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FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No. 10415
December 19, 1990
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J
REGULATION CC
— Interim Rule on Deposits at Nonproprietary ATMs
— Comment Invited by January 11, 1991
To All Depository Institutions, and Others Concerned,
in the Second Federal Reserve District:
Following is the text of a statement issued by the Board of Governors of the Federal Reserve
System:
The Federal Reserve Board has issued for public comment interim amendments it has adopted to
Regulation CC to conform the regulation to a recent amendment to the Expedited Funds Availability
Act, pending adoption of a final rule.
Comment is requested by January 11, 1991.
The amendment, which was enacted on November 28, 1990, extends the availability schedules for
deposits to nonproprietary automated teller machines for a two-year period.
Because the amendment to the Expedited Funds Availability Act became effective upon enactment,
there was no opportunity for the Board to publish proposed regulations for comment prior to the effective
date of the amendment to the Act.
Enclosed — for depository institutions and those who maintain sets of Board regulations —
is a copy of the interim rule, as published in the Federal Register of D ecem ber 11; additional, single
copies may be obtained at this Bank (33 Liberty Street) in the Issues Division on the first floor.
As indicated in the notice, the interim rule has a retroactive effective date of Septem ber 1,
1990; however, the Board of Governors is requesting com m ent pending the adoption of a final rule.
Com ment may be sent to the Board, as specified in the notice, or to John F. Sobala, Vice President,
Check Function of this Bank, by January 11, 1991.
E. G erald C orrigan ,
President.
Tuesday
December 11, 1990
Vol. 55, No. 238
Pp. 50816-50819
Regulation CC; Docket No. R-0717
Interim Rule on Nonproprietary ATMs.
Effective September 1, 1990
[Enc. Cir. No. 10415]
FEDERAL RESERVE SYSTEM
SUPPLEMENTARY INFORMATION: The
Expedited Funds Availability Act
12 CFR Part 229
specifies the time periods within which
funds deposited at ATMs must be made
[Regulation CC; Docket No. R-0717]
available for withdrawal. Different rules
applied under the temporary schedule
RIN 710O-AB01
(which was effective from September 1,
Availability of Funds and Collection of 1988, to August 31,1990) to deposits at
Checks
nonproprietary ATMs 1 than to deposits
at proprietary ATMs, because of
AGENCY: Board of Governors of the
operational differences in the way these
Federal Reserve System.
deposits are processed. During
ACTION: Interim rule with request for
consideration of the Act, banks reported
comment.
to the Congress on the processing
limitations associated with accepting
SUMMARY: The Board is amending
deposits at nonproprietary ATMs. They
Regulation CC to conform to recent
indicated that the account-holding bank
amendments to the Expedited Funds
does not have the information necessary
Availability Act (“Act”) (see the
Cranston-Gonzales National Affordable to place holds on nonproprietary ATM
deposits because the deposits are
Housing Act, Pub. L. No. 101-625,
removed and processed by the ATM
§ 1001). The amendments extend the
operator rather than the account-holding
availability schedules for deposits to
bank. Given these limitations, the Act
nonproprietary automated teller
allowed the account-holding bank to
machines ("ATMs") for a period of two
years. The amendments to the Act were treat any such deposits as though they
were composed of nonlocal checks
signed into law on November 28,1990,
under the temporary schedule. At that
with a retroactive effective date of
time, the Congress anticipated that the
September 1,1990. The Board has
processing limitations that necessitated
adopted these conforming changes to
the special availability rule for
Regulation CC on an interim basis. The nonproprietary ATM deposits under the
Board is requesting comments on the
temporary schedule would be addressed
interim rule pending adoption of a final by the time the permanent schedule
rule.
became effective in September 1990.
DATES: Effective date: September 1,
Therefore, under the permanent
1990. Comment date: Comments must be schedule, deposits at nonproprietary
submitted on or before January 11,1991. ATMs generally had to be made
ADDRESSES: Comments, which should
available for withdrawal within the
refer to Docket No. R-0717, may be
same time periods as deposits made at
mailed to the Board of Governors of the staffed teller facilities.
Federal Reserve System, 20th and C
During the past two years, ATM
Streets, NW., Washington, DC 20551,
networks, banks, and the Board have
Attention: Mr. William W. Wiles,
investigated a number of potential
Secretary: or may be delivered to Room alternatives both to address the
B-2223 between 8:45 a.m. and 5 p.m. All processing limitations and to facilitate
comments received at the above address compliance with the permanent
will be included in the public file and
schedule. A viable systems solution to
may be inspected at Room B-1122
address the processing limitations has
between 8:45 a.m. and 5:15 p.m.
not been identified. All of the identified
FOR FURTHER INFORMATION CONTACT:
solutions are costly and would likely
Louise L. Roseman, Assistant Director
result in increased fees for customers
(202/452-3874), or Kathleen M. Connor, who make deposits at nonproprietary
Senior Financial Services Analyst (202/ ATMs. The possible system solutions
452-3917), Division of Federal Reserve
would degrade the efficiency of shared
Bank Operations; Oliver Ireland,
ATM networks and may slow the
collection of checks, which would be
Associate General Counsel (202/452contrary to the intent of the Act.
3625), or Stephanie Martin, Attorney
(202/452-3198), Legal Division. For
In addition, depository institutions
information regarding modifications to
and ATM operators have expressed
disclosures or Appendix C, contact
concern that the potential for fraud will
Thomas J. Noto, Staff Attorney (202/
452-3667), or Jane E. Ahrens, Staff
1 A nonproprietary A TM is defined in the Act us
Attorney (202/452-3667), Division of
one that is not proprietary. In the Act. the term
"proprietary ATM" means an automated teller
Consumer and Community Affairs. For
machine that is (1) located at or adjacent to a
the hearing impaired only:
branch of the receiving institution or in ciose
Telecommunications Device for the
proximity, as defined by the Board, or (2) owned by.
Deaf, Dorothea Thompson (202/452operated exclusively for, or operated by the
3544).
receiving institution.
2
increase if institutions must comply with
the permanent availability schedule for
nonproprietary ATMs. Under the
permanent availability schedule,
second-business-day availability is
required for local checks. Thus, an
account-holding bank that could not
ascertain the composition of deposits at
nonproprietary ATMs would have to
provide second-business-day
availability for all deposits made at
nonproprietary ATMs in order to ensure
compliance with the availability
schedules, even though longer holds
could apply with respect to similar
deposits, i.e., nonlocal checks, made at a
staffed teller facility. Thus, deposits of
nonlocal checks at nonproprietary
ATMs would be available for
withdrawal several days before the
checks could be presented and returned,
and therefore such deposits would be an
attractive vehicle for check fraud.
Substantial increases in operating costs
or fraud losses could lead some
institutions to cease accepting deposits
at nonproprietary ATMs, thereby
limiting a convenient consumer banking
service.
Based on this research and analysis,
the Board submitted two reports 2 on
this issue to the Congress that
recommended that the Congress amend
the Act to treat nonproprietary ATM
deposits under the permanent schedule
in the same manner as such deposits
were treated under the temporary
schedule; i.e., permit banks to make
deposits at nonproprietary ATMs
available for withdrawal as if they were
nonlocal checks (not later than the fifth
business day following the day of
deposit). ATM networks and
participating institutions also have made
this recommendation to the Congress.
On November 28,1990, the President
signed into law the Cranston-Gonzales
National Affordable Housing Act (Pub.
L. 101-625; § 1001), which amended the
Expedited Funds Availability Act to
extend the schedules applicable to
deposits at nonproprietary ATMs for a
two-year period. The Board is amending
Regulation CC to conform to this recent
amendment of the Act.
Section 229.12 of Regulation CC sets
forth the permanent availability
schedule under which funds deposited
in an account by local and nonlocal
checks must be made available for
withdrawal. A new § 229.12(f) has been
added to provide a special rule for
1 The reports on this subject were transmitted to
Congress in October 1989 and July 1990. An earlier
report submitted in October 1988 provided
bacKground information on the processing of
deposits at nonproprietary ATMs but did not
include a legislative recommendation because there
was limiteo research available at that time.
deposits made at nonproprietary ATMs.
Section 229.12(f) provides that during the
period from September 1,1990, through
November 27,1992, a depositary bank
may treat all deposits made by its
customers at a nonproprietary ATM as
though the deposits were nonlocal
checks under the permanent schedule,
i.e., make them available by the fifth
business day after the day of deposit.
Effective November 28,1992, deposits of
cash, “next-day” checks, and local
checks at a nonproprietary ATM must
be made available by the second
business day following the banking day
of deposit, and nonlocal checks
deposited at a nonproprietary ATM
must continue to be made available by
the fifth business day following the
banking day of deposit. This rule does
not apply to deposits made at
proprietary ATMs.
The Board also has made revisions to
other paragraphs of § 229.12 to conform
that section to the statutory
requirements of the Act. Paragraphs (a),
(b),'(c), and (d) of § 229.12 were
amended to add cross-references to the
new paragraph (f) as well as to other
paragraphs. In addition, in paragraph
(b), which lists the types of deposits that
must be accorded two-day availability
under the permanent schedule, the
Board has removed the language, "a
check drawn on the Treasury of the
United States that is deposited at a
nonproprietary ATM.” Deposits of these
checks are now governed by the
provisions of new paragraph (f) and are
subject to a five-day availability
schedule until November 27,1992, and a
two-day availability schedule after that
date.
Section 229.16(b)(5) requires banks
wishing to take advantage of the
extended hold for deposits at
nonproprietary ATMs to disclose this to
their customers in their initial
disclosures. Model Clause C-10, which
can be used to make this disclosure, has
been revised to reflect the new rules for
nonproprietary ATM deposits.
Conforming changes have also been
made to the commentary to Appendix C
and the commentary to § 229.16.
Section 229.18(e) requires banks to
disclose changes in their availability
policy to their qonsumer account
holders. Changes other than those that
result in faster availability must be
disclosed 30 calendar days before they
are implemented. Accordingly, banks
wishing to take advantage of the
extended hold for nonproprietary ATM
deposits must provide 30-day advance
notice to their consumer account
holders. This requirement may be
fulfilled by mailing Model C-10 prefaced
with language indicating the effective
date of the change.
The Board believes that it is
necessary to amend the regulation with
an interim amendment, so that the
regulation conforms to the statutory
requirements, and so that banks that
permit their customers to make deposits
at nonproprietary ATMs can rely on the
Board’s regulation in providing
availability in accordance with the
amended requirements. If the Board’s
rule is not effective immediately, banks
that wish to take advantage of the
provisions of the Act regarding
nonproprietary ATMs, which reflect the
intent of the Congress to reduce the risk
for banks of accepting deposits at
nonproprietary ATMs, would be in
violation of Regulation CC because the
current provisions call for faster
availability of these deposits than is
required under the amended Act. There
was no opportunity for the Board to
publish proposed regulations for
comment prior to the effective date of
the amendment to the Act, which was
effective upon enactment. Accordingly,
the Board, for good cause, finds that the
notice and public comment procedure
normally required is impractical and
contrary to the public interest under 5
U.S.C 553(b)(B). The Board further finds
that, for the same reasons, there is good
cause under 5 U.S.C. 553(d)(3) to make
the interim amendment effective on
September 1,1990, without regard for
the 30-day period provided for in U.S.C.
553(d).
Initial Regulatory Flexibility Analysis:
The Regulatory Flexibility Act (5
U.S.C. 601-612) requires an agency to
publish an initial regulatory flexibility
analysis with any notice of proposed
rulemaking. Two of the requirements of
an initial regulatory flexibility analysis
(5 U.S.C. 603(b)), a description of the
reasons why the action by the agency is
being considered and a statement of the
objectives of, and legal basis for, the
proposed rule, are contained in the
supplementary information above. The
Board’s interim rule requires no
additional reporting or recordkeeping
requirements, nor are there relevant
federal rules that duplicate, overlap, or
conflict with the proposed rule.
Another requirement for the initial
regulatory flexibility analysis is a
description of, and where feasible, an
estimate of the number of small entities
to which the proposed rule shall apply.
The interim rule will apply to all
depository institutions, regardless of
size, as required by the amendments to
the Expedited Funds Availability Act.
The rule should not have a signficant
negative economic impact on small
3
institutions, but rather will decrease the
risk to all depositary banks by enabling
them to impose longer holds on deposits
made to nonproprietary ATMS.
List of Subjects in 12 CFR Part 229
Banks, banking, Federal Reserve
System, Reporting and recordkeeping
requirements.
For the reasons set out in the
preamble, 12 CFR part 229 is amended
as follows:
PART 229— [AMENDED]
1. The authority citation for part 229
continues to read as follows:
Authority: Title VI of Pub. L 100-86,101
Stat. 552, 635,12 U.S.C. 4001 et seq.
2. In § 229.12, paragraph (a) and the
introductory text to paragraph (b) are
revised, paragraph (b)(3) is removed,
paragraphs (b)(4) and (b)(5) are
redesignated as (b)(3) and (b)(4), newly
redesignated paragrah (b)(4) is revised,
paragraph (c)(1) introductory text and
the first and third sentences of
paragraph (d) are revised, and a new
paragraph (f) is added to read as
follows:
§ 229.12
Permanent availability schedule.
(a) Effective date. Except as provided
in paragraph (f), the permanent
availability schedule contained in this
section is effective September 1,1990.
(b) Local checks and certain other
checks. Except as provided in
paragraphs (d), (e), and (f) of this
section, a depositary bank shall make
funds deposited in an 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—
*'
*
*
*
*
(4)
A check drawn on a Federal
Reserve Bank or Federal Home Loan
Bank; a check drawn by a state or unit
of general local government; or a
cashier's, certified, or teller's check; if
any check referred to in this paragraph
(b)(4) is a local check that is not
governed by the availability
requirements of § 229.10(c).
(c) Nonlocal checks—(1) In general.
Except as provided in paragraphs (d),
(e), and (f) of this section, a depositary
bank shall make funds deposited in an
account by a check available for
withdrawal not later than the fifth
business day following the banking day
on which funds are deposited, in the
case of—
* * * * *
(a)
Time period adjustment for
withdrawal by cash or similar means. A
depositary bank may extend by one
business day the time that funds
deposited in an account by one or more
checks subject to paragraphs (b), (c), or
(f) of this section are available for
withdrawal by cash or similar means.
* * * A depositary bank shall, however,
make $400 of these funds available for
withdrawal by cash or similar means
not later than 5 p.m. on the business day
on which the funds are available under
paragraphs (b), (c), or (f] of this section.
checks that would otherwise be subject to
next-day (or second-day) availability, must
be made available for withdrawal not later
D e p o s its a t A u to m a te d T e lle r M a c h in e s
than Monday of the following week.
Funds from any deposits (cash or checks)
Effective November 28,1992, deposits of
made at automated teller machines (ATMs)
cash, ’’next-day’’ checks, and local checks at
we do not own or operate will not be
a nonproprietary ATM must be made
available until the fifth business day after the available by the second business day
day of your deposit. * * *
following the banking day of deposit.
Nonlocal checks deposited at a
Appendix E to Part 229—[Amended]
nonproprietary ATM must continue to be
*
*
*
4.
Appendix E is amended as set forthmade available by the fifth business day
*
*
*
*
*
below: •
following the banking day of deposit. This
rule does not apply to deposits made at
(f) Deposits at nonproprietary A TMs.
a. In the Commentary to § 229.12, a new
(1)
(i) A depositary bank shall make sentence is added to the end of paragraph (a), proprietary ATMs.
b. In the Commentary to § 229.16, the first
the second paragraph of paragraph (b) is
funds deposited in an account at a
sentence of the seventh paragraph of
revised, and a new paragraph (f) is added to
nonproprietary ATM by cash or check
paragraph (b) is revised to read as follows:
available for withdrawal not later than read as follows:
the fifth business day following the
banking day on which the funds are
deposited.
(ii) Paragraph (f)(1) of this section is
effective September 1,1990, through
November 27,1992.
(2)
(i) A depositary bank shall make
funds deposited in an account at a
nonproprietary ATM available for
withdrawal not later than the second
business day following the banking day
on which the funds are deposited, in the
case of—
(A) Cash;
(B) A check described in § 229.10(c)(1)
(i) through (vi); and
(C) A check described in paragraph
(b) of this section.
(ii) A depositary bank shall make
funds deposited in an account by a'
check described in paragraph (c) at a
nonproprietary ATM available for
withdrawal not later than the fifth
business day following the banking day
on which the funds are deposited.
(iii) Paragraph (f)(2) of this section is
effective November 28,1992.
C—
10—Automated Teller Machine Deposits
(Permanent Schedule, Extended Holds)
S e c t i o n 2 2 9 .1 2
P e rm a n e n t A v a lia b ilit y
(a) E f f e c t i v e d a t e . * * * Paragraph (f)
provides special effective dates for deposits
made to nonproprietary ATMs.
(b) L o c a l c h e c k s a n d c e r t a i n o t h e r c h e c k s .
*
*
*
*
*
In addition, the proceeds of Treasury
checks and U.S. Postal Service money orders
not subject to next-day (or second-day)
availability under § 229.10(c); checks drawn
on Federal Reserve Banks and Federal Home
Loan Banks: checks drawn by a state or unit
of general local government: and cashier’s,
certified, and teller’s checks not subject to
next-day (or second-day) availability under
§ 229.10(c) and payable in the same check
processing region as the depositary bank,
must be made available for withdrawal by
the second business day following deposit.
★
*
*
*
*
(f)
D e p o s i t s a t n o n p r o p r i e t a r y A T M s . The
Act and regulation provide a special rule for
deposits made at nonproprietary ATMs.
Notwithstanding other provisions of the
regulation concerning availability
requirements, during the period from
September 1,1990, through November 27,
1992, a depositary bank may treat all deposits
Appendix C to Part 229—[Amended]
made by its customers at a nonproprietary
3.
In model clause C-10, the heading ATM as though the deposits were nonlocal
and the first sentence under the
checks under the permanent schedule. Thus
subheading “Deposits at Automated
from September 1,1990, to November 27,
Teller Machines" are revised to read as 1992, a deposit at a nonproprietary ATM on a
Monday, including any deposit by cash or
follows:
S e c t i o n 2 2 9 .1 6
S p e c ific A v a ila b ilit y P o lic y
D is c lo s u re
S c h e d u le
*
*
*
*
(b) * * *
*
*
*
*
*
*
A bank taking advantage of the extended
time period for making deposits at
nonproprietary ATMs available for
withdrawal under § 229.12(f)(1) must explain
this in the initial disclosure. * * *
* * * * *
c. In the Commentary to appendix C, under
the subheading “Model C-10," the first
sentence is revised to.read as follows:
A p p e n d ix C— M o d e l F o rm s , C la u s e s , a n d
N o tic e s
*
*
*
*
*
M o d e l C~ 10.
This clause must be incorporated in the
specific availability-policy disclosure by
banks that reserve the right to delay
availability of deposits at nonproprietary
A T M s until the fifth business day following
the date of deposit, as permitted by
§ 229.12(f)(1). * * *
*
*
*
*
*
By order of the Board of Governors of the
Federal Reserve System, December 5,1990.
W illia m W . W ile s ,
S e c r e ta r y o f th e B o a rd .
[FR Doc. 90-28928 Filed 12-10-90; 8:45 am|
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