
2710
0720
2720
0730
2730
Columbus
Depos i tary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Pittsburgh
Depos itary banks
0520
2520
0110
2110
0220
2220
0519
2519
0530
0740
2740
0830
2830
0750
2750
0910
2910
0960
1010
3010
1020
3020
1030
3030
(0440,2440)
1230
3230
1240
3240
1250
3250
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1240
3240
1120
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
(0430,2430)
5 business days
to;
0610
2610
0620
2620
0640
2640
0650
2650
0660
A-253
5 business days
Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Pittsburgh C o n * t .
2530
0710
2710
0420
2420
0410
2410
0440
2440
0730
2730
0720
0539
2539
0630
2630
0820
2820
0920
2920
1030
3130
2960
0310
2310
0360
2360
0510
2510
0810
2810
0210
0260
0280
1110
3110
1120
3120
1130
3130
1140
3140
1210
Richmond
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0515
0520
2520
0530
2530
0531
2531
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2660
0840
2840
1010
3010
1020
3020
1040
3040
1240
3240
1220
3220
1223
3223
1230
3230
1250
3250
3210
(0$10,2510)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
1010
3010
1020
3020
1030
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
5 business days
- 6 Number of business days
following the banking day
funds are deposited_______
Federal Reserve Office
Richmond C o n ’t .
2515
0519
2519
2710
0720
2720
0730
2730
Baltimore
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0820
2820
1030
3030
1110
3110
1120
3120
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
3030
(0520,2520)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
1010
3010
1020
3020
1030
3030
1130
3130
1140
3140
1210
1220
3220
1230
3230
1250
3250
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
A-255
5 business days
- 7
Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Charlotte
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0532
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Columbia
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0520
2520
0530
2530
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
(0530,2530)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
1010
3010
1020
3020
1030
3030
(0539,2539
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
1010
3010
to:
1040
3040
5 business days
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
A-256
5 business days
- 8 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Columbia Con't.
0440
2440
0510
2510
0519
2519
0720
2720
0730
2730
Charleston
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Atlanta
Depositary banks
0110
2110
0210
0260
2260
0280
0220
0520
2520
0530
2530
0539
2539
0620
1020
3020
1030
3030
(0519,2519)
0740
2740
0750
2750
0810
2810
0830
2830
0840
2840
0910
2910
0960
2960
1010
3010
1020
3020
(0610,2610)
0740
2740
0750
2750
0810
2810
0820
to:
1040
3040
5 business days
1110
3110
1120
3120
1130
3130
1140
3140
1240
3240
to:
1040
3040
1110
3110
1120
3120
1130
A-257
5 business days
- 9 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Atlanta Con't.
2220
0310
2310
0360
2360
0410
2410
04-20
2420
0430
2430
0440
2440
0510
2510
0519
2519
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Birmingham
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
(0620,2620)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
A-258
5 business days
ro o
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»-•
- 11 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Miami c o n 't .
0310
2310
0360
2360
0530
2530
0610
2610
0630
2630
0640
2640
0650
2650
0720
2720
0840
2840
1020
3020
Nashville
0613
2613
3 business days
Depositary banks
0610
2610
0620
2620
0630
2630
0650
2650
to:
0660
2660
0530
2530
0840
2840
0539
2539
New Orleans
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
(0640,2640)
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0710
2710
0720
2720
0730
2730
5 business days
(0650,2650)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
A-260
5 business days
- 12 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
New Orleans Con *t .
0510
2510
0519
2519
1020
3020
1030
3030
1250
3250
Chicago
None
Detroit
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
(0720,1720)
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0730
2730
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
to:
1040
3040
5 business days
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
Des Moines
None
Indianapolis
Depositary Banks
0110
2110
0210
0520
2520
0530
(0740,2740)
0750
2750
0810
to:
1040
3040
1110
A-261
5 business days
- 13 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Indianapolis C o n 't .
0260
2260
0280
0220
2220
0310
2310
0360
236-0
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Milwaukee
Depos itary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
(0750,
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
2750)
0740
2740
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
A-262
5 business days
- 14 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
St. Louis
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Little Rock
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
(0810,
2810)
0740
2740
0750
2750
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
(0820,2820)
0740
2740
0750
2750
0810
2810
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
5 business days
to:
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
A-263
5 business days
- 15 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Little Rock Con ‘t •
0440
2440
0510
2510
0519
2519
0710
2710
0720
2720
0730
2730
Louisville
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Memph is
Depos itary banks
0110
2110
0210
0260
2260
0280
0310
2310
0360
2360
0610
2610
0710
2710
0810
2810
1010
3010
1110
3110
1020
3020
1030
3030
(0830,
28:
0740
2740
0750
2750
0810
2810
0820
2820
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
1240
3240
1250
3250
to:
1040
3040
5 business days
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
(0840,284(
0720
2720
0730
2730
0740
2740
0750
2750
0810
2810
1040
3040
1120
3120
1130
3130
1140
3140
1240
3240
A-264
5 business days
- 16 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Memphis Con *t .
0410
2410
0510
2510
0220
2220
0420
2420
0430
2430
0440
2440
0519
2519
0520
2520
0530
2530
0530
2539
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
Minneapolis
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
0820
2820
0840
2840
0910
2910
0960
2960
1010
3010
1020
3020
1030
3030
(0910,2910,0960,2960)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0920
2920
1010
3010
1020
3020
1030
3030
1040
3040
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
A-265
to
5 business days
- 17 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Helena
None
Kansas City
0865
2865
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
(1010,3010)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1020
3020
1030
3030
to:
1040
3040
5 business days
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
Denver
None
Oklahoma City
Depositary banks
(1030,3030)
to:
0110
2110
0210
0260
2260
0520
2520
0530
2530
0539
0740
2740
0750
2750
0810
1040
3040
0280
2539
2810
3120
1110
3110
1120
A-266
5 business days
- 18 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Oklahoma City C o n ’t .
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Omaha
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
(1040,3040)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
to:
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
A-267
5 business days
- 19 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Dallas
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
Houston
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
(1110,3110)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
(1130,3110)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
0920
2920
to:
1120
3120
1130
3130
1140
3140
5 business days
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
to:
1110
3110
1120
3120
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
A-268
5 business days
Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Houston Con't.
0440
2440
0510
2510
0519
2519
0710
2710
0720
2720
0730
2730
San Antonio
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
0520
2520
0530
2530
0539
2539
0610
2610
0620
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
El Paso
Depositary banks
0110
2110
0210
0260
2260
0280
0220
2220
0310
0520
2520
0530
2530
0539
2539
0610
2610
0620
1010
3010
1020
3020
1030
3030
(1140,3140)
0740
2740
0750
2750
0810
2810
0820
2820
0830
2830
0840
2840
0910
2910
0960
2960
1010
3010
1020
3020
1030
3030
(1120,3120)
0740
2740
0750
2750
0810
2810
0820
2820
0830
to:
1040
3040
5 business days
1110
3110
1120
3120
1130
3130
1140
3140
1210
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
to:
1040
3040
1110
3110
1130
3130
1140
3140
1210
5 business days
- 21 Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
El Paso Con't.
2310
0360
2360
0410
2410
0420
2420
0430
2430
0440
2440
0510
2510
0519
2519
2620
0630
2630
0640
2640
0650
2650
0660
2660
0710
2710
0720
2720
0730
2730
2830
0840
2840
0910
2910
0960
2960
0920
2920
1010
3010
1020
3020
1030
3030
3210
1220
3220
1223
3223
1230
3230
1240
3240
1250
3250
San Francisco
None
Los Angeles
None
Portland
1250
3250
5 business days
Salt Lake City
None
Seattle
Depositary banks
(1250,3250)
to:
1230
3230
5 business days
A-270
Appendix B-2
Reduction of Schedules for Certain Nonlocal checks
Under the permanent Schedule
A depositary bank that is located in the following check processing
territories shall make funds deposited in an account by a nonlocal
check described below available for withdrawal not later than the
number of business days following the banking day on which funds are
deposited, as specified below*
Number of business days
following the banking day
funds are deposited______
Federal Reserve Office
Windsor Locks
3 business days
0211
2211
Hew York
Depositary banks
(0210,0280,0260,2260)
to:
3 business days
0214
2214
0219
2219
Jericho
3 business days
0210
0280
0260
2260
Cranford
3 business days
0210
0260
0280
2260
Utica
3 business days
0210
0280
A-271
Federal Reserve Office
Number of business days
following the banking day
funds are deposited______
Nashville
0613
26 1 3
3 busines
Kansas City
0865
28 6 5
3 business days
- 273 -
Appendix C - Model Forms
Specific Policy Disclosures
C-l
Where bank gives next-day availability and places
no holds
C-2
Where bank gives next-day availability and places
holds on safeguard and new account exceptions
bases
C-3
Where bank gives next-day availability and places
holds to statutory limits on local and nonlocal
checks, but only on a case-by-case basis, and
places no holds on safeguard or new account
exceptions bases
C-4
Where bank gives next-day availability and places
holds to statutory limits on local and nonlocal
checks, but only on a case-by-case basis, and
places holds on safeguard exceptions basis but not
on new account exception basis)
C-5
Where bank places holds to statutory limits on all
statutory categories of deposits
C-6
Where bank places holds to statutory limits on all
statutory categories of deposits (includes chart)
C-7
Where bank places holds on all statutory
categories of deposits, but for less than the
statutory limits
Other Notices
C-8
Notice
of exception
C-9
Notice of hold (bank gives next-day availability
and places holds to statutory limits on local and
nonlocal checks, but only on a case-by-case basis)
C-10
Notice
C-ll
Notice
at proprietary automated teller
machines,
driVe-in teller facilities, and on preprinted
deposit slips
C-12
Notice at a bank's automated teller machines that
may be used for deposits by customers of other
banks
C-13
Interest payment policy insert in specific policy
disclosure
at branch locations
A-273
- 274 -
C-l —
holds
Where bank gives next-day availability and places no
YOUR ABILITY TO WITHDRAW FUNDS AT (bank name and location)
Our policy is to allow you to withdraw funds deposited
into your account on the next business day after the day we
receive your deposit.
Every day except Saturday, Sunday,
and a federal holiday is a business day.
Your deposit will
be considered received, however, only on a day we are open
for business.
For example, if you deposit on Thanksgiving,
we consider the deposit made on Friday, the next day we are
open for business.
And if you make your deposit after (time
of day) on any given business day, we consider it made on
the next business day.
Please remember that even after we have made funds
available to you, and you have withdrawn the funds, you are
still responsible for checks you deposit that are returned
to us unpaid and for any other problems involving your
deposit.
If you have any questions, contact your branch manager.
A-274
- 275 -
C-2 — Where bank gives next-day availability and places
holds on safeguard and new account exceptions bases
YOUR ABILITY TO WITHDRAW FUNDS AT (bank name and location)
Our policy is to allow you to withdraw funds deposited
into your account on the next business day after the day we
receive your deposit.
Every day except Saturday, Sunday,
and a federal holiday is a business day.
Your deposit will
be considered received, however, only on a day we are open
for business.
For example, if you deposit on Thanksgiving,
we consider the deposit made on Friday, the next day we are
open for business.
And if you make your deposit after (time
of day) on any given business day, we consider it made on
the next business day.
Please remember that even after we have made funds
available to you, and you have withdrawn the funds, you are
still responsible for checks you deposit that are returned
to us unpaid and for any other problems involving your
deposit.
If you have any questions, contact your branch manager.
LONGER DELAYS MAY APPLY
We may delay your ability to withdraw funds deposited
by check into your account an additional number of days for
these reasons:
If we believe the check you are depositing is
uncollectible.
If you make deposits in any one day that exceed $5,000.
If you redeposit a check that has been returned unpaid.
If you have overdrawn your account three or more times
in the last six months.
We will notify you if we do this, and tell you when you
will be able to withdraw the funds.
(We will delay for no
more than four additional business days.)
SPECIAL RULES FOR NEW ACCOUNTS
If your account has been open 30 days or less, we may
further limit your ability to withdraw funds deposited by
check, but only during the first 30 days.
You may still withdraw funds on the next business day
after the day of your deposit if you made the deposit in
cash or by wire transfer.
You also have next-day
availability for the following deposits (if they meet
certain requirements): government checks, cashier's checks,
certified checks, teller's checks, or traveler's checks.
However, your withdrawals of these check deposits are
A-275
- 276 -
l i m i t e d t o th e f i r s t $ 5 ,0 0 0 o f
r e s t is a v a ila b le on th e n in th
d e p o s it.)
F o r a l l o th e r ch eck d e p o s
d e p o s i t e d f u n d s a f t e r (n u n d t> e r )
a d a y 's t o t a l d e p o s it s .
(T h e
b u s in e s s d a y a f t e r t h e d a y o f
it s , y o u m ay w ith d r a w
b u s in e s s d a y s .
A-276
th e
- 277 -
C-3 — Where bank gives next-day availability and places
holds to statutory limits on local and nonlocal checks, but
only on a case-by-case basis, and places no holds on
safeguard or new account exceptions bases
YOUR ABILITY TO WITHDRAW FUNDS AT (bank name and location)
Our policy is to allow you to withdraw funds deposited
into your account on the next business day after the day we
receive your deposit.
Every day except Saturday, Sunday,
and a federal holiday is a business day.
Your deposit will
be considered received, however, only on a day we are open
for business.
For example, if you deposit on Thanksgiving,
we consider the deposit made on Friday, the next day we are
open for business.
And if you make your deposit after (time
of day) on any given business day, we consider it made on
the next business day.
Please remember that even after we have made funds
available to you, and you have withdrawn the funds, you are
still responsible for checks you deposit that are returned
to us unpaid and for any other problems involving your
deposit.
If you have any questions, contact your branch manager.
LONGER DELAYS MAY APPLY
In some cases, we may find it necessary to delay your
ability to withdraw funds deposited into your account by
check beyond the next business day.
When we do extend the delay, you may not withdraw —
either in cash or by writing checks to others — more than
the first $100 of the deposit until the hold expires.
The
length of the delay will vary with the type of check you are
depositing.
It may last as long as seven business days
after the day of your deposit (counting the business day
after the day of
deposit as day one).
Any time we
decide to delay your ability
to withdraw
funds beyond the next business day, we will notify you at
the time of your
deposit, and we will specify
the date on
which you can begin to withdraw these funds. (If your
deposit was made other than directly to a bank employee, we
will notify you by mail the day after we receive the
deposit.)
A-277
- 278 -
C-4 — Where bank gives next-day availability and places
holds to statutory limits on local and nonlocal checks, but
only on a case-by-case basis, and places holds on safeguard
exceptions basis, but not on new account exception basis
YOUR ABILITY TO WITHDRAW FUNDS AT (bank name and location)
Our policy is to allow you to withdraw funds deposited
into your account on the next business day after the day we
receive your deposit.
Every day except Saturday, Sunday,
and a federal holiday is a business day.
Your deposit will
be considered received, however, only on a day we are open
for business.
For example, if you deposit on Thanksgiving,
we consider the deposit made on Friday, the next day we are
open for business.
And if you make your deposit after (time
of day) on any given business day, we consider it made on
the next business day.
Please remember that even after we have made funds
available to you, and you have withdrawn the funds, you are
still responsible for checks you deposit that are returned
to us unpaid and for any other problems involving your
deposit.
If you have any questions, contact your branch manager.
LONGER DELAYS NAY APPLY
In some cases, we may find it necessary to delay your
ability to withdraw funds deposited into your account by
check beyond the next business day.
When we do extend the delay, you may not withdraw —
either in cash or by writing checks to others -- more than
the first $100 of the deposit until the hold expires.
The
length of the delay will vary with the type of check you are
depositing.
It may last as long as seven business days
after the day of your deposit (counting the business day
after the day of deposit as day one).
Any time we decide to delay your ability to withdraw
funds beyond the next business day, we will notify you at
the time of your deposit, and we will specify the date on
which you can begin to withdraw these funds.
(If your
deposit was made other than directly to a bank employee, we
will notify you by mail the day after we receive the
deposit.)
We may also delay your ability to withdraw funds
deposited by check into your account an additional number of
days for these reasons:
If we believe the check you are depositing is
uncollectible.
If you make deposits in any one day that exceed $5,000.
If you redeposit a check that has been returned unpaid.
A-278
- 279 -
If you have overdrawn your account three or more times
in the last six months.
Again, we will notify you if we do this, and tell you
when you will be able to withdraw the funds. (We will delay
for no more than four additional business days.)
i
A-279
- 280 -
C-5 — Where bank places holds to statutory limits on all
statutory categories of deposits
YOUR ABILITY TO WITHDRAW FUNDS AT (bank name and location)
Our policy is to delay your ability to withdraw funds
that you deposit by check into your account.
The length of
the delay varies, and is explained below.
When we delay
your ability to withdraw funds from a deposit, you may not
withdraw the funds in cash, and we will not pay checks you
write on your account by using these funds.
Please remember that even after we have made funds
available to you, and you have withdrawn the funds, you are
still responsible for checks you deposit that are returned
to us unpaid and for any other problems involving your
deposit.
If you have any questions, contact your branch manager.
DETERMINING AVAILABILITY OF YOUR DEPOSIT
When we delay your ability to withdraw funds, the
length of the delay is counted in business days from the day
of your deposit.
Every day except Saturday, Sunday, and a
federal holiday is a business day.
Your deposit will be
considered received, however, only on a day we are open for
business.
For example, if you deposit on Thanksgiving, we
consider the deposit made on Friday, the next day we are
open for business.
And if you make your deposit after (time
of day) on any given business day, we consider it made on
the next business day.
1.
Next-Day Availability
You may withdraw the first $100 of any deposit of
checks on the next business day after the day of your
deposit.
In addition, you may withdraw the entire amount of the
following deposits on the next business day after the
business day of your deposit:
Cash.
Wire transfers, including preauthorized credits, such
as social security benefits and payroll payments.
Checks drawn on us, that is, drawn on the (bank name)
unless (any limitations related to branches in
different states or check processing regions).
United States government checks payable to you.
State and local government checks if they are payable
to you and if you use a special deposit slip available
from (where the form may be obtained).
A-280
- 281 -
Cashier's, certified, or teller's checks if they
are payable to you and if you use a special
deposit slip available from (where the form may be
obtained).
2.
Availability of Other Check Deposits
Your ability to withdraw deposits other than those
listed above depends on whether your check is local or
nonlocal.
To determine whether the check you want to deposit is a
local or a nonlocal check, look at its bank location number.
This is the number printed on the lower-left-hand corner of
the check:
---------- 19----Pay to the
order of_____________________________ |$__________
___________________________________________ dollars
(Bank Name
and Location)
1234567890
0000000000 000
----- bank location number
If the first four digits of the bank location number
(1234 in the above example) are (bank's local routing
numbers), then the check is drawn on a bank that is located
in the same check-processing region as us, and we consider
it a local check.
If the first four digits of the bank
location number of the check you are depositing are not
listed above, then the check is drawn on a bank outside our
check-processing region and we consider it a nonlocal check.
Local checks deposited into your account will be
available to pay any checks you have written to others
starting on the third business day after the business day of
your deposit.
(The first $100 of any checks deposited may
be withdrawn on the business day following the day of
deposit.)
Also, you may withdraw up to $400 of the deposit
in cash at or after (time no later than 5:00 p.m.) on the
third business day after the business day of your deposit if
your check is a local check.
You may withdraw the remaining
amount on the fourth business day after the day of your
deposit.
For example, if you deposit a local check of $600 on a
Monday, $100 of the deposit is available Tuesday, and the
rest is available to pay checks written to others on
Thursday.
At or after (time no later than 5:00 p.m.) on
A-281
- 282 -
Thursday you may withdraw up to $400 of the deposit in cash,
and the rest is available for cash withdrawal on Friday.
Nonlocal checks deposited into your account will be
available to pay any checks you have written to others
starting on the seventh business day after the business day
of your deposit.
Also, you may withdraw the funds from the
deposit in cash on that day.
For example, if you deposit a nonlocal check on a
Monday, the funds from the deposit are available for
withdrawal or to pay checks written to others on Wednesday
of the next week.
3.
Deposits at Automated Teller Machines
You may not withdraw funds from any deposits, whether
cash or checks, made at automated teller machines we do not
own or operate until the seventh business day after the
business day of your deposit.
LONGER DELAYS MAY APPLY
We may delay your ability to withdraw funds deposited
by check into your account an additional number of days for
these reasons:
If we believe the check being deposited is
uncollectible.
If you make deposits in any one day that exceed $5,000.
If you redeposit a check that has been returned unpaid.
If you have overdrawn your account three or more times
in the last six months.
We will notify you if we do this, and tell you when you
will be able to withdraw the funds.
(We will delay for no
more than four additional business days.)
SPECIAL RULES FOR NEW ACCOUNTS
If your account has been open 30 days or less, we may
further limit your ability to withdraw funds deposited by
check, but only during the first 30 days.
You may still withdraw funds on the next business day
after the day of your deposit if you made the deposit in
cash or by wire transfer.
You also have next-day
availability for the following deposits (if they meet
certain requirements): government checks, cashier's checks,
certified checks, teller's checks, or traveler's checks.
However, your withdrawals of these check deposits are
limited to the first $5,000 of a day's total deposits.
(The
A-282
- 283 -
rest is available on the ninth business day after the day of
deposit.)
For all other check deposits, you may withdraw the
deposited funds after (xxuifoer) business days.
A-283
- 284 -
C -6 — W h e re b a n k p la c e s h o ld s t o s t a t u t o r y l i m i t s
s t a t u t o r y c a t e g o r ie s o f d e p o s its (in c lu d e s c h a r t )
YOUR A B IL IT Y
T O W IT H D R A W
FUNDS A T
(b a n k
nam e
and
on
a ll
lo c a tio n )
Our policy is to delay your ability to withdraw funds
that you deposit by check into your account.
The length of
the delay varies, and is explained below.
When we delay
your ability to withdraw funds on a deposit, you may not
withdraw the funds in cash and we will not pay checks you
write on your account by using these funds.
Please remember that even after we have made funds
available to you, and you have withdrawn the funds, you are
still responsible for checks you deposit that are returned
to us unpaid and for any other problems involving your
deposit.
If you have any questions, contact your branch manager.
D E T E R M IN IN G
A V A IL A B IL IT Y
O F Y O U R D E P O S IT
When we delay your ability to withdraw funds, the
length of the delay is counted in business days from the day
of your deposit.
Every day except Saturday, Sunday, and a
federal holiday is a business day.
Your deposit will be
considered received, however, only on a day we arr open for
business.
For example, if you deposit on Thanksgiving, we
consider the deposit made on Friday, the next day we are
open for business.
And if you make your deposit after (time
o f day) on any given business day, we consider it made on
the next business day.
1.
N e x t-D a y
A v a ila b ility
You m a y w i t h d r a w t h e f i r s t $ 1 0 0 o f a n y d e p o s i t of
checks on the next business day after the day of your
deposit.
In addition, you may withdraw the entire amount of the
following deposits on the next business day after the
business day of your deposit:
C ash.
Wire transfers, including preauthorized credits, such
as social security benefits and payroll payments.
d r a w n o n u s , t h a t is, d r a w n on t h e ( b a n k
(a n y lim it a t io n s r e la t e d to b ra n c h e s in
d i f f e r e n t s t a t e s o r c h e c k p r o c e s s in g r e g io n s ) .
C hecks
nam e)
unless
U n ite d
S ta te s
g o v e rn m e n t
checks
payable to you.
State and local government checks if they are payable
to you and if you use a special deposit slip available
from (where the form may be obtained).
A-284
- 285 -
Cashier's, certified, or teller's checks if they are
payable to you and if you use a special deposit slip
available from (where the form may be obtained)
2.
Availability of Other Check Deposits
To determine when funds deposited by check will be
available to pay any checks you have written to others or
for withdrawal, look at the check's bank location number.
This is the number printed on the lower-left-hand corner of
the check:
---------- 19----Pay to the
order of_____________________________ |$__________
___________________________________________ dollars
(Bank Name
and Location)
1234567890
0000000000 000
----- bank location number
Once you have determined the bank location number, look
at the first four digits of that number.
The following
chart can show you the availability time for your deposit:
A-285
- 286 -
Bank location number
(first four digits)
on the check being
deposited
When funds
are available
Example: when
funds are avail
able if a deposit
is made on a
Monday
(local bank
numbers)
3rd business day
to pay checks
written to others
and $400 cash
for withdrawal at
or after (time no
later than 5:00
p.m.)
Thursday (third
day after the
deposit)
4th business day
for rest of cash
or to pay checks
Friday (fourth
day after the
deposit)
7th business day
Next Wednesday
(the week
following the
deposit)
All other bank
numbers
Deposits at automated teller machines that we do not own or
operate> whether cash or check deposits, will not be
available for withdrawal until the seventh business day
after the date of deposit.
(For example, a deposit you made
on Monday of this week will not be available for withdrawal
until Wednesday of next week.)
LONGER DELAYS N AY APPLY
We may delay your ability to withdraw funds deposited
by check into your account an additional number of days for
these reasons:
If we believe the check you are depositing is
uncollectible.
If you make deposits in any one day that exceed $5,000.
If you redeposit a check that has been returned unpaid.
If you have overdrawn your account three or more times
in the last six months.
A-286
- 287 -
We will notify you if we do this, and tell you when you
will be able to withdraw.
(We will delay for no more than
four additional business days.)
SPECIAL RULES FOR NEW ACCOUNTS
If your account has been open 30 days or less, we may
further limit your ability to withdraw funds deposited by
check, but only during the first 30 days.
You may still withdraw funds on the next business day
after the day of your deposit if you made deposit in cash or
by wire transfer.
You also have next-day availability for
the following deposits (if they meet certain requirements):
government checks, cashier's checks, certified checks,
teller's checks, or traveler's checks.
However, your
withdrawals of these check deposits are limited to the first
$5,000 of a day's total deposits.
(The rest is available on
the ninth business day after the day of deposit.)
For all other check deposits, you may withdraw the
deposited funds after (number) business days.
A-287
- 288 -
C-7 — Where bank places holds on all statutory categories
of deposits, but for less time than the statutory limits
YOUR ABILITY TO WITHDRAW FUNDS AT (bank name and location)
Our policy is to delay your ability to withdraw funds
that you deposit by check into your account.
The length of
the delay varies, and is explained below.
When we delay
your ability to withdraw funds, you may not withdraw the
funds in cash, and we will not pay checks you write on your
account by using these funds.
Please remember that even after we have made funds
available to you, and you have withdrawn the funds, you are
still responsible for checks you deposit that are returned
to us unpaid and for any other problems involving your
deposit.
If you have any questions, contact your branch manager.
DETERMINING AVAILABILITY OF YOUR DEPOSIT
When we delay your ability to withdraw funds, the
length of the delay is counted in business days from the day
of your deposit.
Every day except Saturday, Sunday, and a
federal holiday is a business day.
Your deposit will be
considered received, however, only on a day we are open for
business.
For example, if you deposit on Thanksgiving, we
consider the deposit made on Friday, the next day we are
open for business.
And if you make your deposit after (time
of day) on any given business day, we consider it made on
the next business day.
1.
Next-Day Availability
You may withdraw the first $100 of any deposit of
checks on the next business day after the day of your
deposit.
In addition, you may withdraw the entire amount of the
following deposits on the next business day after the
business day of your deposit:
Cash.
Wire transfers, including preauthorized credits, such
as social security benefits and payroll payments.
Checks drawn on us, that is, drawn on the (bank name)
unless (any limitations related to branches in
different states or check processing regions).
United States government checks payable to you.
State and local government checks if they are payable
to you and if you use a special deposit slip available
from (where the form may be obtained).
A-288
- 289 -
Cashier's, certified, or teller's checks if they are
payable to you and if you use a special deposit slip
available from (where the form may be obtained).
2.
Availability of Other Check Deposits
Your ability to withdraw deposits other than those
listed above depends on whether your check is local or
nonlocal.
To determine whether the check you want to deposit is a
local or a nonlocal check, look at its bank location number.
This is the number printed on the lower-left-hand corner of
the check:
---------- 19----Pay to the
order of_____________________________ |$__________
___________________________________________ dollars
(Bank Name
and Location)
1234567890
0000000000 000
----- bank location number
If the first four digits of the bank location number
(1234 in the above example) are (bank's local routing
numbers), then the check is drawn on a bank that is located
in the same check-processing region as us, and we consider
it a local check.
If the first four digits of the bank
location number of the check you are depositing are not
listed above, then the check is drawn on a bank outside our
check- processing region and we consider it a nonlocal
check.
Local checks deposited into your account will be
available to pay any checks you have written to others
starting on (date).
(The first $100 of any checks deposited
may be withdrawn on the business day following the day of
deposit.) Also, you may withdraw (amount) of the deposit in
cash at or after (time no later than 5:00 p.m.) on (date) if
your check is a local check.
You may withdraw the remaining
amount on (date).
For example, if you deposit a local check of $600 on a
Monday, $100 of the deposit is available Tuesday, and the
rest is available to pay checks written to others on (day).
At or after (time no later than 5:00 p.m.) (amount) of the
deposit in cash, and the rest is available for cash
withdrawal on (day).
A-289
- 290 -
Nonlocal checks deposited into your account will be
available to pay any checks you have written to others
starting on (date).
Also, you may withdraw the funds from
the deposit in cash on that day.
For example, if you deposit a nonlocal check on a
Monday, the funds from the deposit are available for
withdrawal or to pay checks written to others on (day).
3.
Deposits at Automated Teller Machines
You may not withdraw funds from any deposits, whether
cash or checks, made at automated teller machines we do not
own or operate until (date).
LONGER DELAYS MAY APPLY
We may delay your ability to withdraw funds deposited
by check into your account an additional number of days for
these reasons:
If we believe the check being deposited is
uncollectible.
If you make deposits in any one day that exceed $5,000.
If you redeposit a check that has been returned unpaid.
If you have overdrawn your account three or more times
in the last six months.
We will notify you if we do this, and tell you when you
will be able to withdraw the funds.
(We will delay for no
more than four additional business days.)
SPECIAL RULES FOR NEW ACCOUNTS
If your account has been open 30 days or less, we may
further limit your ability to withdraw funds deposited by
check, but only during the first 30 days.
You may still withdraw funds on the next business day
after the day of your deposit if you made the deposit in
cash or by wire transfer.
You also have next-day
availability for the following deposits (if they meet
certain requirements): government checks, cashier's checks,
certified checks, teller's checks, or traveler's checks.
However, your withdrawals of these check deposits are
limited to the first $5,000 of a day's total deposits.
(The
rest is available on the ninth business day after the day of
deposit.)
A-290
- 291 -
For all other check deposits, you may withdraw the
deposited funds after (nunfeer) business days.
A-291
- 292 -
C-8 —
Notice of exception
Exception Hold Notice
(Date hold is placed)
We are placing a hold on the following checks deposited on
(date). These funds will be available to you (number of
business days) business days after the date the deposit was
made.
Please remember that even after we have made funds
available to you, and you have withdrawn the funds, you are
still responsible for checks that you deposit that are
returned to us unpaid and for any other problems involving
your deposit.
(description of items including amount and p a yee)
We placed the hold for the following reasons:
---- 1 The check you deposited has been returned unpaid and
I
■
---- ' is being redeposited.
---- 1 Your account has been overdrawn three or more times
j
in the last six months.
'
----I
I
---- 1 The checks you deposited on this day exceed $5,000.
■ — ' (This hold applies only to the amount over $5,000.)
—
I
*
1 We believe
the check may be uncollectible for the
* following reasons:
If you have any questions regarding this notice you may call
(telephone number).
A-292
- 293 -
C-9 — Notice of hold (bank gives next-day availability and
places holds to statutory limits on local and nonloCal
checks, but only on a case-by-case basis)
Notice of Hold
Date of deposit (today's date).
Amount of deposit (amount).
We are placing a hold on this deposit.
These funds will be
available to you on (date). Please remember that even after
we have made funds available to you, and you have withdrawn
the funds, you are still responsible for checks that you
deposit that are returned to use unpaid and for any other
problems involving your deposit.
A-293
- 294 -
C-io —
Notice at branch locations
FUNDS AVAILABILITY POLICY
Description
of Deposit
When Funds Can Be
Withdrawn By Cash
or Check
Cash, wire transfers, checks
on us unless (any limitation
related to branches in
different check processing
regions), government,
cashier's, certified, or
teller's checks
The business day after
the day of deposit
Local checks
The third business
day after the day
of deposit
Nonlocal checks
The seventh business
day after the day
of deposit
A-294
- 295 -
C-ll — Notice at proprietary automated teller machines,
drive-in teller facilities, and on preprinted deposit slips
AVAILABILITY OF DEPOSITS
Notice: Deposits may not be available for immediate
withdrawal.
[Please refer to the bank's rules
governing funds availability for details.]
A-295
- 296 -
C-12 — Notice at a bank's automated teller machines
that may be used for deposits by customers of other banks
AVAILABILITY OF DEPOSITS
Notice: If your
of bank), funds
available until
day of deposit.
governing funds
account is at a bank other than (name
deposited by cash or check may not be
the seventh business day following the
Please refer to your bank's rules
availability for details.
A-296
- 297 -
C-13 — Interest payment policy insert in specific policy
disclosure
INTEREST PAYMENT POLICY
If we receive a deposit to your account on or before
the tenth of the month, you begin earning interest on the
deposit, whether it was a deposit of cash or checks, on the
first day of the month.
If we receive the deposit after the
tenth of the month, you begin earning interest on the
deposit as of the first of the following month.
For
example, a deposit made on June 7 earns interest from June
1, while a deposit made on June 17 earns interest from July
1.
A-297
APPENDIX D
Indorsement Standards
1.
The depositary bank
shall
indorse
a check according to the
following specifications:
°The indorsement shall contain —
- the
b a n k ’s
arrows
nine-digit
at each
end of
routing
number,
the number
set
off
and pointing
by
toward
the n u m b e r ;
- the bank's n a m e / l o c a t i o n ?
- the indorsement date;
*The indorsement may also contain —
- an optional branch
identification;
- an optional trace/sequence number;
- other optional
of
such
information provided
information
does
not
readibility of the indorsement.
A-298
that
interfere
the
inclusion
with
the
-2-
°The indorsement shall be written
°The
indorsement
in dark purple ink.
shall be placed on the back of the check
in the following location:
- A
block-style
encoder
the
indorsement,
or microfilmer,
area
3.0
inches
to
such
as
applied
shall be wholly
4.5
inches
by
an
contained
in
from the leading
edge of the check.i./
- A
linear-style
indorsement,
r e ader/sorter, shall
number
be
such
placed
is wholly contained
as
so
applied
that
in the area
the
3.0
by
a
routing
inches
to
4.5 inches from the leading edge of the check.
- The indorsement shall not be placed
band,
a
extending
height
of
0.625
carbonized band
check
in
a
along
line
in the MICR clear
the bottom edge of the check to
inches,
location,
between
nor
in
extending
1.4
inches
the
one-write
the length
and
1.9
of the
inches
above the bottom edge of the check.
i/
The leading edge is defined as the right side of the check
looking at it from the front.
See American National Standards
Committee on Financial
Services,
Specification
for
the
placement and Location of MICR Printing, X 9.13.
A-299
-32.
Each
subsequent
identifiability
and
bank
indorser
legibility
shall
of
the
protect
depositary
the
bank
indorsement by:
° including only
arrows)
,
its nine-digit
the
indorsement
routing number
date,
and
an
(without
optional
trace/sequence number ;
# using an ink color other
* staying clear
of
the
from the leading
depositary bank
3.
All other
protect
bank
the
area
edge of
3*0
inches
the check
to
4.5
inches
specified for
the
indorsement.
parties,
identifiability
and
e.g.
corporations,
legibility
of
the
should
depositary
indorsement by staying clear of the area 3.0 inches to 4.5
inches
from the leading edge of
depositary bank
4.
indorsing
than purple;
the
check
for
the
indorsement.
All depositary banks shall work with
arrange
specified
that corporate payee
nine-digit
routing
depositing
the
number
check
and
of
corporate
indorsements
the
bank
include
in
the corporation's
that bank.
A-300
which
indorsers
to
the name and
they
are
account number
at
-301-
2.
Part 210 is amended as follows:
Part 210 —
Regulation j
(Collection of Checks and Other items
and Wire Transfer of Funds)
a.
The authority citation
for Part 210
is revised to
read as follows:
Authority:
342),
Federal
section ll(i)
248(0)
and
360),
Reserve Act,
(12 U.S.C.
and
248(1)),
section 19(f)
Expedited Funds Availability Act
b.
§ 210*1
Reserve
Board of Governors
has
issued
Act,
this
section 13
U.S.C.
464)?
U.S.C.
and
the
(12 U.S.C. 4001 et seq.).
(12
(12 U.S.C.
(12 U.S.C.
governs
the
by
Federal
the Federal
(12
464)?
of
342),
U.S.C.
Reserve
to
the
System
Federal
section 11(1)
248(o)
and
360),
(12
and
the Expedited Funds Availability
and
checks
Reserve
pursuant
U.S.C.
4001 et seq.)?
collection
of
subpart
248(i )) , section 16
section 19(f)
items
(12
(12
Authority, purpose, and scope.
("Board")
Act
section 16
(12 U.S.C.
Section 210.1 is revised to read as follows:
The
U.S.C.
section 13
Banks.
other
laws.
and
other
Its
purpose
This
cash
subpart
and noncash
is
to provide
rules for collecting items and settling balances.
c.
In
paragraph
at
paragraph
(j)
§ 210.2,
the
is
end
paragraph
of
revised,
(e)
paragraph
paragraphs
redesignated
A-301
and
(g)
(k)
the
are
and
undesignated
revised,
(1)
are
-302-
as
paragraphs
(1)
and
(m) , a new paragraph
redesignated
paragraph (1)
paragraph at
the end of § 210.2
$ 210*2
★
is
revised,
(k)
and
is
the
added,
the
undesignated
is revised to read as follows:
Definitions.
*
*
(e)
*
*
"cash item" means —
(1)
noncash
a
check
item under
(2)
at
par
in which
accept as a cash
than
one
this section;
any other
collectible
District
other
item
that
the
item
as
a
or
payable
the
classified
on
Reserve
is payable
demand
Bank
is
of
and
the
willing
to
item.
"Cash item" does not include a returned check.
*
*
*
(g)
includes
both
*
*
*
* * unless otherwise
cash
and
noncash items
and
indicated,
a
returned
"item"
check,
whether or not sent by a sender.
*
*
*
(j)
*
*
"Paying bank" means —
(1)
the
The bank
item is
another
payable
bank
and
by which
or
an
item is
collectible
at
payable unless
or
through
is sent to the other bank for payment
or collection;
(2)
payable
The bank
or
at
collectible
or
and
payment or collection;
A-302
through
to
which
which
it
an
item
sent
is
for
-303-
(3)
check
The bank
in magnetic
which the check
(4)
*
*
defined
a
Is sent for payment or collection- or
a check
described
in 12
*
"Returned check" means a cash
in 12 CFR 229.2
returned
*
*
item or
by a paying bank,
whether or not a Reserve Bank handled
*
appears on
characters or fractional form and to
notice of nonpayment in lieu of a returned
*
number
is drawn.
*
(k)
routing
The state on which
CFR 229.2
*
whose
cash
a check
as
including a
item or check,
the check for collection.
*
(1)
*
with respect
to a returned check.
*
*
*
*
have the
*
Sender
does not
include
*
Unless the context otherwise
herein
*
meanings
requires,
set
terms not defined herein or
the
forth
terms not
in 12CFR 229.2
in 12 CF R 229.2 have
defined
and
the
the meanings
set forth in the Uniform Commercial Code.
d.
paragraph
(b)
of
section 210.7
is amended
as follows.
§ 210.7
*
*
presenting items for payment.
*
(b)
*
*
Place
of
presentment.
A
Reserve
Bank
or
subsequent collecting bank may present an item —
(1)
At a place requested by the paying bank?
A-303
to rea
-304-
(2)
229.2,
In
in
accordance
(3)
if the
the case of
a check as def ined In
with 12 CFR 229.36;
At a place requested
item
12 CFR
is payable
by the nonbank
by a nonbank
payor
payor,
other
than
through or at a paying bank;
(4)
Under
a
special
collection agreement
consistent with this
(5)
Through
subpart;
a clearinghouse
or
and subject
to
its
rules and practices.
*
*
*
*
*
e.
f 210.10
Section 210.10 is revised to read as follows:
Time schedule and availability of credits for cash
items and returned c h e c k s .
(a)
circulars
Each Reserve
a
time
schedule
for
when the amount of any cash
it
each
of
item or
shall
include
its offices
returned
check
in
its operating
indicating
received by
(or sent direct to another Reserve office for the account of
that
Reserve
Part 204
for
Bank
of
use by
immediate
schedule
Reserve
is
counted
this chapter
the
or
sender.
deferred
to a sender
as
reserves
(Regulation D)
The
Reserve
credit
other
in
than
for
and becomes
Bank
shall
accordance
a
purposes
foreign
available
give
with
of
either
its
time
correspondent.
A
Bank ordinarily gives credit to a foreign correspondent
only when
actually
Bank)
the
and
Reserve
Bank
receives
payment
finally collected funds, but,
A-304
of
the
item
in
in its discretion, a
-305-
Reserve
Bank
may
accordance with
(b)
may
give
immediate
or
credit
in
its time schedule,
Notwithstanding
its time schedule,
refuse at any time to permit
any cash
item or returned check
not
received
yet
deferred
payment
in
a Reserve Bank
the use of credit given
for
which
actually
for
the Reserve Bank
and
finally
has
collected
f un d s •
f.
§ 210*12
Section 210.12 is revised to read as follows:
Return of cash items and handling of returned
checks•
(a)
receives
Bank,
that
Return
a cash
other
pays
subpart, may,
item,
or
for
the
nonpayment
in
accordance
with
items. A
or
paying
indirectly
immediate payment over
item
before
if the
cash
item directly
than
for
of
as
it has
provided
in
practices
presented,
the
finally paid
the
a
that
Reserve
counter,
item,
of
and
this
return
the
item is unavailable for return, send notice of
lieu
of
from
$ 210.9(a)
of
the
the Uniform
item,
to
its
commercial
a
clearinghouse
through
or a special collection
item was presented,
may not extend
Reserve
Code and
Part 229 and its Reserve Bank's operating
or
bank
Bank
Subpart C of
circular.
which
agreement
in
the
under
The rules
item
which
was
the
these return times, but may
provide for a shorter return time.
(b)
Return of checks not handled by Reserve B a n k s .
paying bank that receives a check
A-305
as defined
in 12 CFR 229.2,
A
-306-
other
than directly or
determines
notice
of
not to pay the check,
nonpayment
Reserve Bank
Reserve
indirectly from a Reserve Bank,
in
lieu
may send the
of
in accordance with
Bank's
operating
the
returned check
returned
check
to
circular,
its
A returning bank may send a
Subpart
c
its Reserve Bank's operating circular.
(c)
sending
or
its
Subpart C of Part 229 and
returned check to its Reserve Bank in accordance with
of Part 229 and
and that
Paying b a n k ’s and returning
a returned check
to a Reserve Bank,
bank's
agreement.
the paying bank or
returning bank —
(1)
Authorizes
the
any other Reserve Bank
returned
check
subject
to
receiving
or
is sent)
returning bank
to handle
this subpart
Reserve
and
Bank
to which
the returned
to the
(and
the
check
Reserve Banks'
operating circulars;
(2)
229.34;
Makes
warranties set
forth
in 12 C FR
and
(3)
any
the
loss
Agrees
or
to
expense
indemnify
(including
expenses of litigation)
(i)
authority
paragraph
(ii)
within
Reserve
attorneys'
Bank
for
fees
and
resulting from —
The paying
to
each
give
or
the
returning
bank's
authorization
lack of
in
(c)(1) of this section;
Any
action
taken
by
a Reserve
Bank
the scope of its authority in handling the
returned c h e c k ; or
A-306
By
-307(iii)
Any warranty made by the Reserve Bank
under 12 CFR 229.34,
(d)
Recovery
by
Reserve
proceeding is brought against
(or
Bank.
If
if defense
an
action
or
is tendered
to)
a
Reserve Bank that has handled a returned check based on —
(1)
The
returning
alleged
bank
to
failure
have
the
authorization in paragraph
(2)
Any
action
by
of
the
authority
paying
to
or
give
the
(c)(1) of this section;
the Reserve Bank within
scope of its authority in handling
the returned
the
check;
or
(3)
Any warranty made by the Reserve Bank
under
12 CFR 229.34,
the Reserve Bank may,
decree,
amount
recover
of
incurred,
pay
from
attorneys'
upon
the
the entry of
paying
fees
and
bank
other
a
or
final
judgment
returning
expenses
of
bank
or
the
litigation
as well as any amount the Reserve Bank is required to
under
the
judgment
or
decree,
together
with
interest
thereon.
(e)
recover
Methods
the amount
of
stated
recovery.
The
in paragraph
Reserve
(d)
of
Bank
this section by
charging any account on its books that is maintained or
the
paying
or
sender
is
the
other
through the interdistrict Settlement Fund),
if —
Reserve Bank,
Bank
returning
bank
(or
if
the
by entering a charge against
A-307
may
used by
another
Reserve
-308-
(1)
demand
The
on
Reserve
the
paying
Bank
or
made
seasonable
returning
bank
defense of the action or proceeding;
(2)
The
any other
paying
or
arrangement
payment
assume
and
returning bank
for
to
written
that
has not made
is
acceptable
to the Reserve Bank,
The Reserve Bank
action
or proceeding
Reserve
Bank
before
may
and
paragraph.
Reserve
A
provided
enforcement
in
under
in
any
the
this
or
of
nonpayment,
require
Bank
is
manner
a returned
located
to
of
set
not
the
the
forth
in
itself of
prejudice
indemnity
Bank
in
shall
this
the
its
agreement
handle a returned check, or
accordance
bank
with
to send direct
other
Reserve
Subpart C
of
A Reserve Bank may permit
check with respect to which
within
interdistrict
returning bank
avail
does
its operating circular.
the paying
the
A
(c)<3) of this section.
A Reserve
Part 229 and
failure
the
of recovery.
the paying or
paragraph
other
(f)
notice
through
circumstances
Bank's
referred to in paragraph
a
from
for defending
this method
charged
recover
in the manner
responsible
using
that has been
Settlement Fund
remedy
is not
to
another
Reserve
the depositary bank
Bank's
District,
in
depositary
bank
accordance with § 210.4(b).
(g)
shall
settle
A subsequent
for
items presented
returning
bank
or
returned checks in the same manner as for cash
for payment.
A-308
-309-
g.
By
Section 210.15 is deleted.
order
of
the
Reserve System, December
Board
of
Governors
of
the
Federal
3 , 1987.
William W. Wiles
Secretary of the Board
A-309
FEDERAL RESERVE SYSTEM
(Docket No. R-0621)
Federal Reserve Bank Services
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Request for comment.
SUMMARY:
The Board is requesting comment on a proposal for
the Federal Reserve Banks to offer several new services to
depository institutions.
These services will assist
depository institutions in complying with the new rules for
the collection and return of checks that the Board is, in
Docket No. R-0620, proposing to adopt to implement the
Expedited Funds Availability Act.
DATE:
Comments must be submitted on or before
2-8-88
No extension of time for comments will be provided.
ADDRESS:
Comments, which should refer to Docket No. R-^0621,
may be mailed to the Board of Governors of the Federal
Reserve System, 20th and C Streets, N . W . , Washington, D.C.
20551, Attention:
Mr. William W. Wiles, Secretary; or may
be delivered to Room B-2223 between 8:45 a.m. and 5:00 p.m.
All comments received at the above address will be included
in the public comments file, and may be inspected in Room
B-1122 between 8:45 a.m. and 5:15 p.m.
FOR FURTHER INFORMATION CONTACT:
Steven O. App, Manager
(202/452-3760); Thomas C. Luck, Senior Analyst
(202/452-3935)? or Gayle Thompson, Senior Analyst
B-1
- 2 (202/452-2934)? Division of Federal Reserve Bank Operations.
For the hearing impaired only:
Telecommunications Device
for the Deaf, Ernestine Hill or Dorothea Thompson
(202/452-3254).
SUPPLEMENTAL INFORMATION;
The Expedited Funds Availability
Act, Title VI of Pub. L. 100-86, requires banks and other
depository institutions
(collectively referred to as
"banks"1) to make funds deposited into accounts available to
depositors within time periods specified by the Act and to
disclose funds availability policies to their depositors.
The Board is given responsibility to adopt regulations to
implement the Act.
The Act also provides the Board with
broad authority to adopt regulations to improve the check
processing system so that checks may be cleared and, if
necessary, returned within the funds availability schedules
mandated by the Act.
The proposed Regulation CC terminology corresponds with
the terminology of the Uniform Commercial Code, with some
modifications.
Bank is defined to include all depository
institutions.
A paying bank is the bank on which the check
is drawn.
In the case of payable through drafts, the
payable through bank is the paying bank. A returning bank
is an intermediary bank handling a returned check.
A
depositary bank is the bank in which the check was first
deposited.
(See section 229.2 of the proposed regulation
for the complete definitions of these terms.)
B-2
- 3 -
The Board is today requesting comment on a series
of proposals, Docket Nos. R-0620, R-0621, and R-0622, that
will exercise its responsibilities under the Act.
Docket
No. R-0620 consists of a proposed regulation (Regulation CC,
12 CFR Part 229) that will clarify the definitions of the
Act, provide detailed rules to facilitate compliance with
the availability and disclosure requirements, and make
several substantive changes to the current law on the
collection of checks to encourage faster return of unpaid
checks, thus minimizing the losses that could result from
compliance with the availability schedules.
Docket No.
R-0620, also proposes several amendments to the Board's
current Regulation J (12 CFR Part 210), which governs the
collection of checks and other items by Federal Reserve
Banks, so that it conforms to the new standards adopted in
Regulation CC.
This docket, No. R-0621 Federal Reserve Bank
Services, requests comment on proposed new services to be
offered by the Federal Reserve Banks to assist banks and
other depository institutions to comply with the new check
collection rules established in Regulation CC.
Docket No.
R-0622 Proposals for Long-Term Improvements to the Check
Collection System, requests comment on some possible
services that the Federal Reserve are studying as well as
B-3
- 4 -
longer-term improvements to the nation's check collection
system.
Commenters should review the overview material
contained in Docket No. R-0620 Regulation CC, which provides
background on these proposals.
The Federal Reserve System is a major provider of
check collection services to banks, and the 48 Federal
Reserve check processing offices currently handle about 150
million returned checks annually.
In contrast to the
forward collection process, the return item process is a
slow, relatively labor intensive, and costly operation.
A
brief description of the current process can be found in the
overview material contained in Docket No. R-0620, Regulation
CC.
Under current procedures, most returned checks will
not reach the depositary bank before it must make funds
available to its customers according to the availability
schedules mandated by the Expedited Funds Availability Act
(12 U.S.C. 4002).
To reduce the risk to depositary banks,
the Federal Reserve is proposing new responsibilities for
paying banks to return checks expeditiously.
The Federal
Reserve has also developed new services to enable paying
banks to meet these new responsibilities.
B-4
- 5 -
In developing these services, considerable emphasis
was placed on assuring that banks would have available
several alternative approaches to comply with the provisions
of the proposed regulations.
A number of new and enhanced
services that will increase the speed of the return process
are proposed by the Federal Reserve,
including direct
returns, universal returns, expedited processing of
nonautomated returns, high-speed processing of automated
returns, and improved notification services.
In addition,
the Federal Reserve is proposing to implement truncation and
Extended MICR (Magnetic Ink Character Recognition)
services.
It is anticipated that private sector check collection
service providers will also develop similar or other
innovative check services.
PRO PO SED F E D E R A L
D ir e c t
RESERVE
BANK
S E R V IC E S
R e tu rn s
One of the constraints to the speed of the current
return item process is the number of returning banks that
process a check during its trip from the paying bank back to
the depositary bank.
Returned checks handled by the Federal
Reserve generally are returned to the bank that originally
deposited the check with the Federal Reserve.
B-5
Thus, if the
-
6
-
Federal Reserve originally received a check for deposit from
a correspondent bank, and that check is returned, the
Federal Reserve will send that return to the correspondent.
That correspondent will, in turn, send the return to its
indorser, most likely the depositary bank.
It is important
to expedite this return process when the Act becomes
effective.
Experience with a pilot program conducted by the
Federal Reserve Bank of Dallas has shown that the return
process can be completed more promptly if the number of
returning banks can be minimized and the returned check is
sent directly to the depositary bank.
The Federal Reserve is proposing to return checks
directly to the depositary bank, or its agent by
September 1, 1988;bypassing other returning banks
indorsement chain.
in
the
The objective of this proposal is
to
speed the return process by reducing
that must handle a
the number of banks
returned check.
Experience with the Dallas pilot program indicates
that the direct return process would reduce the average
return time by approximately one-half day for returns
processed by the Federal Reserve, with greater improvements
for checks that currently take the longest to return— those
with multiple intermediary bank indorsers.
A survey of over
18,000 returned checks at 12 Federal Reserve offices
B-6
- 7 -
revealed that 43 percent of all returned checks were handled
by one or more correspondents during forward collection.
Bypassing these correspondents by directly returning checks
to the depositary bank would reduce return times by a day or
more.
The proposed direct return procedure will be more
costly for the Federal Reserve because of the additional
endpoints to which returned checks must be sorted and
delivered.
The Federal Reserve may sort returns to an
estimated 26,000 endpoints under a direct return procedure,
in contrast to 5,600 today— an increase of nearly 370
percent.
The Federal Reserve's transportation expenses for
delivery of returned checks could also increase
substantially if delivery of returns were made via courier
to all depositary banks.
The Federal Reserve delivers to
approximately 10,500 endpoints via courier today and
anticipates that most returns can be delivered via this
transportation.
Recognizing the desirability of providing prompt
return of checks to depositary banks while seeking to
minimize increases in transportation costs, the Board
proposes the following:
A depositary bank may receive returned checks from
the Federal Reserve, at no charge, at a location
B-7
-
8
-
where the Federal Reserve currently delivers the
bank's forward collection checks, or at a location
where the Federal Reserve currently provides courier
delivery, or at another designated location through
the U.S. mail.
A depositary bank that wishes its returned checks
delivered by courier to a location where the Federal
Reserve does not currently provide courier service
may be charged for newly instituted transportation.
The Board requests comment on the proposal for Federal
Reserve offices to deliver returned checks directly to the
depositary bank.
Comment is also requested on the proposed
guidelines for delivery of returned checks by courier.
Universal Returns
Currently, unpaid checks are sent back to the
presenting bank.
In order to assist paying banks in meeting
the new requirements for prompt return (See Regulation CC 12
CFR 229.30(a) Docket No. R-0620), the Federal Reserve is
proposing to accept from paying banks by September 1, 1988,
all returned checks regardless of whether or not the checks
were originally collected through the Federal Reserve.
Paying banks, of course, would not be obligated to send any
returned checks to the Federal Reserve.
It is anticipated
that most returned checks originally cleared through private
B-8
- 9 -
clearing arrangements would continue to be exchanged
directly by the clearing participants.
Expedited Processing of Returns
Most Federal Reserve offices now receive returned
checks during the late evening/early morning hours and
process the checks during the daytime hours.
Dispatch of
the returned checks is generally made on the next available
transportation to indorsers and other Federal Reserve
offices.
Thus, returned checks received by the Federal
Reserve can be in the possession of the Federal Reserve for
up to a day before being sent to the previous indorser.
The Federal Reserve is proposing to establish by
September 1, 1988, returned check deposit deadlines at
Federal Reserve offices, supported by expanded processing
capabilities, such that local returned checks can, in most
instances, be returned to the depositary bank the day
following dispatch by the paying bank.
The objective of
this proposal is to provide for overnight processing and
dispatch of returned checks similar to current processing
and presentment time frames for forward collection checks.
Deadlines for deposit of returned checks will
correspond as closely as possible to forward collection
deadlines in order to minimize transportation costs to
paying banks.
Each Federal Reserve office will offer at
B-9
- 10 -
least one deposit deadline for all raw returned checks
deposited intermixed.
The earliest deadline for a mixed
return letter will be 8:00 p.m.
Deposits of raw returned
checks at later deadlines, typically at midnight, may have
to be presorted into separate local and nonlocal return
letters prior to deposit with the Federal Reserve.
Paying
and returning banks will also have the opportunity to
fine-sort returns by depositary bank in order to obtain
later deposit deadlines and lower fees.
Fees for processing raw local returned checks are
projected to be in the range of $0.25 to $0.75 per return.
Fees will be the same for all types of local returns, i.e.,
city/regional/country, but fees may vary at different
deposit deadlines.
Fees for nonlocal raw returned checks
are projected to be in the range of $0.30 to $1.00 per
return.
The higher range for nonlocal checks reflects the
cost of processing at two Federal Reserve offices as well as
transportation costs between the two offices.
Fees for
returned checks that have been fine-sorted prior to deposit
with the Federal Reserve will be the same as fees for
forward collection fine-sorted deposits.
Fees for automated returns or qualified returned
checks
(QRC) initially are expected to be the same as the
fees for regular forward collection checks of the same type.
B-10
- 11 -
In addition,
for both raw and qualified returned checks, a
return letter fee similar to the cash letter fees imposed on
forward collection checks would be assessed.
The
implementation of explicit fees for returned checks will
most likely result in a reduction in Federal Reserve prices
for forward collection checks.
The Reserve Banks may offer deposit options under
which paying banks would place the depositary bank's routing
number on the face of the returned check before sending it
to the Federal Reserve.
Fees and deadlines would be set to
reflect the additional preparations performed by the paying
bank.
The Board requests comment on the impact of the
proposed deadline and fee changes on the operations of
banks.
In addition, the Board would appreciate specific
comments on the proposed deposit option wherein paying banks
would place the nine-digit routing number of the depositary
bank on the face of the returned check.
H ig h -S p e e d
P r o c e s s in g
o f
R e tu rn e d
C hecks
One proposed method of handling returned checks
more efficiently is to prepare returned checks for
high-speed processing as early as possible in the return
cycle.
This can be done by placing the dishonored check in
a carrier envelope or putting a strip across the bottom of
B-ll
- 12 -
the returned check and encoding on the envelope or strip the
nine-digit routing number of the depositary bank, the amount
of the check, and a returned check identifier.
To reduce
possible error and the resulting liability, banks qualifying
returned checks probably would use a check-digit algorithm
to verify the accuracy of the routing number encoded on the
envelope or strip.
The Board includes the following information to
provide commenters with the background necessary to evaluate
this proposed solution.
From November 1985 to February
1986, the American Bankers Association and the Federal
Reserve, with the cooperation of many banks, conducted a
test of a qualified returned check system, proposed by
Valley National Bank, Phoenix, Arizona.
As proposed, the
paying bank deciding to return a check would qualify the
returned check and place it into the outgoing collection
work.
This collection path would be independent of the path
chosen by the depositary bank to collect the check being
returned.
Credit would be passed as if the returned check
were being collected through the forward collection process.
The test provided data that indicated that the QRC procedure
would be successful in speeding the flow of the returned
check to the depositary bank.
A complete analysis of the
test program and its results is available from the Secretary
of the Board at the address indicated in the caption.
B-12
- 13 The benefits that can be derived from using the QRC
system include more timely delivery of returned checks to
the depositary bank, elimination of manual handling at
intermediary processors, use of the most efficient
high-speed process to move the returned check to the
depositary bank, and a reduction in the use of mail to
transport returned checks to the depositary bank or a
returning bank.
These benefits can be accrued with a
minimal investment in new equipment since most of the
equipment used for this procedure is readily available and
in use at many banks.
Even though the test program results indicated that
benefits could be gained from implementation of such a
procedure, various concerns prohibited banks from
implementing the system at the end of the test period.
One
of the key barriers to successful implementation of the QRC
process was the fact that three jurisdictions have not
adopted an optional provision of the U.C.C. that allows the
paying bank to send returned checks directly to the
depositary bank.
The proposed Regulation CC, section
229.30(a) overrides any conflicting state law and allows
banks in all jurisdictions to return checks directly to the
depositary bank or to an intermediary bank or processor that
was not in the original collection chain.
B-13
14
-
-
Another concern for the paying bank is how to
identify and easily determine the depositary bank and its
nine-digit routing number among all the varying sizes and
descriptions of indorsements on the back of the check.
Frequently, the depositary bank will not be one of the
correspondent banks with whose indorsement a bank's return
item personnel are familiar.
This problem is being
addressed in the proposed Regulation CC, section 229.35,
which provides a mandatory indorsement standard for the
depositary bank and subsequent indorsers.
In addition, the industry was concerned about
special handling of returned checks as opposed to forward
collection checks.
The most efficient way of processing
returned checks through a high-speed system is to intermix
returned checks with forward collection checks.
On the
other hand, extra risks may be associated with processing
returned checks intermixed with forward collection checks.
In addition, discussions with the industry have indicated
that most depositary banks would prefer to have their
returned checks presented to them separately from the checks
drawn on them.
This would allow banks to identify their
returned checks earlier and take action as quickly as
possible in the event that the hold period for one of the
checks being returned is about to expire.
B-14
With this in
- 15 -
mind, the Board proposes that the processing of returned
checks via the QRC process be kept separate from, the
processing of forward collection checks.
By September 1, 1988, the Federal Reserve offices
will accept returned checks that have been prepared using
the QRC process.
In addition, the Federal Reserve will
qualify raw returns if this will speed up the return
process.
For the most part, only nonlocal returns will be
qualified? however, some Federal Reserve offices may qualify
local returns when this is the most efficient way for that
office to process the returns.
Qualified returned checks
handled by the Federal Reserve will not be intermixed with
forward collection checks unless the depositary bank agrees
that the returns be included in its Federal Reserve cash
letter.
Proposed fees and deposit deadlines for handling
QRCs will be the same as the fees for handling checks
deposited for collection.
If the return process were to
result in a higher reject rate, need a higher level of
controls than the collection process, or otherwise prove to
be more costly, the fees for QRCs may be increased.
All deposit deadlines for checks deposited for
forward collection, including those for fine-sort deposits,
will be open for qualified returned checks, subject to the
B-15
- 16 same sorting instructions.
Of course, if returns are
fine-sorted, it would not be necessary for the paying or
returning bank to qualify the returns before depositing in
this manner because the checks will be delivered to the
fine-sort endpoint without further processing.
Use of the QRC process will be optional for paying
and returning banks.
Preparing returned checks for
high-speed processing would not always be the most
cost-effective or efficient alternative.
Checks that are
returned through returning banks would most likely be
returned more quickly if qualified early in the return
cycle.
It is anticipated that other methods of handling
returns expeditiously will develop.
One Reserve Bank is
investigating the possibility of using electronics in the
return process
(See Docket R-0622, Proposals for Long-Term
Improvements to the Check Collection System).
The Board requests comment on the use of the QRC
process for expediting the handling of returned checks by
returning banks.
Specifically, the Board requests comment
on the likelihood of paying banks initiating this process.
N o tif ic a t io n
o f
N onpaym ent
Under Regulation J (12 CFR Part 210) , a paying
bank is required to send notification of nonpayment to the
B-16
- 17 depositary bank for returned checks of $2500 or more that
were collected through the Federal Reserve by midnight of
the third banking day following presentment.
This
requirement provides depositary banks with an early warning
that a large-dollar check is being returned.
Although the current large-dollar notification
program does lessen the amount of risk inherent in the
return process, depositary banks are still exposed to
significant areas of risk.
Since the current notification
requirements apply only to checks collected through the
Federal Reserve, depositary banks may not receive notice of
return on all large-dollar returned checks.
In addition,
the current time frame for notification allows three banking
days following presentment before the depositary bank is
given notice of return.
Earlier notification deadlines
would allow the depositary bank to learn of nonpayment of a
greater percentage of checks before funds must be made
available for withdrawal.
Proposed Regulation CC requires notification for
all large-dollar checks and shortens the time period within
which notification must be provided (12 CFR Part 229.33).
Large-dollar notification will now be required for all
checks of $2500 or more, regardless of whether they were
collected through the Federal Reserve.
B-17
The proposed rule
- 18 requires that notification be received by the depositary
bank by 4:00 p.m. local time, on the second business day
following presentment? receipt of the physical check would
satisfy this requirement.
This proposal allows depositary
banks to receive notice of nonpayment more than one day
earlier than is currently the case.
The Federal Reserve is proposing several changes to
its notification services in support of the new regulation.
Beginning on September 1, 1988, a same-day notification
service will be offered, and new deadlines for the
initiation of notification through the Federal Reserve will
be established.
The Federal Reserve will warrant that it
will provide notification to the depositary bank on the same
day that it receives instructions that are in accordance
with these new deadlines.
The proposed new deadlines and fees for
notification are as follows:
O r ig in a t io n
M e th o d
P ro p o s e d
D e a d lin e
C u rre n t
D e a d lin e
Fee
Wire
12 noon on
due date
12 noon on
due date
$1.75
Telephone
Call to Fed
12 noon on
day before
due date
9:00 a.m. on
due date
$4.25
Physical
Check to Fed
12 noon on
day before
due date
9:00 a.m.on
due date
$5.25
N o tic e s
w ill
be
d e liv e r e d
th e
sam e
B-18
day
as
r e c e iv e d .
- 19 -
The Board proposed that, beginning on January 1,
1989, any depositary bank that has an on-line electronic
connection with the Federal Reserve will be required to
receive all notices from the Federal Reserve over their
electronic connection or over an electronic connection to a
designated third party.
(This does not include electronic
connections used solely for tape transmission of ACH items.)
This may require banks to add a terminal in their check
operation or to establish procedures to transmit
notification information from other departments, such as
funds transfer, to the check department.
This requirement
should ensure that their notifications are received more
accurately and timely.
T r u n c a tio n
While the services previously described make
significant improvements in the time it takes to return an
unpaid check, electronic services may provide more
improvements.
The Act directs the Federal Reserve to
consider several electronic alternatives to improve the
check processing system, including check truncation.
The
Board proposes to allow Reserve Banks to begin offering
truncation services that would improve the forward
collection and return process.
B-19
- 20 During 1985, the Federal Reserve implemented a
truncation pilot at four Reserve Banks.
By the end of 1986,
two additional Reserve Banks were participating in the pilot
program.
The objectives of the pilot included developing,
testing, and refining the Federal Reserve's ability to:
(1) provide local storage and retrieval services to paying
banks;
(2) participate in a pilot of the National
Association for Check Safekeeping (NACS), which offers the
potential benefits of truncating eligible checks earlier in
the collection stream; and (3) work with NACS
representatives to expand the NACS program to include all
types of checks.
include:
(1)
Ultimately, pilot experience would
evaluation of the truncation concept,
(2)
examination of the operational and legal issues surrounding
truncation, and (3) determining the appropriate role of the
Federal Reserve System in providing full truncation services
or services which support it.
Under the first phase of the pilot— truncating for
local paying banks, the Reserve Bank serving the paying bank
captures the entire MICR-line, including the nine-digit
routing number, account number, check number, and dollar
amount.
Checks rejected during high-speed processing are
included on the MICR output file.
All MICR-captured checks
are microfilmed, and unique sequence numbers are inserted
B-20
- 21 -
into the MICR file and printed on both the microfilm and the
physical check.
These sequence numbers facilitate Reserve
Bank processing of returned checks and retrieval requests.
The Reserve Bank delivers the captured MICR-line data and
related totals to the paying bank or its agent on magnetic
tape or by data transmission, as requested by the paying
bank.
Under this service, the presentment time for the
paying bank is based on the time of receipt of electronic
presentment because the paying bank does not receive the
physical paper checks.
The Reserve Bank stores the physical
checks and microfilm for a negotiated period, usually 90
days and seven years respectively, after which time they are
destroyed.
After receipt of the MICR data, the paying bank
processes and posts the MICR data to the appropriate
customer accounts.
If a decision is made to dishonor a
check, the paying bank notifies the Reserve Bank no later
than the published deadline on the business day following
the day the MICR data are presented.
The Reserve Bank
retrieves the physical checks and initiates the return
process to the depositary bank.
The paying bank may also
request retrieval services such as information from a
truncated check, a photocopy of a check, or the original
physical check
(provided the request is received before the
check has been destroyed).
B-21
- 22 The Reserve Banks developed a standard pricing
structure and a common set of pricing principles.
Local
pricing is used to reflect the different processing costs at
each office.
With minor adjustments, these prices have
remained in effect throughout the pilot program.
The fee
structure contains a basic per item fee and separate fees
for return items
(initiated by telephone or automated
means), retrievals,
fine-sort fee processing, and
over-the-counter processing.
Reject reentry and
microfilming costs are part of the basic per item fee, while
large-dollar notification costs are part of the return item
fee.
It is anticipated that fees at most Reserve offices
will approximate those in the pilot.
Fee ranges at the six
pilot Reserve Banks are as follows:
Basic per item
— Via tape
$0,011
— Via transmission
$0,014
-
$0,020
-
$0,025
Return item
—
Telephone
$1.60
-
$2.80
—
Automated
$1.35
-
$2.30
$1.00
-
$2.00
$0.00
-
$2.00
Retrieval per item
Fine Sort
—
Per Package
B-2 2
- 23 -
—
Per
item
$0,006
-
$0.02
$0.50
-
$0.50
$0,014
-
$0,018
Over-the-counter
—
Per
Package
—
Per
item
As of October 1987, seven commercial banks, one
savings and loan association, and three credit unions were
participating in the pilot program.
Total truncation volume
during the pilot exceeds 1.3 million checks per month.
Approximately 2 percent of the checks require reject
reentry, 0.3 percent are returned, and retrieval requests
are received on 0.1 percent of the checks.
The truncation
participants' reaction to the service has been positive,
processing costs have been lower than expected, and the
quality of service has met expectations.
One Reserve Bank began truncating NACS-eligible
checks in September 1987.
Plans are underway for other
pilot Reserve Banks to join NACS and begin truncating
NACS-eligible checks as soon as possible.
In addition, the
Federal Reserve is working closely with NACS, the National
Automated Clearing House Association (NACHA), the American
National Standards Institute
(ANSI), and other related
groups to expand the NACS program to include all types of
checks, to make any necessary modifications to the TRC
format (and TRX in the future) on the ACH, and to obtain a
B-23
-
24
-
special truncation indicator to be placed on the MICR-line
of checks that will be eligible for truncation earlier in
the collection cycle.
These efforts are necessary to make
the operation of a national truncation program feasible and
cost effective.
Nationwide truncation has many benefits including
expediting returned checks, reducing the number of physical
handlings of paper checks, and accelerating the collection
of nonlocal checks for depositary banks.
In addition,
truncation produces other benefits, including savings in
transportation costs, float, storage costs for paying banks,
and equipment and personnel costs for paying banks.
Truncation also provides a natural transition from paper to
electronic payments.
Several problems that presented barriers to
truncation have been addressed.
These issues include
improperly payable checks, presentment problems, and check
retrieval and return responsibilities.
Improperly payable checks such as stale checks,
altered checks, postdated checks, and checks with missing or
forged drawer's signatures raise legal issues because the
paying bank will make its decision to pay the check without
without seeing the physical check.
According to the U.C.C.,
liability for these checks may not be passed along to the
B-24
- 25 -
paying bank's customer because the check is not properly
payable, except in the case of a stale check paid in good
faith.
For altered checks, if the paying bank or its agent
was not responsible for the alteration,
it may recoup its
loss in a warranty action against the indorser.
For
postdated checks and checks with missing or forged drawer's
signatures, the paying bank will assume the risk.
It should
be noted that, to minimize this risk, paying banks may
establish dollar caps so that large-dollar checks are not
truncated.
No losses have been reported thus far in the
pilot.
Presentment is a condition precedent to both a
drawer's and an indorser's secondary liability.
The
proposed Regulation CC, section 229.36(c) allows banks to
present checks to a paying bank by transmission of
information describing the check in accordance with an
agreement with the paying bank.
The Reserve Bank, exercising ordinary care, will
act as agent of the paying bank only and cannot grant
retrieval requests from the paying bank's customers.
The
truncating Reserve Bank as agent of the paying bank will
return the check to itself as collecting bank.
Based on the benefits that can be achieved by a
nationwide truncation program, the Federal Reserve proposes
B-2 5
- 26 to make the truncation service a permanent component of the
check collection services at the Reserve Banks.
It is
anticipated that, as more paying banks begin to issue some
type of truncation-eligible check, most Reserve offices
would begin to offer a truncation service, first on a local
level, truncating checks for local paying banks.
The
Reserve Banks would expand into truncation for nonlocal
paying banks as the NACS rules and procedures become more
fully developed.
The Board requests comment on the proposed Federal
Reserve truncation service and adaptation of the NACS rules
for the nationwide program.
E x te n d e d
M IC R
C a p tu re
S e r v ic e
The Board is proposing to allow Reserve Banks to
begin offering a service that provides the benefits of
truncation without actually stopping the flow of the paper
check.
This extended MICR capture service is currently a
Federal Reserve pilot program that combines several existing
payor bank services, including MICR capture, reject reentry,
and electronic data delivery.
Reserve Banks deliver payment
information by transmission or magnetic tape to paying banks
that have requested the service, while retaining the checks
at the Reserve Bank office for several days.
The Reserve
Bank office provides paying banks with return and retrieval
B-26
- 27 -
services identical to the truncation service.
The return
service eliminates the transportation delay between the
paying bank and the Federal Reserve, permitting faster
return of some checks, particularly nonlocal checks.
The
paper checks are subsequently delivered to the paying bank
using less time-critical transportation.
Enhancements to
this service include optional microfilming and the inclusion
of checks presented in fine-sort packages.
Extended MICR capture provides the paying bank a
chance to test most aspects of the truncation service
without giving up receipt of the physical checks.
The
benefits of extended MICR capture are not as great as those
of truncation? however, extended MICR capture serves as a
stepping stone for developing a broader acceptance of
truncation.
The obvious disadvantage to the service is
having the paper check continue to flow through the clearing
process to the Federal Reserve office serving the paying
bank before being converted to electronic form.
The Federal
Reserve is conducting a study on an electronic clearinghouse
concept that may offer the ability to convert to electronics
earlier in the collection process
(See Docket R-0622
Proposals for Long-Term Improvement to the Check Collection
System).
B-27
- 28 -
The fee structure adopted for the extended MICR
capture service includes a per item fee that includes reject
reentry, return item fees (telephone and automated),
retrieval fees, optional fine-sort per item and daily fixed
fees, and optional microfilming fees.
The basic per item
fee varies depending on whether the presentment is made via
transmission
or magnetic tape.
standard fee
structure
Similar to truncation,
and a common set
of
a
pricing
principles have been developed for extended MICR capture.
It is anticipated that fees at most Reserve offices
will approximate those in the pilot program.
fees used in
the pilot
Ranges for
are as follows:
Basic per item
$0,006 - $0,012
Return Item
—
Telephone
$1.60
-
$2.10
—
Automated
$1.35
-
$1.60
$1.00
-
$1.50
Retrievals
Fine Sort
—
Per item
$0,006
-
$0,012
—
Fixed daily fee
$2.00
-
$5.00
$0,006
-
$0.01
Microfilm per item
Local pricing is used to reflect the different processing
costs at each Reserve Bank office.
B-28
In addition to the above
- 29 -
fees, during the pilot program the Reserve Banks have
assessed a fixed fee per day that includes the first "x"
number of checks before the basic per item fee begins to be
assessed.
The Federal Reserve is evaluating the merit of
the fixed fee and may consider modifying the fee structure
to eliminate the fixed fee.
C o m p e t it iv e
Is s u e s
An important factor considered in the development
of the regulatory framework for expedited returns and
related Reserve Bank services was the impact on competition
in the check collection system.
The public has benefited
from the competitive environment that has existed between
the Federal Reserve and correspondent banks, and among
correspondent banks in proving check collection services.
The Board has sought to ensure that the proposed regulatory
requirements, and Federal Reserve service offerings, were
designed to provide options to banks in the return process,
and to facilitate a competitive environment.
Although a number of the Reserve Bank service
proposals— such as acceptance of any returned check, the
explicit pricing of returns and corresponding decrease in
the forward collection fees, and direct return by the
Federal Reserve to the depositary bank— may have significant
competitive implications, it is difficult to determine what
B-29
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the impact would be.
For example, lower Federal Reserve
check collection fees could make the Reserve Banks'
forward
collection check services more attractive and acceptance of
all returns could increase return volume.
On the other
hand, a bank that uses the Federal Reserve for both forward
collection and return services may experience an increase in
its total charges for check services.
In addition, the
acceptance of universal returns by the Federal Reserve has
the potential to result in a reduction of Federal Reserve
forward collection check volume, since returns are often
viewed as nuisance items in the collection process that have
deterred banks from competing for forward collection volume.
Correspondent banks will have the opportunity to
compete with the Federal Reserve in providing returned check
services.
For example, approximately 4,000 banks that do
not collect checks through the Federal Reserve currently
mail returned checks to their Reserve Banks.
Under the
proposed Regulation CC, section 229.30, these paying banks
may deliver these returned checks along with their forward
collection checks to their correspondent bank, rather than
establishing separate transportation to deliver their
returns to the Federal Reserve.
This practice could result
in additional volume of returned checks for correspondents.
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In this regard, the Board requests comment on
whether there are any returned check services or other
procedural changes for returning banks that the Federal
Reserve has not proposed that might assist the returning
bank in providing returned check services.
Board of Governors of the
Federal
Reserve System
December 3, 1987
William W. Wiles
Secretary of the Board
B-31
FEDERAL RESERVE SYSTEM
(Docket No. R-0622)
Proposals for Long-Term Improvements
to the Check Collection System
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Request for comment.
SUMMARY:
The Board is requesting comment on several studies
that are being undertaken that have the potential to provide
for substantial long-run improvements to the check system.
DATE:
Comments must be submitted on or before
ADDRESS:
4 - 8 - 8 8_ _ _ _ .
Comments, which should refer to Docket No. R-0622,
may be mailed to the Board of Governors of the Federal
Reserve System, 20th and C Streets, N.W., Washington, D.C.
20551, Attention:
Mr. William W. Wiles, Secretary; or may
be delivered to Room B-2223 between 8:45 a.m. and 5:00 p.m.
All comments received at the above address will be included
in the public file, and may be inspected in Room B-1122
between 8:45 a.m. and 5:15 p.m.
FOR FURTHER INFORMATION CONTACT:
Steven O. App, Manager,
(202/452-3760); Brada W. Panther, Analyst (202/452-2831); or
Nalini T. Rogers, Analyst (202/452-3801); Division of
Federal Reserve Bank Operations.
only:
For the hearing impaired
Telecommunications Device for the Deaf, Ernestine
Hill or Dorothea Thompson (202/452-3254).
SUPPLEMENTARY INFORMATION:
The Expedited Funds Availability
Act, Title VI of Pub. L. 100-86, requires banks and other
C-l
depository institutions
(collectively referred to as
"banks"1) to make funds deposited into accounts available to
depositors within time periods specified by the Act and to
disclose funds availability policies to their depositors.
The Board is given responsibility to adopt regulations to
implement the Act.
The Act also provides the Board with
broad authority to adopt regulations to improve the check
processing system so that checks may be cleared and, if
necessary, returned within the funds availability schedules
mandated by the Act.
The Board is today requesting comment on a series
of proposals, Docket Nos. R-0620, R-0621, and R-0622, that
will exercise its responsibilities under the Act.
No. R-0620 Regulation CC
Docket
consists of a proposed regulation
(Regulation CC, 12 CFR Part 229) that will clarify the
The proposed Regulation CC terminology corresponds with
the terminology of the Uniform Commercial Code, with some
modifications.
Bank is defined to include all depository
institutions.
A paying bank is the bank on which the check
is drawn.
In the case of payable through drafts, the
payable through bank is the paying bank.
A returning bank
is an intermediary bank handling a returned check.
A
depositary bank is the bank in which the check was first
deposited.
(See section 229.2 of the proposed regulation
for the complete definitions of these terms.)
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definitions of the Act, provide detailed rules to facilitate
compliance with the availability and disclosure require
ments, and make several substantive changes to the current
law on the collection of checks to encourage faster return
of unpaid checks, thus minimizing the losses that could
result from compliance with the availability schedules.
Docket No. R-0620 also proposes several amendments to the
Board's current Regulation J (12 CFR Part 210), which
governs the collection of checks and other items by Federal
Reserve Banks, so that it conforms to the new standards
adopted in Regulation CC.
Docket No. R-0621 Federal Reserve Bank Services
requests comment on proposed new services to be offered by
the Federal Reserve Banks to assist in the new check
collection rules established in Regulation CC.
This docket, No. R-0622, requests comment on some
possible services that the Federal Reserve is studying as
well as longer-term improvements to the nation's check
collection system.
Commenters should review the overview material
contained in Docket No. R-0620 Regulation CC, which provides
background on these proposals.
The Federal Reserve will continue to investigate
improvements to enhance the speed, the efficiency, and the
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quality of the entire check system.
To this end, several
projects are underway that address the need to plan for
future innovations.
Several of these concepts, including
bar-code indorsements, electronic clearinghouses, and
electronic clearing zones are described within this Federal
Register notice.
In addition, this notice describes the
Federal Reserve's continuous study of the impact certain
disbursement practices have on the check system.
requests comment on these studies.
The Board
This notice also
provides information on the Federal Reserve's ongoing
exploration of digitized image processing.
PRO PO SALS
TO
B a r-C o d e
THE
F O R L O N G -T E R M
IM P R O V E M E N T S
C H E C K C O L L E C T IO N
SYSTEM
In d o r s e m e n ts
The Federal Reserve has recently begun to explore
possible approaches to machine-readable indorsements and
automated returned check handling.
Machine-readable
indorsements represent a substantial improvement over
human-readable indorsements because they have the potential
to automate fully the returned check process.
In the
near-term, these indorsements could facilitate the automated
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preparation of qualified returned checks
(QRCs)
2
and thereby
enable more returns to reach the depositary bank in an
expedited manner.
In addition, these indorsements would
reduce the cost of handling returns for paying banks and
returning banks.
For these reasons, the Federal Reserve
initiated a study on machine-readable indorsements.
The first step of this study was to develop a
comprehensive list of possible technologies for
machine-readable indorsements.
Four technologies, MICR,
OCR, bar-code, and magnetic strip, were selected.
Each was
evaluated on the following characteristics: performance
(information density, speed for reading and writing, error
rates); functions
(the size of character set, whether or not
it is observable/erasable/human-readable, whether it
provides an audit trail, and whether information can be
added at a later date by another party)? institutional
considerations
(familiarity to banking industry, vendor base
of support, existence of industry standards )
future cost and performance trends.
;
and expected
Bar-code was chosen as
the most promising technology to investigate.
Qualified returned checks are checks that are prepared
for automated processing on high-speed equipment, by
encoding the routing number of the depositary bank, the
amount of the check, and a return identifier on a carrier
envelope or on a strip attached to the check.
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6
-
Several scenarios were developed to outline how
bar-code indorsements could be applied by the depositary
bank and used by the paying bank to automate the creation of
QRCs.
The bar-code itself would be limited to the
nine-digit routing number of the depositary bank; with other
information in the indorsement in human-readable form to
facilitate the handling of exception items.
In order to
read the bar-code indorsements, paying banks could scan a
hand wand, linked to a computer, across each indorsement and
generate the routing number for encoding on the strip or the
carrier envelope for each returned check, or for inclusion
in an electronic file that would accompany the returns to
the depositary bank
Plan").
(See discussion on "Speedy Return
Alternatively, encoding equipment and/or reject
processing equipment could be modified to read the bar-code
routing number and the MICR amount, and encode this
information on either a strip or a carrier envelope.
The
technology to read bar-code indorsements on high-speed
reader/sorters also exists, which could eliminate the need
for strips or envelopes, although this approach is currently
very costly.
Another issue under study is the depositary bank's
responsibility to place the bar-code indorsement on the
check.
The depositary bank could add bar-codes to the
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indorsement plates located on the encoding machines.
Printing of the bar-code by this method, however, has a
drawback because the position of the bar-code may not be
very precise, which increases the difficulty and the expense
of machine-reading (as opposed to hand wand reading) of the
indorsement.
Another disadvantage is that the designated
space may not accommodate additional future uses of
bar-code, which banks and equipment manufacturers may
develop.
Alternative locations are being investigated that
could accommodate an expanded use of the bar-code;
specifically, the top front edge of the check, or the lower
back edge just behind the MICR-line could be used.
Although
encoding equipment would need to be modified to print in
these alternative locations, these areas of a check are
attractive because they should be relatively free of clutter
and, therefore, allow for improved read rates.
It has also
been suggested that read rates might be further improved by
selecting a fluorescent ink for the machine-readable
indorsement.
The Federal Reserve is interested in selecting an
approach to machine-readable indorsements that has the
capability to improve other check handling procedures.
The
bar-code indorsement concept has been reviewed with several
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groups of industry representatives and equipment vendors who
have been involved with developing an approach to sorting
returns on high-speed reader/sorters.
Based on these
discussions, the acceptability of bar-code technology
appears to be quite high.
The Federal Reserve intends to
continue discussions with equipment vendors and banking
industry representatives to investigate further the
usefulness of bar-code indorsements and to develop technical
specifications.
The Board requests comment on the concept of
bar-code indorsements and on how quickly the Federal Reserve
should proceed in the study and implementation of this new
technology.
Specifically, the Board requests comment on the
following issues:
1.
Although the Federal Reserve study has designated bar
code as the most promising machine-readable technology,
would the industry prefer other forms of machinereadable indorsements?
2.
Would the banking industry have other uses for bar-code
technology, besides identification of the depositary
bank?
How much space would be required for the
necessary information?
3.
What location is preferable for the bar-code
indorsement?
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4.
What specific bar-code is preferable for banking
industry use?
5.
Are there any outstanding issues in defining a bar-code
standard indorsement (other than information content,
choice of coding language, location on the check, print
quality, and ink specifications)
that have not been
addressed?
D ig it iz e d
Im a g e
P r o c e s s in g
In 1985, the Federal Reserve initiated a multi-year
research and development effort to explore digitized image
processing technology.
Prior to 1985, image processing had
been discussed widely in the financial industry as a
technology that might bring significant productivity and
quality improvements to the check collection system.
This
technology had been adopted in numerous lock-box operations,
but otherwise had been largely untested in check processing.
The first phase of the research and development
project demonstrated the technical feasibility of high-speed
image capture of one side of a check in a laboratory
environment.
The second phase is intended to demonstrate in
prototype form a fully functioning high-speed image
processing system that will capture images, process and
compress the image data, and store this data for later
retrieval and analysis.
This phase will be undertaken in
laboratory conditions with a limited volume of checks.
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As planned, phase three would move the testing from
the laboratory to a Federal Reserve site.
This phase will
involve testing of large quantities of checks to determine
performance consistency.
Two specific applications that could benefit from
digitized image processing are government check processing
and returned check processing.
The government check
application was selected for the initial laboratory
demonstration for several reasons.
First, it is a very
demanding application for both rate of capture and image
quality, and will provide a rigorous test of the technology.
It is also the Federal Reserve's primary application for
microfilm, and one purpose of the program is to determine
whether an image processing system would be a superior and
cost-effective substitute for microfilm.
Returned check processing is another application
for which image processing might be practical.
To make
significant improvements in return times, new technologies
will be required.
The System hopes to further automate and
accelerate the processing of the physical returned check.
Image processing may prove to be a viable means to transmit
images of returned checks electronically, particularly for
large-dollar checks.
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The Federal Reserve will share results of this
research with the financial industry.
Potential benefits to
the industry include information on the general feasibility
of the capture and compression technologies used to capture
check images and handle the resultant data at high speeds,
methods to measure the quality of images
(such as exist
today for microfilm), and methods and standards to assure
the exchange of images among banks.
Electronic Clearing Zones
The Board has encouraged proposals on how to
expedite the return process from both the industry and the
Federal Reserve Banks.
A proposal that is being developed
by the Federal Reserve Bank of Minneapolis is based on the
concepts tested in the Federal Reserve truncation and
extended MICR programs.
This proposal could expedite the check collection
and return processes by converting specified geographic
areas into electronic check clearing zones.
This would be
particularly beneficial to those banks located far from
their local Federal Reserve office.
Under this proposal,
all banks in a specified area would agree to receive all
their checks by electronic presentment of the MICR-line
data.
The checks would be held at either the Federal
Reserve, correspondent bank, or the depositary bank until
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the returns were identified.
The paying bank would then
transmit the information on those returned checks to the
presenting bank. Under this system, the physical returned
checks could be made available to the depositary bank one or
more days in advance of the current process.
The electronic clearing zone concept differs from
extended MICR capture services, in that, in an electronic
clearing zone, all banks in a specified geographic region
accept electronic presentments, which may allow for later
deposit deadlines for collecting checks drawn on these
endpoints, thereby improving availability for collecting
ba nks .
The success of this electronic check clearing zone
concept depends on the willingness of all banks in a given
area to participate.
In addition, the costs of electronic
presentment may be allocated to both the paying bank and the
collecting bank because both benefit. ,The paying bank
benefits from reduced operating costs.
The collecting bank
benefits from improved availability because deposit
deadlines would be later for electronic clearing zones.
The Board requests comment on the electronic
clearing zone concept, and specifically on methods of
allocating costs between paying and collecting banks.
C-l 2
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E le c t r o n ic
C le a r in g h o u s e
Section 609(f) of the Expedited Funds Availability
Act (12 U.S.C. 4008(f))
requires the Federal Reserve to
report to the Congress on the feasibility of the electronic
clearinghouse concept by May 1988.
An electronic
clearinghouse is an electronic message service through which
checks are electronically presented for collection and
return.
The Federal Reserve is currently discussing the
electronic clearinghouse concept with experts in
telecommunications technology and plans to request further
information from other specialists and industry trade
groups.
The Board requests comment on the feasibility of
electronic clearinghouses and on the information that should
be included in the May 1988 report to the Congress.
Im p r o v e m e n t s
to
th e
F o rw a rd
C o lle c t io n
P ro c e s s
The Board's proposals, for the most part, have
focused on improvements to the returned check process.
The
Congress also directed the Board to explore further
improvements to the forward collection process over the
longer term.
The Board has identified certain practices
that may be inconsistent with the intent of the Congress and
the Expedited Funds Availability Act.
These practices
include corporations engaging in arrangements that prolong
C-l 3
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the time required to collect and, consequently, return their
check disbursements.
This occurs, for example, when a
corporation located on the East Coast issues checks drawn on
a bank located on the West Coast to make payments to other
East Coast organizations.
The payment at one location of
traveler's checks that are issued on a nationwide basis
poses similar problems.
The issuance by a bank of teller's
checks that are drawn on another bank located in a different
Federal Reserve check processing region is a further
example.
There are certain problems inherent with these
practices.
These checks generally take longer to clear and
return, which may increase the risk of loss to depositary
banks.
These checks are typically more expensive to collect
because of the distance they must travel to reach the paying
bank.
Float costs may also increase for depositary banks
that must provide funds availability prior to receiving
provisional credit in those cases where next-day
availability must be granted.
In addition, these practices
result in a larger proportion of checks being considered
nonlocal for the purposes of granting availability, thus
delaying the time the proceeds of these checks must be made
available to the customer for withdrawal*
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The Federal Reserve System has been concerned with
the problems related to delayed disbursement for several
years.
For instance, the Board issued a policy statement on
January 11, 1979, that expressly discouraged the banking
industry from designing, promoting, or otherwise offering
services intended to delay final settlement and which expose
recipients to greater than ordinary risk. 65 Federal Reserve
Bulletin 140, February 1979.
On February 23, 1984, the
Board issued another policy statement that further
discouraged the use of arrangements that result in a delay
in the collection and final settlement of checks.
This
policy statement stated that the Board intended to monitor
such actions and, if abuses continued, would pursue
appropriate action.
3-1506.6.
1 Federal Reserve Regulatory Service,
In conjunction with this statement, the Board
implemented the High-Dollar Group Sort Program to reduce the
level of float and speed the collection of checks.
7293
49 FR
(February 28, 1984).
Given the intent of the Congress to expedite the
check collection and return systems and the fact that
depositary banks will be exposed to additional risk of loss
and increased float costs associated with these practices,
the Board requests comment on suggested actions it should
consider regarding these practices, in general.
C-15
In
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addition, the Board requests specific comment on the
practice of issuing teller's checks payable in a different
check processing region than the issuing bank.
An additional disbursement issue concerns the
treatment of traveler's checks under the Act.
The Act
requires next-day availability of travelers checks deposited
in a new account.
During this period, the depositary bank
may incur additional float costs, because funds may be
withdrawn prior to the time the bank receives provisional
credit*.
The Board requests comment on whether issuers of
8000-series traveler's checks should be required to
designate multiple paying locations, in order to expedite
the collection of these checks.
N ew
F e d e ra l
R e s e rv e
S e r v ic e s
U nder
C o n s id e r a t io n
Based on discussions with industry groups, the
Board is aware that implementation of the Act may provide an
opportunity for new services to develop to serve the needs
of banks, particularly depositary banks.
The Federal
Reserve is not proposing specific new services at this time,
but requests comment on preliminary concepts of possible new
services.
Depository Check Authenticity.
The Expedited Funds
Availability Act requires banks to make the proceeds of
depository checks
(cashier's checks, certified checks, and
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teller’s checks) available for withdrawal by the opening of
business on the business day following deposit.
These
checks are not subject to the exception provided in the Act
for large-dollar deposits.
Some banks may be concerned with
the risk associated with accepting large-dollar depository
checks, since they will not learn of nonpayment of these
checks before funds must be made available for withdrawal.
Depositary checks can be forged, altered or otherwise
defective, and, in some cases, may be subject to a stop
payment order.
A depositary bank may want to determine
whether a depository check is authentic before it makes the
proceeds available for withdrawal.
Proposed Regulation CC (12 CFR 229.37) requires
paying banks to respond to telephone inquiries from the
depositary bank regarding whether a depository check has
been issued, certified, subject to a stop payment order, or
whether it has been paid or returned.
In addition, the
paying bank must verify information on the check, such as
the amount and payee.
With respect to teller's checks, the
drawing bank must also respond to inquiries from the
depositary bank.
The depositary bank could obtain
information pertaining to the check by contacting the
issuing bank directly or by using a service provided by a
third party, such as the one being considered by the Federal
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Reserve.
Under this service, the depositary bank would
telephone the Federal Reserve, which would in turn contact
the issuing bank for information on the depository check.
The Federal Reserve would then relay the information to the
depositary bank.
The need for a more sophisticated means of
communication will be dependent on the volume associated
with this service.
There are a number of issues to be considered
before such a service could be implemented.
In order to
respond to inquiries from a depositary bank or a third
party, such as the Federal Reserve, banks would have to
maintain records of depository checks issued.
Docket R-0620
Regulation CC requests comment on whether this is a workable
arrangement, whether paying banks should be permitted to
charge for this service, and whether the service should be
limited to checks over a certain dollar amount.
With respect to the authenticity service under
consideration, the Board requests comment on the demand for
such a service by banks and the features and limitations
such a service might encompass.
Communication of return item information to
depositary banks prior to physical delivery of the checks.
Despite the improvements to the returned check process being
proposed, a number of returned checks will not be received
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by the depositary bank in sufficient time to take action
before the proceeds of the check are available for customer
withdrawal.
In these cases, depositary banks may desire
information pertaining to returned checks before the physi
cal checks are delivered.
Physical transportation limita
tions between the Federal Reserve office and the depositary
bank may be offset by the use of telecommunications
facilities to transmit returned check data to the depositary
bank.
The Federal Reserve is considering a series of new
services to provide information early in the day to
depositary banks about returned checks that will not be
delivered to the depositary bank until later that day or, in
some cases, the following day.
It is expected that
depositary banks would request this service primarily for
selected returns that impose greater risk on the depositary
bank.
Information on this returns could be communicated by
phone, wire, date transmission, or facsimile, if available.
Facsimile transmission equipment could be used to
enhance and speed the flow of returned check information
between banks without involving the Federal Reserve.
In
addition, facsimile could serve as an alternative means of
meeting the notification requirement.
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The Board requests comment on whether there is any
interest in, or demand for, these services from the Federal
Reserve.
The
"S p eed y
R e tu rn
P la n *
An alternative to the qualified returned check
(QRC) method of high-speed return processing has been
proposed by a task force comprised of representatives from
the Cleveland Federal Reserve District and local industry
representatives.
This proposal, named the "Speedy Return
Plan," is based on using high-speed equipment to process
returned checks.
The first step in this process is to
capture MICR data for each returned check to create a data
file.
On-line entry is used to add the depositary bank's
nine-digit routing number to the file.
A final high-speed
sort uses the data from the file to sort the checks by
depositary bank.
This high-speed sort allows banks to sort
returned checks to an increased number of endpoints during a
shorter period of time.
From a longer-term perspective, included in the
Speedy Return Plan is the concept of electronically
capturing the depositary bank's machine-readable
indorsement information at either the paying bank or the
first Federal Reserve office.
This captured indorsement
information would be electronically merged with the actual
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item file for immediate and final sorting of returns at the
returning bank or Federal Reserve office.
This data would
be electronically transmitted through all intermediaries
back to the depositary bank along with the returned checks.
Similar to the QRC process, this proposal significantly
decreases the costs and required processing windows for
return operations because only one bank would have to
decipher and record the depositary bank's indorsement.
The
advantage of the Speedy Return Plan is that banks can avoid
the use of strips or carrier envelopes by electronically
matching the nine-digit routing number of the depositary
bank with the MICR-line of the check.
The Speedy Return Plan concept raises a number of
issues.
All banks and Federal Reserve offices using this
plan would need to adopt the necessary high-speed returned
check technology.
Compatibility among automation systems to
facilitate receipt and transmission of the electronic data
files must also be considered.
This proposal is still in
preliminary review by the Board and other Federal Reserve
Districts.
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The Board requests comment on the Speedy Return
Plan, particularly on the concept of depositing returns with
their corresponding electronic files in order to expedite
the return collection process.
Board of Governors of the
Federal Reserve System
De c e m b e r 3, 1987
William W. Wiles
Secretary of the Board
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@FedFRASER