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FEDERAL RESERVE BANK
OF NEW YORK
No. 10567 "I
[ Circular
August 27, 1992
AVAILABILITY OF FUNDS AND COLLECTION OF CHECKS
Final Am endm ents to Regulation CC on
Exception Holds, ATMs, and Enforcem ent A uthority
Effective September 14, 1992
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 announced adoption of final amendments to Regulation CC which
implement provisions in the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
that amend several provisions of the Expedited Funds Availability Act.
The amendments allow banks to extend holds, on an exception basis, to “next-day” and “secondday” availability checks and allow one-term notices of exception holds in certain cases.
Additionally, the Board has made permanent the current availability schedules for deposits at non
proprietary automated teller machines and has reaffirmed administrative enforcement authority of Fed
eral regulatory agencies over U.S. offices and branches of foreign banks.
Enclosed — for depository institutions and others who maintain sets of the Board’s regulations
— is a copy of the amendments, effective September 14, 1992, as published in the Federal Register
of August 14. Additional, single copies may be obtained at this Bank (33 Liberty Street) in the Issues
Division on the first floor, or by calling our Circulars Division (Tel. No. 212-720-5215 or 5216).
(Note that the amendments supersede the interim rule on exception holds that was sent to you with
our Circular No. 10514, dated February 10, 1992.)
Questions on this matter may be directed to our Compliance Examinations Department
(Tel. No. 212-720-5914).
E. G
era ld
C
o r r ig a n
,
P resid en t.
________ joS&J
Friday
August 14, 1992
Vol. 57, No. 158
Pp. 36593-36601
REGULATION CC AMENDMENTS
(Effective September 14, 1992)
1. Exception Holds - Docket No. R-0744
2. Nonproprietary ATMs; Enforcement
Authority - Docket No. R-0745
[Enc. Cir. No. 10567]
1992, to conform the regulation to the
amendments to the Act (57 FR 3277,
12 CFR Part 229
January 29,1992). The Board has
adopted the interim amendments, with
[Docket No. R-0744; Regulation CC]
technical and clarifying modifications,
in final form.1
Availability of Funds and Collection of
Checks
Background
AGENCY: Board of Governors of the
Regulation CC implements the Act
Federal Reserve System.
and was effective September 1,1988.
a c t i o n : Final rule.
Among other things, the regulation
establishes availability schedules to
s u m m a r y : The Board is adopting in final
limit the holds banks 12 can place on
form, with minor modifications, its
deposits in transaction accounts and
interim rule amending Regulation CC to requires banks to disclose their funds
conform to recent amendments to the
availability policies to their customers.
Expedited Funds Availability Act. The
As a general matter, the availability of
amendments allow banks to extend
a deposit is linked to the degree of risk
holds, on an exception basis, to “nextassociated with the deposit and the
day” and “second-day” availability
amount of time necessary for a bank to
checks and allow one-time notices of
learn whether a deposited check will be
exception holds in certain cases. The
returned unpaid. Accordingly, nonlocal 3
amendments should benefit and reduce
checks generally must be made
costs for all banks that choose to take
available for withdrawal on the fifth
advantage of the rule changes.
business day after deposit, local checks
EFFECTIVE DATE: September 14,1992.
on the second business day, and certain
"low-risk” checks, such as government,
FOR FURTHER INFORMATION CONTACT:
cashier’s, certified, and teller’s checks,
Oliver Ireland, Associate General
on the next business day. (Most "nextCounsel (202/452-3625), or Stephanie
Martin, Senior Attorney (202/452-3198), day” checks, if not deposited in person
at a stalled teller lacility, must be made
Legal Division, Board of Governors of
available for withdrawal on the second
the Federal Reserve System. For
business day after deposit.)
information regarding modifications to
Model Forms or appendix C, contact
The Act (section 604) and the
Jane E. Ahrens, Staff Attorney (202/452- regulation (§ 229.13) provide for certain
3667), or Dale I. Nishimura, Staff
safeguard exceptions to the availability
Attorney (202/452-2412), Division of
schedules. Under these exceptions, the
Consumer and Community Affairs,
depositary bank may extend the hold on
Board of Governors of the Federal
a deposit for a reasonable period of
Reserve System. For the hearing
time. The exception holds apply to
impaired only: Telecommunications
Device for the Deaf, Dorothea
1 Section 227 of the FDICIA amends section 603(e)
of the Act to eliminate the shorter availability
Thompson (202/452-3544), Board of
schedules
for deposits at nonproprietary ATMs that
Governors of the Federal Reserve
were to become effective November 28,1992.
System, 20th and C Streets, NW.,
Section 212(h) of the FDICIA amends the
Washington, DC 20551.
administrative enforcement provisions in section
610(a) of the Act. The Board proposed amendments
SUPPLEMENTARY INFORMATION: The
to Regulation CC regarding these provisions
Federal Deposit Insurance Corporation
separately from the interim rule (57 FR 3365, January
Improvement Act of 1991 (FDICIA, Pub. 29,1992). The Board has adopted final amendments
to Regulation CC to implement these changes (see
L. 102-242, section 225,105 stat. 2236
Docket No. R-0745, elsewhere in today's Federal
(1991)) amended the provisions in
Register).
section 604 of the Expedited Funds
2 For purposes of Regulation CC. the term "bank”
Availability Act (Act) (12 U.S.C. 4003)
includes commercial banks, savings institutions,
regarding safeguard exceptions to the
and credit unions.
3 A check generally is "local" if the bank by
availability schedules, effective
which it is payable and to which it is sent for
December 19,1991. The Board adopted
collection ("paying bank”) is in the same Federal
interim amendments to Regulation CC
Reserve check processing region as the bank that
(12 CFR part 229), effective January 15,
receives the check for deposit (“depositary bank").
FEDERAL RESERVE SYSTEM
2
deposits to new accounts, daily
aggregate check deposits in excess of
$5,000, checks that have returned unpaid
and redeposited, checks deposited into
an account that has been repeatedly
overdrawn, checks the depositary bank
may reasonably expect to be
uncollectible, and checks deposited
during emergency conditions, such as a
computer failure, natural disaster, or
other emergency beyond the bank’s
control.
Applicability of Exception Holds to
“Next-Day” and “Second-Day” Checks
Prior to the enactment of the FDICIA,
most of the exception holds did not
apply to checks that must be accorded
next-day or second-day availability
under section 603(a)(2) of the Act and
§ 229.10(c) of the regulation, such as
government, cashier’s, certified, and
teller’s checks. In three reports to
Congress on the implementation of the
Act, the Board expressed concern that
the inapplicability of the exception
holds to next-day and second-day
checks exposed depositary banks to
substantial risk that such checks would
be returned after the proceeds had been
made available for withdrawal.4 The
Board noted that fraud loss reduction
would benefit banks as well as their
customers, who otherwise may face
increased service fees or decreased
service levels.
Section 225 of the FDICIA amended
section 604 of the Act to authorize the
Board to prescribe regulations to apply
most of the safeguard exception holds to
checks that otherwise would receive
next-day or second-day availability. The
Board’s interim rule allowed banks to
apply the exceptions for large deposits
(§ 229.13(b)), redeposited checks
(§ 229.13(c)), accounts with repeated
overdrafts (§ 229.13(d)), and emergency
conditions (§ 229.13(f)) to checks
otherwise covered by § 229.10(c). In
addition, the interim rule made the
reasonable cause exception
(§ 229.13(e)), which previously had
applied to local and nonlocal checks
* See, Board of Governors of the Federal Reserve
System, Report to Congress Under the Expedited
Funds Availability Act, September 1991. March
1990, and June 1989.
I #3^7
and only certain next-day or second-day
checks (i.e., checks drawn on Federal
Reserve Banks or Federal Home Loan
Banks and cashier's, certified, and
teller’s checks), available for all checks
covered by § 229.10(c).5*8The Board
adopted Commentary to the interim rule
to reflect the broader scope of the
exception holds.
The Board's interim rule also
amended § 229.13(h), which governs the
availability of deposits subject to the
exception holds. The interim rule
provided that, with respect to most
checks subject to the next-day (or
second-day) availability requirement
(i.e., Treasury checks, U.S. Postal
Service money orders, checks drawn on
Federal Reserve Banks or Federal Home
Loan Banks, state and local government
checks, and cashier's, certified, and
teller’s checks), the depositary bank
may extend the time funds must be
made available for withdrawal under
the large deposit, redeposited check,
repeated overdraft, or reasonable cause
exception by a reasonable period. The
reasonable period is presumed to be five
business days for local checks and six
business days for nonlocal checks,
unless the depositary bank establishes
otherwise. This reasonable period may
be added to the availability schedule
that would have applied had the checks
not been subject to the next-day (or
second-day) availability requirement. In
other words, the additional hold is
added to the local or nonlocal schedule
that would apply based on the location
of the paying bank. (Treasury checks
and U.S. Postal Service money orders
would be considered drawn on local
paying banks.) For on us checks that
must be afforded next-day availability
under § 229.10(c)(l)(vi), the reasonable
additional hold is presumed to be one
business day, which is added to the
next-day requirement.
The Board received 57 comments on
the interim rule. Forty-nine of the
commenters supported the rule, four
opposed its adoption, and four
expressed no opinion. The distribution
by type of commenter is shown below:
5 The new account exception was not affected by
the amendments. The next-day (or second-day. for
those checks not deposited at a staffed teller
station) availability requirements for Treasury
checks, U.S. Postal Service money orders. Federal
Reserve Bank and Federal Home Loan Bank checks,
state and local government checks, and cashier's,
certified, and teller's checks continue to apply for
the first $5,000 deposited in a new account on any
one banking day, with the remainder available on
the ninth business day after deposit, as provided in
8 229.13(a). The amendments to the Act do not
allow extended holds for these types of checks
when deposited in new accounts.
would reduce losses to depositary banks
associated with the acceptance of
cashier’s, certified, and teller’s checks.
Commercial banks/bank holding compaThe Board recognizes that the ability
26
of
a bank to place an exception hold on
8
Savings institutions......... ... ............. ....
6 the portion of a cashier’s or teller’s
Credit unions............._ ......... .
....... .....
1 check in excess of $5,000 may delay
8 disbursement of funds from or require
Trade associations..................... ....... ..... ......
4
Federal Reserve Banks.................................
4 earlier prefunding of escrow accounts,
57 unless an alternative form of payment,
Total.................................... ..............
such as an electronic payment, is used.
However, should the check be returned
Thirty-six commenters addressed the
for forgery or another reason, such holds
applicability of the safeguard exception may reduce the risk of loss for the
holds to checks that otherwise would be depositary bank and for other parties to
granted next-day or second-day
the transaction such as the seller,
availability. All but one of these
escrow holder, or title insurance
commenters supported the change,
company. Despite the possibility that a
generally because of the reduction in
bank could place holds on cashier's or
risk to depositary banks. Eleven
teller's checks, those types of checks
commenters believed that the change
likely would continue to be desirable
would reduce the potential for fraud loss payment instruments for many types of
due to the withdrawal of funds made
transactions because (1) it is difficult to
available to depositors before the
stop payment of such checks and (2)
depositary bank receives notification
when cashier's or teller's checks are
from the paying bank that checks are
taken in payment for an obligation, the
being returned. One commenter noted
obligation is discharged under UCC 3that banks would be able to conserve
310(a).®
valuable resources because of the
One commenter stated that large
reduction in fraud, and that the
deposit exception holds on next-day
customers might benefit if banks no
checks should not apply to U.S.
longer needed to increase service fees or Treasury
checks, because the primary
reduce service levels to cover fraudrisk associated with government checks
related costs. Another commenter,
is the risk of forged indorsements. The
however, believed the amendment still
depositary bank generally would not
exposed banks to a certain amount of
learn of the forgery until after the
risk. One commenter believed that
banks should not be permitted to impose expiration of the exception hold period.
The Board recognizes that the
an exception hold based on “reasonable
Treasury
may return checks with forged
cause" to doubt the collectibility of the
indorsements long after the exception
check.
The Board agrees with the majority of hold period has elapsed. However,
Treasury checks could be returned for
the commenters that the interim rule
other reasons within a much shorter
reduces risk for depositary banks. The
time frame. For example, stale-dated
Board has adopted the interim rule and
Treasury checks generally are returned
Commentary applying the safeguard
within seven business days of
exceptions to next-day and second-day
presentment. Thus, the Board believes it
checks as a final rule, with minor
is appropriate to retain the exception
technical and clarifying amendments.
holds for Treasury checks, as authorized
One commenter, a mortgage lender,
by the Act.
believed that the interim rule calls into
One commenter noted that the interim
question the acceptance of cashier’s
rule did not apply to new accounts,
checks in real estate transactions in
which are governed by 5 229.13(a).
states that have“good funds" laws
Under § 229.13(a), the first $5,000 of
because of the possibility that a large
most “next-day" and “second-day"
deposit hold could be placed on those
checks must be made available on the
checks. (Generally, state "good funds"
next or second day after deposit as
laws prohibit escrow holders from
disbursing funds from an escrow
account until the funds are available for
6 In addition, the Board has proposed
amendments to its Regulation D (12 CFR part 204).
withdrawal as a matter of right.) The
commenter believed this problem could governing reserve requirements, that would classify
teller's checks as reservable liabilities. If adopted,
be avoided if banks were allowed to
the Regulation D amendment could prompt teller's
apply all exception holds except the
check providers to move to other types of
instruments that would not be accorded next-day
large deposit exception hold to checks
availability, even for the first SSJXJO. Thus, use of
normally afforded next-day or secondchecks that are neither cashier's nor teller’s checks
day availability. In contrast, a
in real estate and other types of transactions could
commercial bank commented that the
become more prevalent despite the lack of next-day
ability to use the large deposit exception availability for those checks.
Type
3
Num
ber
provided in § 229.10(c), and the
remainder may be held until the ninth
business day after the day of deposit
(This nine-day maximum hold period is
mandated by the Act.) The commenter
noted that this provision could result in
certain cases, in deposits of “next-day”
checks to new accounts becoming
available faster than deposits of similar
checks to established accounts
(assuming a seven or eleven-day hold
was placed on a “next-day" check
deposited into an established account).
The Board acknowledges this
inconsistency between the statutory
hold period for “next-day" checks
deposited in new accounts and the
regulatory hold period for “next-day"
checks deposited in established
accounts. The Board does not have the
statutory authority, however, to increase
the hold periods for new accounts or to
apply the exception holds described in
§ 229.13 (b) through (f) to new accounts.
One commenter asked whether the
reasonable hold period may be added to
the calculated availability schedule,
which banks may compute for
nonconsumer accounts in accordance
with § 229.19(d). A bank may add the
reasonable hold period to its calculated
availability schedule, but should reflect
that practice in its disclosures.
One-Time Hold Notices
Prior to the enactment of the FDICIA,
section 604(f) of the Act and § 229.13(g)
of the regulation provided that each time
a depositary bank invoked an exception
to the availability schedules under
§ 229.13 (b) through (f) (the large deposit,
redeposited check, repeated overdraft,
reasonable cause, and emergency
conditions exceptions, respectively), it
had to notify the customer of the
exception hold. Section 229.13(g)
required that the exception hold notice
be given at the time of the deposit or by
the first business day following the day
the facts upon which the exception hold
was based became known to the
depositary bank.
Although individual notices may be
appropriate in the case of the
reasonable cause or emergency
conditions exceptions, which must be
invoked on a case-by-case basis, they
are less appropriate for the large
deposit, redeposited check, or repeated
overdraft exceptions. In these latter
cases, it would be more efficient and
less costly to depositary banks if the
notice requirement could be tailored to
the exception invoked. Customers, as
well, would benefit from receiving
advance notice of any exception holds
that the bank would invoke under
certain conditions or for a certain period
of time, rather than receiving on-the-
spot or after-the-fact notices upon each
deposit. In its three reports to Congress
regarding implementation of the Act,
cited above, the Board recommended
that the Act be amended to provide
banks with greater flexibility in giving
notices of exception holds.
Section 225 of the FDICIA amends
section 604(f) of the Act to authorize the
Board to prescribe regulations to allow
the depositary bank, in certain cases, to
send one notice of an exception hold
applicable to a customer’s future
deposits rather than sending a separate
notice for each deposit. Hie
amendments to section 604(f) set out
two types of one-time notices and the
circumstances under which they apply,
as follows:
1. Large Deposit and Redeposited Check
Exception Hold Notices
Sections 229.13 (b) and (c) of the
regulation provide that a depositary
bank may apply exception holds to
aggregate daily deposits of checks in
excess of $5,000 and to deposits of
checks that have been returned unpaid
and redeposited. Under the amendments
to section 604(f) of the Act if a
depositary bank applies the large
deposit or redeposited check exception
to nonconsumer accounts, it may give its
nonconsumer customers a single notice
at or prior to the time notice otherwise
must be given. The Board’s interim
amendments to § 229.13(g) and revisions
to the Commentary implemented these
amendments to the Act.
As provided in the interim
amendments to § 229.13(g)(2), the one
time notice for the large deposit and
redeposited check exceptions must
explain the reason the exception(s) may
be invoked and the time period within
which deposits subject to the
exception(s) would be available for
withdrawal. The notice should reflect
the bank’s priorities in placing exception
holds on deposits consisting of different
types of checks, such as next-day. local,
and nonlocal checks.
A depositary bank may provide a one
time notice to a nonconsumer customer
under § 229.13(g)(2) only if each
exception cited in the notice (the large
deposit and/or the redeposited check
exception) will be invoked for most
check deposits to the customer’s account
to which the exception could apply. The
Board adopted Model Notice C-13B,
which may be used by those banks that
wrant to provide a one-time notice of
these exception holds to their
nonconsumer customers. Alternatively,
a depositary bank may choose to send
hold notices for each individual deposit
subject to the large deposit or
redeposited check exception in
4
accordance with 5 22913(g)(1) (see
Model Notice 0-13).
2. R e p e a te d O v e rd ra ft E x c e p tio n H o l d
N o tic e
Section 229.13(d) of the regulation
provides that a depositary bank may, for
a six-month period, apply longer holds
to deposits to an account that has been
repeatedly overdrawn. Under
§ 229.13(d), an account is repeatedly
overdrawn if it is overdrawn on six or
more banking days, or is overdrawn by
$5,000 or more on two or more banking
days, within the preceding six months.
Section 229.13(g) of the regulation
originally provided that, when invoking
the repeated overdraft exception, a
depositary bank must provide a notice
to the customer upon each deposit. Act,
if an account (either consumer or
nonconsumer) is subject to the repeated
overdraft exception, the depositary bank
may provide one notice to its customer
for each time period during which the
exception will apply, rather than giving
a notice upon each deposit during that
time period. The Board adopted interim
amendments to § 229.13(g) and revisions
to the Commentary to implement the
amendments to the Act.
Section 229.13(g)(3) of the interim
amendment provides that the one-time
repeated overdraft notice must state the
customer's account number, the fact that
the exception was invoked under the
repeated overdraft exception, the time
period within which deposits subject to
the exception will be made available for
withdrawal, and the time period during
which the exception will apply. A
depositary bank may provide a one-time
notice to a customer under § 229.13(g)(3)
only if the repeated overdraft exception
will be invoked for most check deposits
to the customer’s account. A depositary
bank may send a notice, such as that
contained in Model Notice C-13C, to its
customer at the start of each period for
which the repeated overdraft exception
will be in effect.
Twenty-four commenters addressed
the concept of one-time notices.
Fourteen commenters supported the
amendments as a means to improve the
efficiency of and reduce costs to banks.
Three of these commenters stated that
customers would also benefit by
receiving advance notice of exception
holds, rather than receiving notification
at the time of deposit, or later. Several
other commenters stated that, although
one-time notices would not necessarily
be more cost effective than an
individual notice of each hold or be
useful to their own operations, they
supported the option as a means of
providing flexibility to banks. Other
\o $ (* 7
commenters noted that the proposed
procedure was onerous and that some
clarification was necessary. One
commenter suggested that banks that
give customers individual notice of each
hold should receive consideration in the
form of simplified hold criteria. One
other commenter opposed the option of
one-time notices because it would not
reduce losses.
The Board believes that the one-time
notices provide flexibility to banks and
may reduce the cost of providing hold
notices in certain cases. The Board has
adopted the interim rule and
Commentary provisions relating to one
time notices, with minor technical and
clarifying amendments.
One commenter suggested that the
Board revise § 229.16(c) of Regulation
CC to clarify the applicability of the
one-time exception hold notice for
banks with a case-by-case hold policy.
The Board has amended the
Commentary to § 229.16(c) (1) and (3) to
clarify that depository banks that use
case-by-case disclosure policies may
use the one-time notice provisions of
§ 229.13(g) (2) and (3) and that the
provisions of § 229.16(c)(3) regarding
overdraft and returned check fees apply
only to case-by-case notices provided
pursuant to § 229.16(c)(2).
Twenty commenters discussed the
amendment allowing one-time notices to
nonconsumer customers of exception
holds on large deposits and redeposited
checks. One commenter favored these
one-time notices because the notice
could be incorporated into the bank’s
initial disclosure provided to the
customer when an account is opened.
Another commenter stated that the
option would not be of use to
community banks, but that larger banks
might find the option useful. A
commercial bank commenter indicated
that it would continue to apply
exception holds using individual notices,
as it does not invoke the holds on most
deposits. Further, this commenter noted
that most of the holds invoked for large
deposits and redeposited checks were
on consumer accounts, rather than
nonconsumer accounts. Another
commercial bank commenter stated that
larger business customers that routinely
make aggregate daily deposits in excess
of $5,000 and retailers that redeposit a
significant number of checks usually
have well-established relationships with
their banks and generally do not have
exception holds placed on their
accounts.
One commenter suggested that the
§ 229.13(g)(2) one-time notice should
include the account number of the
depositor. This commenter noted that
businesses may have multiple accounts
and this information would help the
bank to identify the account to which
the hold applies. Banks may include the
account number in the one-time notice,
but the Board has not required that they
do so. Requiring the customer’s account
number on each notice would force
banks to individualize each notice,
thereby precluding such a notice from
being part of an initial policy disclosure
given to all customers.
Several commenters believed that the
interim rule needed additional
clarification. For example, a commenter
recommended that the rule state clearly
that a one-time notice may be sent out
on an individual account basis. Several
commenters requested further
clarification of the terms "most check
deposits,’’ “generally available,”
“consumer account,” and “nonconsumer
account.” The Board believes that the
§ 229.13(g) regulatory and Commentary
language clearly indicates that the one
time notice may be applied on an
account-by-account basis. The Board
also believes that banks may rely on the
plain meaning of the terms “most check
deposits” and “generally available” and
that further detail is unnecessary. The
Board has amended the Commentary to
the definition of “consumer account” to
clarify that any account that does not
meet the consumer account definition is
a nonconsumer account and to add
cross-references.
One commenter believed that a bank
may have difficulty issuing one-time
notices if the bank aggregates deposits
to multiple accounts as permitted by
§ 229.13(b). The commenter noted that
the depositing customer may not be the
sole holder of the accounts and the other
holders of the accounts may not all be
the same. The commenter recommended
that the final regulation specify that a
bank may place applicable holds on all
accounts after giving the one-time notice
to one of the account holders. Although
a bank may aggregate deposits to
different accounts for purposes of
meeting the $5,000 large deposit
threshold, under § 229.13(g)(2) one-time
notices must be provided for each
nonconsumer account on which large
deposit holds will be placed. Thus,
banks should send one-time notices to
the address associated with each
nonconsumer account on which a hold
will be placed, rather than to a single
common account-holder.
The same commenter noted that
redeposits by the bank are easier to
track operationally than redeposits by
the customer. Therefore, the requirement
that “the exception hold be invoked for
most check deposits to which the
exception could apply” should apply
separately to redeposits by the
5
depositary bank and redeposits by the
customer. The commenter did not
believe that this would require any
change to the wording of Model Notice
C-13B. Although a bank is free to apply
the one-time exception notice to a
specific subset of redeposited checks,
such as those automatically redeposited
by the bank under an agreement with its
customer, the specific subset of checks
should be described in the one-time
notice. For example, Model Form 13-B
describes only "checks that have been
returned unpaid;” a bank that wishes to
use the one-time notice for only a subset
of returned checks should elaborate on
that description.
One commenter asked whether the
one-time notice for large deposits and
redeposited checks is valid for the entire
life of the account. Neither the statute
nor the regulation specify an expiration
period for the one-time notice described
in § 229.13(g)(2).
Fourteen commenters discussed the
provision for a one-time repeated
overdraft exception notice. Twelve
commenters supported the provision,
citing cost savings, reduced notification
burden, and reduced exposure to loss
from accounts with repeated overdrafts.
Three of these commenters supported
the option, although they did not believe
they would use one-time notices.
Another commenter indicated that the
change would be of no benefit to banks
that are not capable of invoking holds
on a widespread, automated basis.
Several commenters suggested
technical or editorial changes regarding
the interim rule and the model notice.
For example, commenters noted that the
language in Model Notices 13-B and 13C referring to local and nonlocal checks
could be confusing for customers of
banks that normally do not distinguish
between local and nonlocal checks. The
model notices may be tailored to a
bank’s availability policy, and the
references to local and nonlocal checks
may be eliminated where appropriate.
Another commenter believed that the
statement regarding the applicability of
exception holds to local and nonlocal
checks, as well as to next-day checks, as
repeated unnecessarily throughout the
Commentary to § 229.13. The Board has
retained the statements in the separate
paragraphs of the Commentary to
§ 229.13 for purposes of clarity. Another
commenter made a number of
suggestions intended to make the
amendments more clear and precise,
some of which have been adopted by
the Board (i.e., the Board has removed
references in § 229.13 to the temporary
schedule, which is no longer in effect,
added an example of the exception hold
period calculation in § 229.13(h). and
made other minor wording changes
throughout § 229.13.) The Board also has
made a technical change to § 229.1
(amending the statutory authority
citations).
Suggestions of further changes to
Regulation CC were also received, such
as extending the safeguard exception
holds to new accounts, extending the
definition of a new account beyond the
current thirty days, extending the
allowable hold on a local check to three
days, adding new safeguard exceptions,
expanding the notice of nonpayment
requirement to include checks greater
than $500 returned because of a closed
account, making the reasonable
exception hold period the same for local
and nonlocal checks, and clarifying the
applicability of Regulation CC to “paper
debits,” those items that have all the
features of checks except the account
holders signature. These matters wrere
not subject to public comment, and
some would require a statutory
amendment. The Board may consider
further regulatory changes at a later
date.
Questions on Consumer Account
Classifications
The Board's interim amendment did
not relieve banks from the requirement
of providing consumer account-holders
with large deposit and redeposited
check exception hold notices upon each
deposit to which the exception is
applied. The amendment to § 604(f) of
the Act authorized the Board to apply
the one-time notice provision for the
large deposit and redeposited check
exceptions to classes of consumer
accounts that generally have a large
number of such deposits. The Board
requested comment on whether the one
time notice provision for these types of
exceptions should be extended to
certain classes of consumer accounts,
and if so, how those classes of accounts
should be categorized. Specifically, the
Board requested comment on the
following questions:
i. Are there classes of consumer
accounts, such as high balance
accounts, that would generally have a
large number of daily aggregate deposits
of checks in excess of $5,000?
ii. What is a proper measurement of a
“large number" of large deposits or
redeposited checks, and over what
period of time should such a
measurement be taken?
iii. Would it be operationally feasible
for depositary banks to monitor deposits
to consumer accounts to determine
which accounts have a large number of
daily aggregate deposits of checks in
excess of $5,000 or a large number of
deposits of redeposited checks?
Twenty-nine commenters responded
to the questions posed by the Board.
Generally, commenters indicated that
while the designation of certain classes
of consumer accounts to receive one
time notices was possible, it would not
be feasible operationally because the
size of any such classes would probably
be very small.
Fourteen commenters believed that
the exception holds should be extended
to consumer accounts as well as
nonconsumer accounts, with three
commenters citing losses from consumer
accounts and the large number of holds
placed on consumer accounts as reasons
for the extension. Generally, the
commenters believed that it would not
be feasible to monitor one class of
consumer accounts and provide one
time notices to these customers, while
providing individual notices to other
consumer customers. They noted that a
uniform policy would eliminate the
possibility of teller confusion associated
with invoking such exceptions, and
consequently there would be less risk of
error. These commenters suggested that
the information regarding the
availability of deposits in excess of
$5,000 could be incorporated in the
funds availability policy disclosure
given to all customers, reducing
confusion. One of these commenters
stated that it appeared that the language
contained in FDICIA section 225 was
sufficiently general to support this
interpretation. In addition, one
commenter believed that banks were as
likely to experience fraud in lowbalance accounts as in high-balance
ones.
Question (i)
Nine commenters stated they were
unable to identify a specific class of
consumer accounts that have a high
incidence of aggregate daily deposits
greater than $5,000, or have a large
number of redeposited checks. Two of
these commenters added that even if
such accounts could be identified, they
would likely be accounts on which the
bank generally does not place exception
holds.
Other commenters attempted to
identify specific classes of consumer
accounts that might be eligible for one
time notices. One commenter believed
an appropriate class might be composed
of persons that do not consider
themselves to be commercial customers
or do not pay commercial checking
service charges, such as doctors,
lawyers, small merchants, or real estate
trusts. Another commenter stated that
certain high-balance consumer accounts
6
should be subject to the one-time notice,
with the definition of “high balance” to
be determined by each bank. Another
commenter suggested that the class of
accounts be determined by account
history. Two commenters stated that the
Federal Reserve should conduct
research to determine such classes. One
commenter recommended that for
simplicity, one-time notices be allowed
only on nonconsumer accounts.
Question (ii)
Thirteen commenters addressed the
question of how to define “large
number" and what time period would be
appropriate to use as a measurement.
Six commenters provided specific
numbers, ranging from two deposits to
as many as eight deposits during a onemonth time period. Four other
commenters recommended a threshold
that could vary from bank to bank. One
commenter suggested that marketers of
check kiting software be consulted
regarding their experience.
Question (iii)
Eighteen commenters discussed
whether it would be operationally
feasible to monitor consumer accounts
to determine which accounts have a
large number of large deposits or
redeposited checks. Although most of
these commenters agreed that the
capability existed to monitor consumer
accounts, it generally was not
considered feasible because of its cost.
Seven commenters indicated that
consumer accounts normally do not
have aggregate daily deposits in excess
of $5,000 or a large number of
redeposited checks, therefore monitoring
would not be cost effective. One
commenter was concerned that
monitoring would be burdensome to
banks and not in keeping writh the
President’s moratorium on regulatory
initiatives that could hinder growth and
profitability. Another commenter
believed that monitoring the number of
redeposited checks deposited to
consumer accounts would require those
checks to be encoded, necessitating a
change in industry standards. Two
commenters cited the expense of
systems development One other
commenter believed that monitoring
accounts would be more onerous than
the current notification system. Two
commenters indicated that monitoring
might be feasible if done on all
accounts, not just specific classes.
The Board has not expanded the
applicability of the one-time exception
hold notice for large deposits and
redeposited checks. The Act specifically
limits the applicability of the one-time
hold notice to consumer accounts “that
generally have a large number of such
deposits.” The Board does not believe
there is an easily-identifiable subset of
consumer accounts that meets this
requirement, nor would it be practicable
for banks to monitor consumer accounts
to verify that they meet any criteria the
Board established.
Final Regulatory Flexibility Analysis
Two of the three requirements of a
final regulatory flexibility analysis (5
U.S.C. 604), (1) a succinct statement of
the need for and the objectives of the
rule and (2) a summary of the issues
raised by the public comments, the
agency’s assessment of the issues, and a
statement of the changes made in the
final rule in response to the comments,
are discussed above. The third
requirement of a final regulatory
flexibility analysis is a description of
significant alternatives to the rule that
would minimize the rule’s economic
impact on small entities and reasons
why the alternatives were rejected.
The rule applies to all depository
institutions, regardless of size, as
required by the amendments to the
Expedited Funds Availability Act. The
rule should not have a negative
economic impact on small institutions,
but rather will decrease the risk and
cost for all depositary banks by
broadening the scope of the exception
holds and providing the one-time notice
requirement in certain cases. Because
the rule should benefit and reduce costs
for all institutions that choose to take
advantage of the rule change, it is not
necessary to consider alternatives to
minimize the economic impact.
List of Subjects in 12 CFR Part 229
Banks, banking, Federal Reserve
System.
For the reasons set out in the
preamble, the interim rule amending
Regulation CC, 12 CFR part 229, which
was published at 57 FR 3277-3282 on
January 29,1992, is adopted as a final
rule with the following changes:
Availability Act (Act) (title VI of Pub. L.
100-86,101 Stat. 552, 635), as amended
by section 1001 of the CranstonGonzalez National Affordable Housing
Act of 1990 (Pub. L. 101-625,104 Stat.
4079, 4424) and sections 212(h), 225, and
227 of the Federal Deposit Insurance
Corporation Improvement Act of 1991
(Pub. L. 102-242,105 Stat. 2236, 2303,
2307).
* * * * *
3. In § 229.13, the term ", 229.11” is
removed in paragraphs (b), (c)
introductory text, (d) introductory text,
(e)(1), (f) introductory text, (h)(1), and
(h)(3); the phrase “§ 229.11 or” is
removed in paragraph (h)(2); the word
"in” is removed after the first
occurrence of the word “under” in
paragraph (h)(4); and paragraphs
(g)(2)(ii) and (g)(3)(iii) are revised as
follows:
§ 229.13 Exceptions.
* * * * *
(g) Notice of exception. * * *
(2 )* * *
(ii) The time period within which
deposits subject to the exception
generally will be available for
withdrawal.
* * * * *
(3) * * *
(iii) The time period within which
deposits subject to the exception
generally will be available for
withdrawal; and
* * * * *
Appendix E to Part 229—[Amended]
4. Appendix E is amended as set forth
below:
a. In the Commentary under section
229.2(n), a new sentence is added after
the first sentence and the last sentence
is revised;
b. In the Commentary under section
229.13, the term ", 229.11” is removed in
the first paragraph of paragraph (g) and
the fifth paragraph of paragraph (h); in
paragraph (b), the last sentence of the
second paragraph is revised; in
paragraph (d), the last paragraph is
revised; in paragraph (e), the third
PART 229— [AMENDED]
sentence of the first paragraph is
1. The authority citation for part 229 is revised; in paragraph (f), the fifth
revised to read as follows:
sentence is revised; in paragraph (g), the
Authority: 12 U.S.C. 4001 et seq.
second sentence of the sixth paragraph,
the first and last sentences of the
2. In § 229.1, paragraph (a) is revised
seventh paragraph, and the second
to read as follows:
sentence of the ninth paragraph are
§ 229.1 Authority and purpose;
revised and two new sentences are
organization.
added before the last sentence of the
(a)
Authority and purpose. This part seventh paragraph; and in paragraph (h),
(Regulation CC; 12 CFR part 229) is
a new sentence is added to the end of
issued by the Board of Governors of the the fourth paragraph;
c. In the Commentary under section
Federal Reserve System (Board) to
implement the Expedited Funds
229.16(c), the last paragraph of
7
paragraph (c)(1) is revised and a npw
sentence is added to the end of
paragraph (c)(3) as follows:
Appendix E—Commentary
*
*
ft
Section 229.2
*
*
*
*
*
Definitions
*
*
(n) * * * A n accou n t that d o es not m eet
the definition o f “con su m er account" is a
n on con su m er accou n t. * * * S ection
229.13(g)(2) (one-tim e ex cep tio n n otice) and
§ 229.19(d) (use o f calcu lated availab ility)
apply on ly to n on con su m er accou n ts.
*
*
*
*
*
Section 229.13 Exceptions
*
*
*
*
*
*
(b) Large deposits.
*
*
*
*
* * * A n ad d ition al $4,900 o f the p ro ceed s
o f the lo ca l ch eck m ust b e a v a ila b le for
w ith d raw al on W ed n esd a y in acco rd a n ce
w ith the lo ca l sch ed u le, and the rem aining
$4,000 m ay b e h eld for an ad d ition al period o f
tim e under the large d ep osit excep tion .
*
*
*
*
*
*
(d) Repeated overdrafts.
*
*
*
*
T his ex cep tio n ap p lies to local and
n o n lo ca l ch eck s, a s w e ll a s to ch eck s that
o th erw ise w o u ld b e m ade a v a ila b le on the
n ex t (or se co n d ) b u sin ess d ay after the d ay o f
d ep o sit under § 229.10(c). W h en a bank
p la c e s or ex ten d s a hold under this
excep tion , it n eed not m ake the first $100 o f a
d ep o sit a v a ila b le for w ith d raw al on the n ext
b u sin ess day, a s o th erw ise w ou ld b e required
by § 229.10(c)(l)(vii).
(e) Reasonable cause to doubt
collectibility. * * * W h en a bank p la ces or
ex te n d s a h old under this ex cep tio n , it n eed
not m ake the first $100 o f a d ep o sit a v a ila b le
for w ith d raw al on the n ex t b u sin e ss day, as
o th e rw ise w o u ld b e required by
§ 229.10(c)(l)(vii). * * *
*
*
*
*
*
(f) Em ergency conditions. * * * W h en a
bank p la ces or e x ten d s a h old under this
ex cep tio n , it n eed not m ake the first $100 o f a
d ep o sit a v a ila b le for w ith d raw al on the n ext
b u sin e ss day, a s o th erw ise w ou ld b e required
b y § 229.10(c)(l)(vii). * * *
(g) Notice of exception.
*
*
*
*
*
* * * W h en paragraph (g)(2) or (g)(3)
requires d isclosu re o f the tim e period w ithin
w h ich d ep o sits su b ject to the excep tio n
g en erally w ill b e a v a ila b le for w ithd raw al,
the requirem ent m ay b e sa tisfied if the o n e
tim e n otice sta te s w h en on us, local, and
n o n lo ca l ch eck s w ill b e a v a ila b le for
w ith d raw al if an ex cep tio n is in vok ed . * * *
U nder paragraph (g)(2), if a nonconsum er
accou n t (see C om m entary to 229.2(n)) is
su b ject to the large d ep osit or red ep o sited
ch eck ex cep tio n , the d ep ositary bank m ay
g iv e its cu stom er a sin gle n otice at or prior to
the tim e n otice m ust b e p rovid ed under
paragraph (g)(1). * * * A on e-tim e n o tice m ay
sta te that the d ep ositary bank w ill apply
ex cep tio n h o ld s to certain su b sets o f d ep o sits
/CSV?
to w h ich the large d ep o sit or red ep osited
ch eck ex cep tio n m ay apply, an d the n otice
sh ou ld id en tify su ch su b sets. For exam p le,
the d ep o sita ry bank m ay apply the
red ep o sited ch eck ex cep tio n on ly to ch eck s
that w ere red ep o sited a u tom atically by the
d ep o sita ry bank in a cco rd an ce w ith an
agreem ent w ith the custom er, rather than to
all red ep o sited ch eck s. In lieu o f sen d in g the
on e-tim e n otice, a d ep o sitary bank m ay sen d
in d ivid u al hold n o tic es for each d ep osit
su b ject to the large d ep o sit or red ep osited
ch eck ex cep tio n in acco rd an ce w ith
S 229.13(g)(1) (see M od el N otice C -13).
*
*
*
*
*
* * * N o tices sen t pursuant to paragraph
(g)(3) m ust sta te the cu stom er's accou n t
number, the fact the ex cep tio n w a s in vok ed
under the rep eated overdraft ex cep tio n , the
tim e period w ithin w h ich d ep o sits su b ject to
the ex cep tio n w ill b e m ade a v a ila b le for
w ith d ra w a l, and the tim e period during w h ich
the ex cep tio n w ill apply (se e M odel Form C 13C). * * *
By order o f the Board o f G overnors of the
F ederal R eserve S ystem . A ugust 5.1992.
William W. Wiles,
Secretary of the Board.
(FR D oc. 92-19078 Filed 8-13-92: 8:45 amj
BJLINQ CODE 6210-01-f
12 CFR Part 229
[Docket No. R-0745; Regulation CC]
Availability of Funds and Collection of
Checks
Board of Governors of the
Federal Reserve System.
a c t i o n : Final rule.
agency:
the proposed amendments in final
form.1
The Board received 38 comments on
the proposed amendments, all of which
discussed the availability schedules for
deposits at nonproprietary ATMs. Six
commenters also discussed the
proposed amendment regarding
administrative enforcement powers over
U.S. offices and branches of foreign
banks. The distribution by type of
commenter is shown below:
Type
Num
ber
Commercial banks/bank holding compaCredit unions...................................................
Savings institutions................... ....................
Clearing houses..............................................
Trade associations..........................................
Federal Reserve Banks..................................
Other..........„....................................................
Total......................................................
16
6
3
1
6
4
2
38
The Board is amending
Regulation CC to conform to recent
amendments to the Expedited Funds
(h) A v a ila b ility of deposits subject to
Availability Act. The amendments make
exceptions. * * *
permanent the current availability
Deposits at Nonproprietary ATMs
* * * * *
schedules for deposits at nonproprietary
Currently, under § 229.12(f)(1) of
* * * For example, if a customer deposits a automated teller machines and reaffirm
Regulation
CC, a depositary bank may
$7,000 cashier’s check drawn on a nonlocal
the administrative enforcement
bank, and the depositary bank applies the
treat all deposits made by its customers
authority
of
federal
regulatory
agencies
large deposit exception to that check, $5,000
at a nonproprietary ATM 12 as though the
must be available for withdrawal on the next over U.S. offices and branches of foreign deposits were nonlocal checks, i.e.,
business day after the day of deposit and the banks.
make them available by the fifth
remaining $2,000 must be available for
business day after the day of deposit.
EFFECTIVE DATE: September 14,1992.
withdrawal on the eleventh business day
This special treatment was accorded
following the day of deposit (six business
FOR FURTHER INFORMATION CONTACT:
deposits made at nonproprietary ATMs
days added to the five-day schedule for
Oliver Ireland, Associated General
because the depositary bank cannot
nonlocal checks), unless the depositary bank Counsel (202/452-3625), or Stephanie
ascertain the composition of these
establishes that a longer hold is reasonable.
Martin, Senior Attorney (202/452-3198), deposits (i.e., whether the deposit
* * * * *
Legal Division, Board of Governors of
consists of cash, checks generally
the Federal Reserve System. For the
Section 229.16 Specific A vailability Policy
subject to next-day availability, or local
hearing impaired only:
Disclosure
or nonlocal checks). As of November 28,
* * * * *
Telecommunications Device for the
1992, 5 229.12(f)(2) would have required
Deaf, Dorothea Thompson (202/452(c) Longer delays on a case-by-case
nonproprietary ATM deposits of cash,
3544), Board of Governors of the Federal “next-day" checks (as described in
basis— (1) * * *
* * * * *
Reserve System, 20th and C Streets.
§ 229.10(c)(l)(i) through (v) and (vii)),
NW„ Washington, DC 20551.
A bank that im p o ses d ela y s on a c a s e -b y
and local and other checks (as described
c a s e b a sis is still su b ject to the a v a ila b ility
in § 229.12(b)) to be made available by
SUPPLEMENTARY INFORMATION: The
requirem ents o f this regulation. If the bank
the second business day following the
Federal
Deposit
Insurance
Corporation
im p o ses a d ela y on a particular d ep o sit that
banking day of deposit. Depositary
Improvement
Act
of
1991
(“FDICIA,”
is not longer than the a v ailab ility required by
banks could have continued to make
Pub.
L
No.
102-242,105
Stat.
2236
(1991))
§ 229.12 for lo ca l and n o n local ch eck s, the
nonlocal checks deposited at a
rea so n for the d ela y n eed not b e b a sed on the amended the Expedited Funds
Availability Act (“Act") (12 U.S.C. 4001- nonproprietary ATM available by the
ex cep tio n s p rovid ed in § 229.13. If the d elay
fifth business day following the banking
4010), effective December 19,1991.
e x c e e d s the tim e p eriod s perm itted under
day of deposit.3
§ 229.12, h o w ev er, then it m ust b e b a se d on
Section 227 of the FDICIA amended
an ex cep tio n p rovid ed in § 229.13, an d the
section 603(e) of the Act regarding
bank m ust com p ly w ith the 5 229,13 n otice
1 Section 225 of the FDICIA amended section 605
deposits at nonproprietary automated
of the Act regarding exception holds for "next-day"
requirem ents. A bank that im p oses d ela y on
teller machines ("ATMs"). Section
and "second-day" availability checks and one-time
a c a se -b y -c a se b a sis m ay a v a il itse lf o f the
212(h) of the FDICIA amended section
exception hold notices. To allow banks to avail
cn e-tim e n o tice p ro v isio n s in S 229.13(g)(2)
themselves of these changes immediately, the Board
610(a) of the Act to reaffirm the
an d (3) for d ep o sits to w h ich th ose p rovision s
administrative enforcement authority of adopted interim amendments to Regulation CC (57
apply.
FR 3365. January 29.1992) and has adopted the
federal regulatory agencies over U.S.
* * * * *
interim rule, with technical and clarifying changes.
In final form. See Docket R-0744. elsewhere in
(3)
* * * Paragraph (c)(3) a p p lies w h en a branches and agencies of foreign banks.
today's Federal Register.
The Board requested comment on
b ank p ro v id es a c a se -b y -c a se n otice in
4 A nonproprietary ATM generally is an ATM
proposed amendments to Regulation CC
acco rd a n ce w ith paragraph (c)(2) an d d o es
that is not owned or operated by the depositary
(12 CFR part 229) and revisions to the
not ap p ly if the bank h a s provid ed an
bank.
ex cep tio n hold n o tice in accord an ce with
Commentary to implement the
3 The effective date for the shorter schedules for
5 229.13.
amendments to the Act (57 FR 3277,
nonproprietary ATM deposits was extended from
* * * * *
Continued
January 29.1992). The Board is adopting
*
*
*
*
SUMMARY:
*
8
loft 7
Banks and ATM operators raised
concerns with Congress and the Board
about the operational problems and
potential for fraud under the shorter
schedules for nonproprietary ATM
deposits. In two reports to Congress on
the implementation of the Act and two
reports specifically discussing deposits
to nonproprietary ATMs,4 the Board
summarized these concerns and
recommended that Congress amend the
Act to provide fifth-day availability for
all deposits at nonproprietary ATMs on
a permanent basis.
The FDICIA amendments to section
603(e) of the Act eliminated the shorter
holds for deposits at nonproprietary
ATMs that were scheduled to take effect
in November 1992 and extended the
current 5-day hold permanently. The
Board proposed amendments to
§ § 229.12(a) and (f) of the regulation and
revisions to the Commentary to reflect
these changes.
Thirty-four commenters supported the
proposed amendments. Fourteen
commenters believed that banks would
be exposed to increased risk of fraud
and loss of the availability scheduled for
deposits made at nonproprietary ATMs
were the same as the availability
schedule for deposits made at
proprietary ATMs or teller’s stations.
Seven commenters stated that because
banks lack the technology to ascertain
the composition of deposits made at
nonproprietary ATMs, the current
availability schedule should be made
permanent.
Six commenters stated that, although
they did not allow their customers to
make deposits at nonproprietary ATMs,
they supported the amendment because
it would give banks increased flexibility
and protection. Several of these
commenters stated that they might begin
providing nonproprietary ATM deposit
services, given the reduced risk
provided by the amendment. Five
commenters believed that the
amendment would ensure that
nonproprietary ATM deposit services
would continue to be offered to
customers, as some hanks were
considering discontinuing the service
because of the shorter schedule that
September 1,1900, to November 28.1992, by the
Cranston-Gonzales National Affordable Housing
Act of 1990 (Pub. L No. 101-625; { 1001). The Board
adopted conforming amendments to Regulation CC
at that time. See 55 FR 50816, December 11,1990,
(interim rule) and 56 FR 7799, February 26,1991
(final rule).
4 See, Board of Governors of the Pederal Reserve
System. Report to Congress Under the Expedited
Funds Availability Act, September 1991 and March
1990. and Deposits at Nonproprietary Automated
Teller Machines: Report to Congress Pursuant to the
Expedited Funds Availability Act, October 1989 and
July 1990.
of the Act and Regulation CC.) Six
would have taken effect in November
commenters supported the proposed
1992.
amendments without specific comment.
One commenter that currently does
The Board is adopting the conforming
not accept deposits at nonproprietary
amendments as proposed.
ATMs believed that individual ATM
networks should have the right to
Final Regulatory Flexibility Analysis
require participating banks to provide
Two of the three requirements of final
prompter availability if supporting
regulatory flexibility analysis (5 U.S.C,
agreements are executed between the
604), (1) a succinct statement of the need
participants. The Board notes that
for the objectives of the rule and (2) a
depositary banks are free to provide
summary of the issues raised by the
faster availability for any type of
public comments, the agency’s
deposit than is required by the
assessment of the issues, and a
regulation.
statement of the changes made in the
Another commenter stated his
final rule in response to the comments,
understanding that Hawaiian banks
are discussed above. The third
could extend the five-day hold of
deposits at nonproprietary ATMs by an requirement of a final regulatory
flexibility analysis is a description of
additional day. Section 229.12(e)
significant alternatives to the rule that
provides that a one-day extension is
would minimize the rule’s economic
permissible for deposits in Hawaii, as
well as deposits in Alaska, Puerto Rico, impact on small entities and reasons
why the alternatives were rejected.
and the U.S. Virgin Islands. However,
The rule will apply to all depository
this one-day extension applies only to
checks for which the paying bank is not institutions, regardless of size, as
required by the amendments to the
located in the same state as the
depositary bank. Therefore, the one-day Expedited Funds Availability Act. The
rule should not have a negative
extension may not be helpful to a
economic impact on small institutions,
depositary bank that can not ascertain
but rather will decrease the risk and
the composition of a deposit to a
cost of all depositary banks by
nonproprietary ATM.
eliminating the requirement for shorter
One commenter indicated that the
holds on deposits made to
amendment was unclear as to whether
nonproprietary ATMs after November
deposits at nonproprietary ATMs were
subject to the $100 next-day availability 27,1992. In addition, small institutions
should not be effected by the
requirement. Under the Act and the
clarification of U.S. banking regulatory
regulation, the next-day availability
provisions (including the $100 provision) agencies’ administrative enforcement
authority over U.S. offices and branches
do not apply to deposits at
nonproprietary ATMs. The Commentary of foreign banks. Because the rule
should benefit and reduce costs for all
to § 229.12(f) adopted by the Board
institutions that choose to take
clearly explains that § 229.10(c)(l)(vii),
advantage of the rule change, it is not
which requires a depositary bank to
necessary to consider alternatives to
make up to $100 of an aggregate daily
deposit available for withdrawal on the minimize the economic impact.
next business day after the banking day List of Subjects in 12 CFR Part 229
of deposit, does not apply to deposits to
Banks, banking, Federal Reserve
a nonproprietary ATM.
System.
The Board is adopting the proposed
For the reasons set out in the
amendments to §§ 229.12 (a) and (f) and
preamble, 12 CFR part 229 is amended
the corresponding Commentary, with
as follows:
minor technical changes.
Administrative Enforcement
PART 229— [AM ENDED]
Title II, Subtitle A of the FDICIA
1. The authority citation for part 229 is
affirmed the supervisory responsibilities revised to read as follows:
of U.S. banking regulatory agencies over
Authority: 12 U.S.C. 4001 et seq.
U.S. offices and branches of foreign
banks. Section 212(h) of the FDICIA
2. In § 229.3, paragraph (a)(1) is
made conforming changes to the
revised and concluding text to
administrative enforcement provisions
paragraph (a) is added after paragraph
in section 610(a) of the Act. These
(a)(3) to read as follows:
amendments were effective December
§
229.3 Administrative enforcement
19,1991. The Board proposed
( a)* * *
conforming amendments to § 229.3(a) of
Regulation CC. (U.S. branches and
(1)
Section 8 of the Federal Deposit
agencies of foreign banks are already
Insurance Act (12 U.S.C. 1818 et seg.) in
subject to the substantive requirements
the case of—
9
(i) National banks, and Federal
branches and Federal agencies of
foreign banks, by the Office of the
Comptroller of the Currency;
(ii) Member banks of the Federal
Reserve System (other than national
banks), and offices, branches, and
agencies of foreign banks located in the
United States (other than Federal
branches, Federal agencies, and insured
State branches of foreign banks), by the
Board; and
(iii) Banks insured by the Federal
Deposit Insurance Corporation (other
than members of the Federal Reserve
System) and insured State branches of
foreign banks, by the Board of Directors
of the Federal Deposit Insurance
Corporation;
* * * * *
The terms used in paragraph (a)(1) of
this section that are not defined in this
part or otherwise defined in section 3(s)
of the Federal Deposit Insurance Act (12
U.S.C. 1813(s)) shall have the meaning
given to them in section 1(b) of the
(f)
Deposits at nonproprietary A T M s . T he
International Banking Act of 1978 (12
A ct and regulation p rovid e a sp e c ia l rule for
U.S.C. 3101).
d ep o sits m ade at nonproprietary A TM s. T h is
* * * * *
paragraph d o e s n ot ap p ly to d ep o sits m ade at
3.
In 5 229.12, paragraph (a) is revised,proprietary A TM s. A ll d ep o sits at a
paragraphs (f)(l)(ii) and (f)(2) are
nonproprietary ATM m ust b e m a d e a v a ila b le
removed, and the designation “(l)(i)” in
for w ith d raw al b y the fifth b u sin e ss d ay
paragraph (f) is removed to read as
fo llo w in g the banking d ay o f d e p o s it For
exam p le, a d ep o sit m ade at a nonproprietary
follows:
ATM on a M onday, including an y d ep o sit by
ca sh or ch eck s that w ou ld o th erw ise b e
su b ject to n ex t-d a y (or secon d -d a y )
(a)
Effective date. The permanent
availab ility, m ust b e m ade a v a ila b le for
availability schedule contained in this
w ith d raw al not later than M on d ay o f the
section is effective September 1,1990.
follow in g w eek . T h e p rovision s o f
* * * * *
§ 229.10(c)(l)(vii) requiring a d ep o sito ry bank
to m ake up to $100 o f an aggregate d aily
Appendix E to Part 229—[Amended]
d ep o sit a v a ila b le for w ith d raw al on the n ext
4.
Appendix E to part 229 is amended, b u sin e ss d ay after the ban k in g d a y o f d ep o sit
in the Commentary under section 229.12, do not ap p ly to d ep o sits at a nonproprietary
ATM .
by removing the second and third
§229.12 Permanent availability schedule.
sentences of paragraph (a) and revising
paragraph (f) to read as follows:
A p p en d ix E— C om m entary
*
*
*
*
*
By order o f the B oard o f G overn ors o f the
F ederal R eserve S ystem , A ugust 5 ,1992.
W illiam W . W iles,
Secretary o f the Board.
Section 229.12 Permanen t A vailability
Schedule
*
*
*
*
*
10
[FR D oc. 92-19077 F iled 8-13-92: 8:45 am]
BILLING) CODE 6210-01-f
@FedFRASER