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FEDERAL RESERVE BANK
OF NEW YORK
Qt.ioizI
July 13, 1994
To All Depository Institutions in the Second Federal Reserve
District, and Others Maintaining Sets o f Board Regulations:
Enclosed is a copy o f a revised Regulation CC pamphlet, "Availability o f Funds and
Collection o f Checks," o f the Board o f Governors o f the Federal Reserve System, as amended
effective January 3, 1994.
The revised pamphlet supersedes the previous printing o f this regulation and any subsequent
amendments thereto. Because o f the pamphlet’s thickness and the method by which it has been
bound, we are unable to 3-hole punch it for insertion into a looseleaf binder.
Circulars Division
Board o f G overnors o f the Federal R eserve S ystem
Regulation CC
Availability of Funds
and Collection of Checks
12
CFR 229; as amended effective January 3, 1994
] Q Hd [
Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of
the Federal Reserve District in which the inquiry arises.
May 1994
/o v a /
Contents
Subpart A—General
*
Page
Section 229.1—Authority and purpose;
organization...............................................
Section 229.2—Definitions..........................
Commentary on section 229.2 .....................
Section 229.3—Administrative
enforcement............................................
(a) Enforcement agencies...................
(b) Additional po w ers.......................
(c) Enforcement by the B o a rd .........
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Subpart B—Availability of Funds and
Disclosure of Funds-Availability Policies
Section 229.10—Next-day availability . . .
(a) Cash deposits ..............................
(b) Electronic payments.....................
(c) Certain check deposits................
Commentary on section
229.10 ........
Section 229.11—Temporary availability
schedule.................................................
(a) Effective date ..............................
(b) Local checks and certain other
checks ..........................................
*
(c) Nonlocal checks............................
(d) Deposits at nonproprietary
ATMs............................................
(e) Extension of schedule for
certain deposits in Alaska,
Hawaii, Puerto Rico, and the
U.S. Virgin Islands .......................
Commentary on section
229.11 ........
Section 229.12—Permanent availability
schedule.................................................
(a) Effective d a t e ..............................
(b) Local checks and certain other
checks ..........................................
(c) Nonlocal checks............................
(d) Time period adjustment for
withdrawal by cash or similar
means............................................
(e) Extension of schedule for
certain deposits in Alaska,
Hawaii, Puerto Rico, and the
U.S. Virgin Islands.......................
(0 Deposits at nonproprietary
ATMs............................................
Commentary on section
229.12 ........
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Section
(a)
(b)
(c)
(d)
(e)
229.13—Exceptions.....................
New accounts..............................
Large deposits..............................
Redeposited checks.......................
Repeated overdrafts .....................
Reasonable cause to doubt
collectibility...................................
(0 Emergency conditions....................
(g) Notice of exception.....................
(h) Availability of deposits subject
to exceptions.................................
Commentary on section 229.13 ................
Section 229.14—Payment of interest . . . .
(a) In general.....................................
(b) Special rule for credit unions. . . .
(c) Exception for checks returned
unpaid ..........................................
Commentary on section 229.14 ................
Section 229.15—General disclosure
requirements..........................................
(a) Form of disclosures.....................
(b) Uniform reference to day of
availability.....................................
(c) Multiple accounts and multiple
account holders............................
(d) Dormant or inactive accounts . . .
Commentary on section 229.15 ................
Section 229.16—Specific availabilitypolicy disclosure...................................
(a) General..........................................
(b) Content of specific availabilitypolicy disclosure ..........................
(c) Longer delays on a case-by
case basis......................................
(d) Credit-union notice of interestpayment policy ............................
Commentary on section 229.16 ................
Section 229.17—Initial disclosures.............
(a) New accounts...............................
0?) Existing accounts..........................
Commentary on section 229.17 ................
Section 229.18—Additional disclosure
requirements..........................................
(a) Deposit slip s.................................
(b) Locations where employees
accept consumer deposits ............
(c) Automated teller machines............
Page
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Contents
M Mai
(d) Upon request..............................
(e) Changes in p o lic y .....................
Commentary on section 229.18 ..............
Section 229.19—Miscellaneous..............
(a) When funds are considered
deposited.....................................
(b) Availability at start of business
day..............................................
(c) Effect on policies of depositary
bank............................................
(d) Use of calculated availability . . .
(e) Holds on other funds................
(f) Employee training and
compliance................................
(g) Effect of merger transaction . . . .
Commentary on section 229.19 ..............
Section 229.20—Relation to state law . .
(a) In general...................................
(b) Preemption of inconsistent law. .
(c) Standards for preemption............
(d) Preemption determinations.........
(e) Procedures for preemption
determinations............................
Commentary on section 229.20 ..............
Section 229.21—Civil liability................
(a) Civil liability..............................
(b) Class action aw ards...................
(c) Bona fide errors.........................
(d) Jurisdiction................................
(e) Reliance on Board rulings.........
(f) Exclusions...................................
(g) Record retention.........................
Commentary on section 229.21 ..............
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Subpart C—Collection of Checks
Section 229.30—Paying bank’s
responsibility for return of checks . . .
(a) Return of checks.......................
(b) Unidentifiable depositary bank . .
(c) Extension of deadline................
(d) Identification of returned check
(e) Depositary bank without
accounts.....................................
(f) Notice in lieu of return ............
(g) Reliance on routing number . . .
Commentary on section 229.30 ..............
Section 229.31—Returning bank’s
responsibility for return of checks . . .
(a) Return of checks.......................
(b) Unidentifiable depositary bank . .
(c) Settlement...................................
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Charges........................................... 83
Depositary bank without
accounts....................................... . 83
(0 Notice in lieu of return ............... 83
(g) Reliance on routing number . . . . 83
Commentary on section 229.31 ................. 84
Section 229.32—Depositary bank’s
responsibility for returned checks......... . 88
(a) Acceptance of returned checks . . . 88
(b) Payment....................................... . 88
(c) Misrouted returned checks and
written notices of nonpayment . . . 88
(d) Charges........................................ . 88
Commentary on section 229.32 ................ . 89
Section 229.33—Notice of nonpayment . 92
(a) Requirement ................................ . 92
(b) Content of notice......................... . 92
(c) Acceptance of notice .................. . 92
(d) Notification to custom er............... 92
(e) Depositary bank without
accounts..................................... . 92
Commentary on section 229.33 .............. . 93
Section 229.34—Warranties..................... . 95
(a) Warranties................................... . 95
(b) Warranty of notice of
nonpayment................................ . 95
(c) Warranty of settlement amount,
encoding, and offset................... . 95
(d) Damages..................................... . 95
(e) Tender of defense ..................... . 95
Commentary on section 229.34 .............. . 96
Section 229.35—Indorsements................ . 98
(a) Indorsement standards................ . 98
(b) Liability of bank handling
check .......................................... . 98
(c) Indorsement by a bank.............. . 98
(d) Indorsement for depositary bank . 98
Commentary on section 229.35 .............. . 99
Section 229.36—Presentment and
issuance of checks .............................. . 103
(a) Payable-through and payable-at
checks ....................................... . 103
(b) Receipt at bank office or
processing center....................... . 103
(c) Truncation................................... . 103
(d) Liability of bank during
forward collection....................... . 103
(e) Issuance of payable-through
checks ....................................... . 103
(f) Same-day settlement................... . 103
Commentary on section 229.36 .............. . 105
(d)
(e)
M jim /
Section 229.37—Variation by agreement
Commentary on section 229.37 ..............
Section 229.38—U ability.......................
(a) Standard of care; liability;
measure of damages...................
(b) Paying bank’s failure to make
timely return..............................
(c) Comparative negligence..............
(d) Responsibility for certain
aspects of checks.......................
(e) Timeliness of action...................
(0 Exclusion...................................
(g) Jurisdiction................................
(h) Reliance on Board rulings.........
Commentary of section 229.38 ..............
Section 229.39—Insolvency of bank . . .
(a) Duty of receiver .......................
(b) Preference against paying or
depositary b a n k ..........................
(c) Preference against collecting,
paying, or returning b a n k .........
(d) Preference against presenting
bank............................................
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Contents
Page
(e) Finality of settlement................ . 118
Commentary on section 229.39 .............. . 119
Section 229.40—Effect of merger
transaction............................................ . 120
Commentary on section 229.40 .............. . 121
Section 229.41—Relation to state law . . . 122
Commentary on section 229.41 .............. . 123
Section 229.42—Exclusions ................... . 124
Commentary on section 229.42 .............. . 125
Appendix A—Routing number guide to
next-day-availability checks and local
checks ................................................. . 126
Appendix B—Reduction of schedules
for certain nonlocal checks................ . 130
Appendix C—Model forms, clauses,
and notices.......................................... . 153
Commentary on appendix C ................... . 168
Appendix D—Indorsement standards . . . . 172
Appendix F—Preemption determinations . 173
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EXPEDITED FUNDS AVAILABILITY
A C T ........................................................ . 191
Note on Regulation CC
In the Code of Federal Regulations, the com
mentary on Regulation CC is set out sepa
rately as appendix E. In the version of Regu
lation CC that follows, each section of the
regulation is followed by the commentary on
that section. The beginning of each commen
tary section is clearly labeled “Commentary,”
and the running head at the top of each page
indicates whether the text on that page is reg
ulation or commentary.
The commentary provides background ma
terial to explain the Board’s intent in adopting
a particular part of the regulation. It also pro
vides examples to help readers understand
how a particular requirement is to work.
M/ d m
Under section 611(e) of the Expedited Funds
Availability Act (12 USC 4010(e)), no provi
sion of section 611—
imposing any liability shall apply to any act done
or omitted in good faith conformity with any rule,
regulation, or interpretation thereof by the Board of
Governors of the Federal Reserve System, notwith
standing the fact that after such act or omission has
occurred, such rule, regulation, or interpretation is
amended, rescinded, or determined by judicial or
other authority to be invalid for any reason.
The commentary is an “interpretation” of the
regulation by the Board within the meaning of
section 611.
Regulation CC
Availability of Funds and Collection of Checks
12 CFR 229; as amended effective January 3, 1994
Subpart A—General
Section
229.1 Authority and purpose; organization
229.2 Definitions
229.3 Administrative enforcement
Appendix
Certain
Appendix
Notices
Appendix
Appendix
Appendix
B—Reduction of Schedules for
Nonlocal Checks
C—Model Forms, Clauses, and
D—Indorsement Standards
E—Commentaryf
F—Preemption Determinations
Subpart B—Availability of Funds and
Disclosure of Funds-Availability Policies
SUBPART A—GENERAL
Section
229.10
229.11
229.12
229.13
229.14
229.15
229.16
229.17
229.18
229.19
229.20
229.21
Next-day availability
Temporary availability schedule
Permanent availability schedule
Exceptions
Payment of interest
General disclosure requirements
Specific availability-policy disclosure
Initial disclosures
Additional disclosure requirements
Miscellaneous
Relation to state law
Civil liability
SECTION 229.1—Authority and
Purpose; Organization
Subpart C—Collection of Checks
(a) Authority and purpose. This part (Regula
tion CC; 12 CFR part 229) is issued by the
Board of Governors of the Federal Reserve
System (“Board” ) to implement the Expedited
Funds Availability Act (“act” ) (title VI of
Pub. L. 100-86), as amended by section 1001
of the Cranston-Gonzalez National Affordable
Housing Act of 1990 (Pub. L. 101-625) and
sections 212(h), 225, and 227 of the Federal
Deposit Insurance Corporation Improvement
Act of 1991 (Pub. L. 102-242).
Section
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
229.35 Indorsements
229.36 Presentment and issuance of checks
229.37 Variation by agreement
229.38 Liability
229.39 Insolvency of bank
229.40 Effect of merger transaction
229.41 Relation to state law
229.42 Exclusions
(b) Organization. This part is divided into
subparts and appendixes 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 enforce
ment of this part’s provisions.
(2) Subpart B of this part contains rules re
garding the duty of banks to make funds
deposited into accounts available for with
drawal, including both temporary and per
manent availability schedules. Subpart B of
this part also contains rules regarding ex
ceptions to the schedules, disclosure of
funds-availability policies, payment of inter
est, liability of banks for failure to comply
Appendix A—Routing Number Guide to
Next-Day-Availability Checks and Local
Checks
t In this publication, the commentary is interwoven with
the regulation rather than set out as a separate appendix.
The commentary for each section o f the regulation immedi
ately follow s that section.
3
§ 229.1
with subpart B of this part, and other
matters.
(3) Subpart C of this part contains rules to
expedite the collection and return of checks
by banks. These rules cover the direct re
turn of checks, the manner in which the
paying bank and returning banks must re
turn checks to the depositary bank, notifica
tion of nonpayment by the paying bank, in
dorsement and presentment of checks,
same-day settlement for certain checks, the
liability of banks for failure to comply with
subpart C of this part, and other matters.
4
Regulation CC
Regulation CC
SECTION 229.2—Definitions
As used in this part, unless the context re
quires otherwise:
(a) “Account” means a deposit as defined in
12 CFR 204.2(a)(l)(i) that is a transaction ac
count as described in 12 CFR 204.2(e). As
defined in these sections, “account” generally
includes accounts at a bank from which the
account holder is permitted to make transfers
or withdrawals by negotiable or transferable
instrument, payment order of withdrawal, tele
phone transfer, electronic payment, or other
similar means for the purpose of making pay
ments or transfers to third persons or others.
“Account” also includes accounts at a bank
from which the account holder may make
third-party payments at an ATM, remote ser
vice unit, or other electronic device, including
by debit card, but the term does not include
savings deposits or accounts described in 12
CFR 204.2(d)(2) even though such accounts
permit 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 account, or
(5) Any other transaction account described
in 12 CFR 204.2(e).
“Account” does not include an account where
the account holder is a bank, where the ac
count holder is an office of an institution de
scribed in paragraphs (e)(1) through (e)(6) of
this section or an office of a “foreign bank”
as defined in section 1(b) of the International
Banking Act (12 USC 3101) that is located
outside the United States, or where the direct
or indirect account holder is the Treasury of
the United States.
(b) “Automated clearinghouse” or “ACH”
means a facility that processes debit and credit
transfers under rules established by a Federal
Reserve Bank operating circular on automated
clearinghouse items or under rules of an auto
mated clearinghouse association.
(c) “Automated teller machine” or “ATM”
means an electronic device at which a natural
person may make deposits to an account by
§ 229.2
cash or check and perform other account
transactions.
(d) “Available for withdrawal” with respect
to funds deposited means available for all uses
generally permitted to the customer for actu
ally and finally collected funds under the
bank’s account agreement or policies, such as
for payment of checks drawn on the account,
certification of checks drawn on the account,
electronic payments, withdrawals by cash, and
transfers between accounts.
(e) “Bank” means—
(1) An “insured bank” as defined in sec
tion 3 of the Federal Deposit Insurance Act
(12 USC 1813) or a bank that is eligible to
apply to become an insured bank under sec
tion 5 of that act (12 USC 1815);
(2) A “mutual savings bank” as defined in
section 3 of the Federal Deposit Insurance
Act (12 USC 1813);
(3) A “savings bank” as defined in section
3 of the Federal Deposit Insurance Act (12
USC 1813);
(4) An “insured credit union” as defined in
section 101 of the Federal Credit Union Act
(12 USC 1752) or a credit union that is
eligible to make application to become an
insured credit union under section 201 of
that act (12 USC 1781);
(5) A “member” as defined in section 2 of
the Federal Home Loan Bank Act (12 USC
1422);
(6) An “insured institution” as defined in
section 401 of the National Housing Act
(12 USC 1724) or an institution that is eli
gible to make application to become an in
sured institution under section 403 of that
act (12 USC 1726); or
(7) An “agency” or “branch” of a “for
eign bank” as defined in section 1(b) of the
International Banking Act (12 USC 3101).
For purposes of subpart C and, in connection
therewith, subpart A, the term “bank” also in
cludes any person engaged in the business of
banking, including a Federal Reserve Bank, a
Federal Home Loan Bank, and a state or unit
of general local government to the extent that
the state or unit of general local government
acts as a paying bank. Unless otherwise speci
fied, the term “bank” includes all of a bank’s
5
§ 229.2
offices in the United States, but not offices
located outside the United States.
(f) “Banking day” means that part of any
business day on which an office of a bank is
open to the public for carrying on substan
tially all of its banking functions.
(g) “Business day” means a calendar day
other than a Saturday or a Sunday, January 1,
the third Monday in January, the third Mon
day in February, the last Monday in May,
July 4, the first Monday in September, the
second Monday in October, November 11, the
fourth Thursday in November, or December
25. If January 1, July 4, November 11, or De
cember 25 fall on a Sunday, the next Monday
is not a business day.
(h) “Cash” means United States coins and
currency.
(i) “Cashier’s check” means a check that is—
(1) Drawn on a bank;
(2) Signed by an officer or employee of the
bank on behalf of the bank as drawer;
(3) A direct obligation of the bank; and
(4) Provided to a customer of the bank or
acquired from the bank for remittance
purposes.
(j) “Certified check” means a check with re
spect to which the drawee bank certifies by
signature on the check of an officer 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
check, and
(B) Will be used to pay the check; or
(2) The bank will pay the check upon
presentment.
(k) “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 a
Federal Reserve Bank or a Federal Home
Loan Bank;
(3) A negotiable demand draft drawn on
the Treasury of the United States;
(4) A demand draft drawn on a state gov
ernment or unit of general local government
that is not payable through or at a bank;
Regulation CC
(5) A United States Postal Service money
order; or
(6) A traveler’s check drawn on or payable
through or at a bank.
The term “check” does not include a noncash
item or an item payable in a medium other
than United States money. A draft may be a
check even though it is described on its face
by another term, such as “money order.” For
purposes of subpart C, and in connection
therewith, subpart A, of this part, the term
“check” also includes a demand draft of the
type described above that is nonnegotiable.
(/) “Check clearinghouse association” means
any arrangement by which three or more par
ticipants exchange checks on a local basis, in
cluding an entire metropolitan area. The term
“check clearinghouse association” may in
clude arrangements using the premises of a
Federal Reserve Bank, but it does not include
the handling of checks for forward collection
or return by a Federal Reserve Bank.
(m) “Check-processing region” means the ge
ographical area served by an office of a Fed
eral Reserve Bank for purposes of its check
processing activities.
(n) “Consumer account” means any account
used primarily for personal, family, or house
hold purposes.
(o) “Depositary bank” means the first bank to
which a check is transferred even though it is
also the paying bank or the payee. A check
deposited in an account is deemed to be trans
ferred to the bank holding the account into
which the check is deposited, even though the
check is physically received and indorsed first
by another bank.
(p) “Electronic payment” means a wire trans
fer or an ACH credit transfer.
(q) “Forward collection” means the process
by which a bank sends a check on a cash
basis to the paying bank for payment.
(r) “Local check” means a check payable by
or at a local paying bank, or a check payable
by a nonbank payor and payable through a
local paying bank.
(s) “Local paying bank” means a paying
bank that is located in the same check
Regulation CC
processing region as the physical location
of—
(1) The branch or proprietary ATM of the
depositary bank in which that check was
deposited; or
(2) Both the branch of the depositary bank
at which the account is held and the non
proprietary ATM at which the check is
deposited.
(t) “Merger transaction” means—
(1) A merger or consolidation of two or
more banks; or
(2) The transfer of substantially all of the
assets of one or more banks or branches to
another bank in consideration of the as
sumption by the acquiring bank of substan
tially all of the liabilities of the transferring
banks, including the deposit liabilities.
(u) “ Noncash item” means an item that
would otherwise be a check, except that—
(1) A passbook, certificate, or other docu
ment is attached;
(2) It is accompanied by special instruc
tions, such as a request for special advice
of payment or dishonor;
(3) It consists of more than a single thick
ness of paper, except a check that qualifies
for handling by automated check-processing
equipment; or
(4) It has not been preprinted or postencoded in magnetic ink with the routing
number of the paying bank.
(v) “Nonlocal check” means a check payable
by, through, or at a nonlocal paying bank.
(w) “Nonlocal paying bank” means a paying
bank that is not a local paying bank with re
spect to the depositary bank.
(x) “Nonproprietary ATM” means an ATM
that is not a proprietary ATM.
(y) “Participant” means a bank that—
(1) Is located in the geographic area served
by a check clearinghouse association; and
(2) Both collects and receives for payment
checks through the check clearinghouse as
sociation either directly or through another
participant.
(z) “Paying bank” means—
(1) The bank by which a check is payable,
unless the check is payable at another bank
§ 229.2
and is sent to the other bank for payment or
collection;
(2) The bank at which a check is payable
and to which it is sent for payment or
collection;
(3) The Federal Reserve Bank or Federal
Home Loan Bank by which a check is
payable;
(4) The bank through which a check is
payable and to which it is sent for payment
or collection, if the check is not payable by
a bank; or
(5) The state or unit of general local gov
ernment on which a check is drawn and to
which it is sent for payment or collection.
For purposes of subpart C, and in connection
therewith, subpart A, “paying bank” includes
the bank through which a check is payable
and to which the check is sent for payment or
collection, regardless of whether the check is
payable by another bank, and the bank whose
routing number appears on a check in frac
tional or magnetic form and to which the
check is sent for payment or collection.
(aa) “Proprietary ATM” means an ATM that
is—
(1) Owned or operated by, or operated ex
clusively for, the depositary bank;
(2) Located on the premises (including the
outside wall) of the depositary bank; or
(3) Located within 50 feet of the premises
of the depositary bank, and not identified as
being owned or operated by another entity.
If more than one bank meets the owned-oroperated criterion of paragraph (1) of this def
inition, the ATM is considered proprietary to
the bank that operates it.
(bb) “Qualified returned check” means a re
turned check that is prepared for automated
return to the depositary bank by placing the
check in a carrier envelope or placing a strip
on the check and encoding the strip or envel
ope in magnetic ink. A qualified returned
check need not contain other elements of a
check drawn on the depositary bank, such as
the name of the depositary bank.
(cc) “Returning bank” means a bank (other
than the paying or depositary bank) handling a
returned check or notice in lieu of return. A
returning bank is also a collecting bank for
purposes of UCC 4-202(b).
7
§ 229.2
(dd) “Routing number” means—
(1) The number printed on the face of a
check in fractional form or in nine-digit
form; or
(2) The number in a bank’s indorsement in
fractional or nine-digit form.
(ee) “Similarly situated bank” means a bank
of similar size, located in the same commu
nity, and with similar check-handling activities
as the paying bank or returning bank.
(ff) “State” means a state, the District of Co
lumbia, Puerto Rico, or the U.S. Virgin
Islands.
(gg) “Teller’s check” means a check pro
vided to a customer of a bank or acquired
from a bank for remittance purposes, that is
drawn by the bank, and drawn on another
bank or payable through or at a bank.
(hh) “Traveler’s check” means an instrument
for the payment of money that—
(1) Is drawn on or payable through or at a
bank;
(2) Is designated on its face by the term
“traveler’s check” or by any substantially
similar term or is commonly known and
marketed as a traveler’s check by a corpo
ration or bank that is an issuer of traveler’s
checks;
(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.
(ii) “Uniform Commercial Code,” “Code,”
or “UCC” means the Uniform Commercial
Code as adopted in a state.
(jj) “United States” means the states, includ
ing the District of Columbia, the U.S. Virgin
Islands, and Puerto Rico.
(kk) “ Unit of general local government”
means any city, county, parish, town, town
ship, village, or other general-purpose political
subdivision of a state. The term does not in
clude special-purpose units of government,
such as school districts or water districts.
(//) “Wire transfer” means an unconditional
order to a bank to pay a fixed or determinable
8
Regulation CC
amount of money to a beneficiary upon re
ceipt or on a day stated in the order, that is
transmitted by electronic or other means
through the Federal Reserve Communications
System, the New York Clearing House In
terbank Payments System, other similar net
work, between banks, or on the books of a
bank. “Wire transfer” does not include an
electronic fund transfer as defined in section
902(f) of the Electronic Fund Transfer Act (15
USC 1693a(6)).
(mm) Fedwire has the same meaning as that
set forth in section 210.26(e) of this chapter.
(nn) Good faith means honesty in fact and the
observance of reasonable commercial stan
dards of fair dealing.
(oo) Interest compensation means an amount
of money calculated at the average of the fed
eral-funds rates published by the Federal Re
serve Bank of New York for each of the days
for which interest compensation is payable,
divided by 360. The federal-funds rate for any
day on which a published rate is not available
is the same as the published rate for the last
preceding day for which there is a published
rate.
(pp) Unless the context requires otherwise,
the terms not defined in this section have the
meanings set forth in the UCC.
Regulation CC Commentary
COMMENTARY
SECTION 229.2— Definitions
Section 229.2 defines the terms used in the
regulation. For the most part, terms are de
fined as they are in section 602 of the Expe
dited Funds Availability Act (12 USC 4001).
The Board has made a number of changes for
the sake of clarity, to conform the terminol
ogy to that which is familiar to the banking
industry, to define terms that are not defined
in the act, and to carry out the purposes of the
act. The Board has also incorporated by refer
ence the definitions of the Uniform Commer
cial Code where appropriate. Some of the
Regulation CC definitions are self-explanatory
and therefore are not discussed in this
commentary.
2(a) Account
The act defines account to mean “a demand
deposit account or similar transaction account
at a depository institution.” The regulation de
fines “account” in terms of the definition of
“transaction account” in the Board’s Regula
tion D (12 CFR 204). The definition of “ac
count” in Regulation CC, however, excludes
certain deposits, such as nondocumentary obli
gations (see 12 CFR 204.2(a)(l)(vii)), that are
covered under the definition of “transaction
account” in Regulation D. The definition ap
plies to accounts with general third-party pay
ment powers but does not cover time deposits
or savings deposits, including money market
deposit accounts, even though they may have
limited third-party payment powers. The
Board believes that it is appropriate to exclude
these accounts because of the reference to de
mand deposits in the act, which suggests that
the act is intended to apply only to accounts
that permit unlimited third-party transfers.
The term “account” also differs from the
definition of “transaction account” in Regula
tion D because the term “account” refers to
accounts held at banks. Under subparts A and
C, the term “bank” includes not only any
“depository institution,” as defined in the act,
but also any person engaged in the business
of banking, such as a Federal Reserve Bank, a
Federal Home Loan Bank, or a private banker
that is not subject to Regulation D. Thus ac
§ 229.2
counts at these institutions benefit from the
expeditious-return requirements of subpart C.
Interbank deposits, including accounts of
offices of domestic banks or foreign banks lo
cated outside the United States, and direct and
indirect accounts of the United States Treasury
(including Treasury General Accounts and
Treasury Tax and Loan Deposit Accounts) are
exempt from Regulation CC.
2(b) Automated Clearinghouse (ACH)
The Board has defined “automated clearing
house” as a facility that processes debit and
credit transfers under rules established by a
Federal Reserve Bank operating circular gov
erning automated clearinghouse items or the
rules of an ACH association. ACH credit
transfers are included in the definition of
“electronic payment.”
The reference to “credit transfers” and
“debit transfers” does not refer to the corre
sponding credit and debit entries that are part
of the same transaction, but to different kinds
of ACH payments. In an ACH credit transfer,
the originator orders that its account be deb
ited and another account credited. In an ACH
debit transfer, the originator, with prior autho
rization, orders another account to be debited
and the originator’s account to be credited.
A facility that handles only “wire trans
fers” (defined elsewhere) is not an ACH.
2(c) Automated Teller Machine
“Automated teller machine (ATM)” is not de
fined in the act. The regulation defines an
ATM as an electronic device at which a natu
ral person may make deposits to an account
by cash or check and perform other account
transactions. Point-of-sale terminals, machines
that only dispense cash, night depositories,
and lobby deposit boxes are not ATMs within
the meaning of the definition, either because
they do not accept deposits of cash or checks
(e.g., point-of-sale terminals and cash dispens
ers) or because they only accept deposits (e.g.,
night depositories and lobby boxes) and can
not perform other transactions. A lobby de
posit box or similar receptacle in which writ
ten payment orders or deposits may be placed
is not an ATM.
A facility may be an ATM within this defi9
§ 229.2
Regulation CC Commentary
Under this definition, when funds become
“available for withdrawal,” the funds may be
put to all uses for which the customer may
use actually and finally collected funds in the
customer’s account under the customer’s ac
count agreement with the bank. Examples of
such uses include payment of checks drawn
on the account, certification of checks, elec
tronic payments, and cash withdrawals. Funds
are available for these uses notwithstanding
provisions of other law that may restrict the
use of uncollected funds (e.g., 18 USC 1004;
12 USC 331).
If a bank makes funds available to a cus
tomer for a specific purpose (such as paying
checks that would otherwise overdraw the
customer’s account and be returned for insuf
ficient funds) before the funds must be made
available under the bank’s policy or this regu
lation, it may nevertheless apply a hold con
sistent with this regulation to those funds for
other purposes (such as cash withdrawals).
For purposes of this regulation, funds are con
sidered available for withdrawal even though
they are being held by the bank to satisfy an
obligation of the customer other than the cus
tomer’s potential liability for the return of the
check. For example, funds are available for
withdrawal even though they are being held
by a bank to satisfy a garnishment, tax levy,
or court order restricting disbursements from
the account, or to satisfy the customer’s liabil
ity arising from the certification of a check,
sale of a cashier’s or teller’s check, guaranty
or acceptance of a check, or similar
transaction.
also used in article 4 of the Uniform Com
mercial Code.
“Bank” is defined to include depository in
stitutions, such as commercial banks, savings
banks, savings and loan associations, and
credit unions as defined in the act, and U.S.
branches and agencies of foreign banks. For
purposes of subpart B, the term does not in
clude corporations organized under section
25(a) of the Federal Reserve Act, 12 USC
611-631 (Edge corporations) or corporations
having an agreement or undertaking with the
Board under section 25 of the Federal Reserve
Act, 12 USC 601-604a (agreement corpora
tions). For purposes of subpart C, and in con
nection therewith, subpart A, any Federal Re
serve Bank, Federal Home Loan Bank, or any
other person engaged in the business of bank
ing is regarded as a bank. The phrase “any
other person engaged in the business of bank
ing” is derived from UCC section 1-201(4),
and is intended to cover entities that handle
checks for collection and payment, such as
Edge and agreement corporations, commercial
lending companies under 12 USC 3101, cer
tain industrial banks, and private bankers, so
that virtually all checks will be covered by the
same rules for forward collection and return,
even though they may not be covered by the
requirements of subpart B. For the purposes
of subpart C, and in connection therewith,
subpart A, the term may also include a state
or a unit of general local government to the
extent that it pays warrants or other drafts
drawn directly on the state or local govern
ment itself, and the warrants or other drafts
are sent to the state or local government for
payment or collection.
Unless otherwise specified, the term “bank”
includes all of a bank’s offices in the United
States. The regulation does not cover foreign
offices of U.S. banks.
2(e) Bank
2(f) and (g) Banking Day and Business
Day
The act uses the term “depository institution,”
which it defines by reference to section
19(b)(l)(A)(i) through (vi) of the Federal Re
serve Act (12 USC 461(b)(l)(A)(i) through
(vi)). This regulation uses the term “bank,” a
term that conforms to the usage the Board has
previously adopted in Regulation J. “Bank” is
The act defines “business day” as any day
excluding Saturdays, Sundays, and legal holi
days. “Legal holiday,” however, is not de
fined, and the variety of local holidays, to
gether with the practice of some banks to
close midweek, makes the act’s definition dif
ficult to apply. The Board believes that two
nition even if it is a branch under state or
federal law, although an ATM is not a branch
as that term is used in this regulation.
2(d) Available for Withdrawal
10
§ 229.2
Regulation CC Commentary
kinds of business days are relevant. First,
when determining the day when funds are de
posited or when a bank must perform certain
actions (such as returning a check), the focus
should be on a day that the bank is actually
open for business. Second, when counting
days for purposes of determining when funds
must be available under the regulation or
when notice of nonpayment must be received
by the depositary bank, there would be confu
sion and uncertainty in trying to follow the
schedule of a particular bank, and there is less
need to identify a day when a particular bank
is open. Most banks that act as intermediaries
(large correspondents and Federal Reserve
Banks) follow the same holiday schedule. Ac
cordingly, the regulation has two definitions:
“business day” generally follows the standard
Federal Reserve holiday schedule (which is
followed by most large banks), and “banking
day” is defined to mean that part of a busi
ness day on which a bank is open for substan
tially all of its banking activities.
The definition of “banking day” corre
sponds to the definition of banking day in
UCC 4-104(a)(3), except that a banking day is
defined in terms of a “business day.” Thus, if
a bank is open on Saturday, Saturday might
be a banking day for purposes of the UCC,
but it would not be a banking day for pur
poses of Regulation CC because Saturday is
never a “business day” under the regulation.
The definition of “banking day” is phrased
in terms of when “an office of a bank is
open” to indicate that a bank may observe a
banking day on a per-branch basis. A deposit
made at an ATM or off-premise facility (such
as a remote depository or a lock box) is con
sidered made at the branch holding the ac
count into which the deposit is made for the
purpose of determining the day of deposit. All
other deposits are considered made at the
branch at which the deposit is received. For
example, under section 229.19(a)(1), funds de
posited at an ATM are considered deposited at
the time they are received at the ATM. On a
calendar day that is a banking day for the
branch or other location of the depositary
bank at which the account is maintained, a
deposit received at an ATM before the ATM’s
cut-off hour is considered deposited on that
banking day, and a deposit received at an
ATM after the ATM’s cut-off hour is consid
ered deposited on the next banking day of the
branch or other location where the account is
maintained. On a calendar day that is not a
banking day for the account-holding location,
all ATM deposits are considered received on
that location’s next banking day. This rule for
determining the day of deposit would also ap
ply to a deposit to an off-premise facility,
such as a night depository or lock box, which
is considered deposited when removed from
the facility and available for processing under
section 229.19(a)(3). If an unstaffed facility,
such as a night depository or lock box, is on
branch premises, the day of deposit is deter
mined by the banking day at the branch at
which the deposit is received, whether or not
it is the branch at which the account is
maintained.
2(h) Cash
“Cash” means U.S. coins and currency. The
phrase in the act “including Federal Reserve
notes” has been deleted as unnecessary. (See
31 USC 5103.)
2(i) Cashier’s Check
The regulation adds to the second item in the
act’s definition of “ cashier’s check” the
phrase, “on behalf of the bank as drawer,” to
clarify that the term “cashier’s check” is in
tended to cover only checks that a bank draws
on itself. The definition of cashier’s check in
cludes checks provided to a customer of the
bank in connection with customer deposit-ac
count activity, such as account disbursements
and interest payments. The definition also in
cludes checks acquired from a bank by
noncustomers for remittance purposes, includ
ing loan-disbursement checks. Cashier’s
checks provided to customers or others are
often labeled as “cashier’s check,” “officer’s
check,” or “official check.” The definition ex
cludes checks that a bank draws on itself for
other purposes, such as to pay employees and
vendors, and checks issued by the bank in
connection with a payment service, such as a
payroll or a bill-paying service. Cashier’s
checks are generally sold by banks to substi
tute the bank’s credit for the customer’s credit
and thereby enhance the collectibility of the
11
§ 229.2
checks. A check issued in connection with a
payment service is generally provided as a
convenience to the customer rather than as a
guarantee of the check’s collectibility. In addi
tion, such checks are often more difficult to
distinguish from other types of checks than
are cashier’s checks as defined by this
regulation.
2(j) Certified Check
The act defines a “certified check” as one to
which a bank has certified that the drawer’s
signature is genuine and that the bank has set
aside funds to pay the check. Under the Uni
form Commercial Code, certification of a
check means the bank’s signed agreement that
it will honor the check as presented (UCC
3-409). The regulation defines “ certified
check” to include both the act’s and UCC’s
definitions.
2(k) Check
“Check” is defined in section 602(7) of the
act as a negotiable demand draft drawn on or
payable through an office of a depository in
stitution located in the United States, exclud
ing noncash items. The regulation includes six
categories of instruments within the definition
of check.
The first category is negotiable demand
drafts drawn on or payable through or at an
office of a bank. As the definition of “bank”
includes only offices located in the United
States, this category is limited to checks
drawn on or payable through or at a banking
office located in the United States.
The act treats drafts payable through a bank
as checks, even though under the UCC the
payable-through bank is a collecting bank to
make presentment and is generally not author
ized to make payment (UCC 4-106(a)). The
act does not expressly address items that are
payable at a bank. This regulation treats both
payable-through and payable-at demand drafts
as checks. The Board believes that treating
demand drafts payable at a bank as checks
will not have a substantial effect on the opera
tions of payable at banks—by far the largest
proportion of payable-at items are not negotia
ble demand drafts, but time items, such as
commercial paper, bonds, notes, banker’s ac12
Regulation CC Commentary
ceptances, and securities. These time items are
not covered by the requirements of the act or
this regulation. (The treatment of payablethrough drafts is discussed in greater detail in
connection with the definitions of “ local
check” and “paying bank.”)
The second category is checks drawn on
Federal Reserve Banks and Federal Home
Loan Banks. Principal and interest payments
on federal debt instruments are often paid
with checks drawn on a Federal Reserve Bank
as fiscal agent of the United States, and these
fiscal-agency checks are indistinguishable
from other checks drawn on Federal Reserve
Banks. (See 31 CFR 355.) Federal Reserve
Bank checks are also used by some banks as
substitutes for cashier’s or teller’s checks.
Similarly, savings and loan associations often
use checks drawn on Federal Home Loan
Banks as teller’s checks. The definition of
“check” includes checks drawn on Federal
Home Loan Banks and Federal Reserve Banks
because in many cases they are the functional
equivalent of Treasury checks or teller’s
checks.
The third and fourth categories of instru
ment included in the definition of “check” re
fer to government checks. The act refers to
checks drawn on the U.S. Treasury, even
though these instruments are not drawn on or
payable through an office of a depository in
stitution, and checks drawn by state and local
governments. The act also gives the Board au
thority to define functionally equivalent instru
ments as “depository checks.” 1 Thus, the act
is intended to apply to instruments other than
those that meet the strict definition of
“check” in section 602(7) of the act. Checks
and warrants drawn by states and local gov
ernments are often used for the purposes of
making unemployment-compensation pay
ments and other payments that are important
to the recipients. Consequently, the Board has
expressly defined “check” to include drafts
drawn on the U.S. Treasury and drafts or war
rants drawn by a state or a unit of general
local government on itself.
The fifth category of instrument included in
1 Section 602(11) o f the act (12 USC 4001(11)) defines
“ depository ch eck ” as “ any cashier’s check, certified
check, teller’s check, and any other functionally equivalent
instrument as determined by the Board.”
§ 229.2
Regulation CC Commentary
the definition of “check” is U.S. Postal Ser
vice money orders. These instruments are de
fined as checks because they are often used as
a substitute for checks by consumers, even
though money orders are not negotiable under
Postal Service regulations. The Board has not
provided specific rules for other types of
money orders; these instruments are generally
drawn on or payable through or payable at
banks and are treated as checks on that basis.
The sixth and final category of instrument
included in the definition of check is traveler’s
checks drawn on or payable through or at a
bank. “Traveler’s check” is defined in para
graph (hh) of this section. Finally, for the pur
poses of subpart C, and in connection there
with, subpart A, the definition of “check”
includes nonnegotiable demand drafts because
these instruments are often handled as cash
items in the forward-collection process.
The definition of “check” does not include
an instrument payable in foreign currency
(i.e., other than in United States money as de
fined in 31 USC 5101), a credit card draft
(i.e., a sales draft used by a merchant or a
draft generated by a bank as a result of a cash
advance), or an ACH debit transfer. The defi
nition of check includes a check that a bank
may supply to a customer as a means of ac
cessing a credit line without the use of a
credit card.
2(1) Check Clearinghouse Association
The act defines a clearinghouse association as
any arrangement by which participants ex
change deposited checks on a local basis, in
cluding an entire metropolitan area. The defi
nition includes informal arrangements where
the participants have not formally constituted
themselves as an association. The definition of
check clearinghouse association excludes di
rect exchanges involving only two banks.
The act defines “clearinghouses” as local
arrangements, which may cover an entire met
ropolitan area. In some cases, most notably
California, a single clearinghouse association
sponsors separate exchanges in different met
ropolitan areas. For purposes of this regula
tion, each of those exchanges would be re
garded as a separate clearinghouse.
Using the premises of a Federal Reserve
Bank to exchange checks does not constitute
the handling of checks for collection by the
Reserve Bank. Several clearinghouses meet at
Reserve Banks to exchange checks among
their members.
2(m) Check-Processing Region
The act defines this term as “the geographic
area served by a Federal Reserve bank check
processing center or such larger area as the
Board may prescribe by regulations.” The
Board has defined check-processing region as
the territory served by one of the 48 Federal
Reserve head offices, branches, or regional
check-processing centers. Appendix A in
cludes a list of routing numbers arranged by
Federal Reserve Bank office. The definition of
check-processing region is key to determining
whether a check is considered local or
nonlocal.
2(n) Consumer Account
“Consumer account” is defined as an account
used primarily for personal, family, or house
hold purposes. An account that does not meet
the definition of “consumer account” is a
nonconsumer account. Both consumer and
nonconsumer accounts are subject to the re
quirements of this regulation, including the re
quirement that funds be made available ac
cording to specific schedules and that the bank
make specified disclosures of its availability
policies. Section 229.18(b) (Notices at Branch
Locations) and section 229.18(e) (Notice of
Changes in Policy) apply only to consumer
accounts. Section 229.13(g)(2) (One-Time Ex
ception Notice) and section 229.19(d) (Use of
Calculated Availability) apply only to noncon
sumer accounts.
2(o) Depositary Bank
The regulation uses the term “depositary
bank” rather than the term “receiving deposi
tory institution.” “Receiving depository insti
tution” is a term unique to the act, while “de
positary bank” is the term used in article 4 of
the UCC and Regulation J.
A depositary bank includes the bank in
which the check is first deposited. If a foreign
office of a U.S. or foreign bank sends checks
to its U.S. correspondent bank for forward
collection, the U.S. correspondent is the de13
§ 229.2
positary bank since foreign offices of banks
are not included in the definition of “bank.”
If a customer deposits a check in its ac
count at a bank, the customer’s bank is the
depositary bank with respect to the check. For
example, if a person deposits a check into an
account at a nonproprietary ATM, the bank
holding the account into which the check is
deposited is the depositary bank even though
another bank may service the nonproprietary
ATM and send the check for collection.
(Under section 229.35 the depositary bank
may agree with the bank servicing the nonpro
prietary ATM to have the servicing bank place
its own indorsement on the check as the de
positary bank. For the purposes of subpart C,
the bank applying its indorsement as the de
positary-bank indorsement on the check is the
depositary bank.)
For purposes of subpart B, a bank may act
as both the depositary bank and the paying
bank with respect to a check, if the check is
payable by the bank in which it was depos
ited, or if the check is payable by a nonbank
payor and payable through or at the bank in
which it was deposited. A bank is also consid
ered a depositary bank with respect to checks
it receives as payee. For example, a bank is a
depositary bank with respect to checks it re
ceives for loan repayment, even though these
checks are not deposited in an account at the
bank. Because these checks would not be
“deposited to accounts,” they would not be
subject to the availability or disclosure re
quirements of subpart B.
2(p) Electronic Payment
“Electronic payment” is defined to mean a
wire transfer as defined in section 229.2(11)
or an ACH credit transfer. The act requires
that funds deposited by wire transfer be made
available for withdrawal on the business day
following deposit but expressly leaves the def
inition of the term “wire transfer” to the
Board. Because ACH credit transfers fre
quently involve important consumer payments,
such as wages, the regulation requires that
funds deposited by ACH credit transfers be
available for withdrawal on the business day
following deposit.
ACH debit transfers, even though they may
be transmitted electronically, are not defined
14
Regulation CC Commentary
as electronic payments because the receiver of
an ACH debit transfer has the right to return
the transfer, which would reverse the credit
given to the originator. Thus, ACH debit
transfers are more like checks than wire trans
fers. Further, bank customers that receive
funds by originating ACH debit transfers are
primarily large corporations, which would
generally be able to negotiate with their banks
for prompt availability.
A point-of-sale transaction would not be
considered an electronic payment unless the
transaction was effected by means of an ACH
credit transfer or wire transfer.
2(q) Forward Collection
“Forward collection” is defined to mean the
process by which a bank sends a check to the
paying bank for payment as distinguished
from the process by which the check is re
turned after nonpayment. Noncash collections
are not included in the term “ forward
collection.”
2(r) Local Check
“Local check” is defined as a check payable
by or at a local paying bank, or, in the case
of nonbank payors, payable through a local
paying bank. A check payable by a local bank
but payable through a nonlocal bank is a local
check. Conversely, a check payable through a
local bank but payable by a nonlocal bank is
a nonlocal check. Where two banks are named
on a check and neither is designated as a pay
able-through bank, the check is considered
payable by either bank and may be considered
local or nonlocal depending on which bank it
is sent to for payment. Generally, the deposi
tary bank may rely on the routing number to
determine whether a check is local or nonlo
cal. Appendix A includes a list of routing
numbers arranged by Federal Reserve Bank
Office to assist persons in determining
whether or not such a check is local. If, how
ever, a check is payable by one bank but pay
able through another bank, the routing number
appearing on the check will be that of the
payable-through bank, not the paying bank.
Many credit-union share drafts and certain
other checks payable by banks are payable
through other banks. In such cases, the routing
§ 229.2
Regulation CC Commentary
number cannot be relied on to determine
whether the check is local or nonlocal. Until
the labelling requirements in section 229.36(e)
for payable-through checks become effective
on February 1, 1991, there may be cases
where the payable-through bank will be desig
nated only by routing number and will not be
named on the check. In such cases also, the
routing number may not be relied on to deter
mine whether the check is local or nonlocal.
For payable-through checks that meet the la
belling requirements of section 229.36(e), the
depositary bank may rely on the four-digit
routing symbol of the paying bank that is
printed on the face of the check as required
by that section, e.g., in the title plate, but not
on the first four digits of the payable-through
bank’s routing number printed in magnetic ink
in the MICR line or in fractional form, to de
termine whether the check is local or
nonlocal.
2(s) Local Paying Bank
“Local paying bank” is defined as a paying
bank located in the same check-processing re
gion as the branch or proprietary ATM of the
depositary bank.
Examples
1. If a check that is payable by a bank that is
located in the same check-processing region
as the depositary bank is payable through a
bank located in another check-processing re
gion, the check is considered local or nonlocal
depending on the location of the bank by
which it is payable even if the check is sent
to the nonlocal bank for collection.
2. The location of the depositary bank is de
termined by the physical location of the
branch or proprietary ATM at which a check
is deposited. If the branch of the depositary
bank located in one check-processing region
sends a check to the depositary bank’s central
facility in another check-processing region,
and the central facility is in the same check
processing region as the paying bank, the
check is still considered nonlocal. (See the
commentary on definition of “paying bank.”)
For deposits at nonproprietary ATMs, a
paying bank is a local paying bank only if the
paying bank is located in the same check
processing region as the location of both the
branch of the depositary bank at which the
account is held and the nonproprietary ATM
at which the check is deposited.
2(t) Merger Transaction
“Merger transaction” is a term used in sub
parts B and C in connection with transition
rules for merged banks. It encompasses merg
ers, consolidations, and purchase/assumption
transactions of the type that must usually be
approved under the Bank Merger Act (12
USC 1828) or similar statutes; it does not en
compass acquisitions of a bank under the
Bank Holding Company Act (12 USC 1842)
or section 408 of the National Housing Act
(12 USC 1730a) where an acquired bank
maintains its separate corporate existence.
Regulation CC adopts a one-year transition
period for banks that are party to a merger
transaction during which the merged banks
will continue to be treated as separate entities.
(See sections 229.19(g) and 229.40.)
2(u) Noncash Item
The act defines the term “check” to exclude
noncash items, and defines “noncash items”
to include checks to which another document
is attached, checks accompanied by special in
structions, or any similar item classified as a
noncash item in the Board’s regulation. To
qualify as a noncash item, an item must be
handled as such and may not be handled as a
cash item by the depositary bank.
The regulation’s definition of “ noncash
item” also includes checks that consist of
more than a single thickness of paper (except
checks that qualify for handling by automated
check-processing equipment, e.g., those placed
in carrier envelopes) and checks that have not
been preprinted or post-encoded in magnetic
ink with the paying bank’s routing number as
well as checks with documents attached or ac
companied by special instructions. (In the
context of this definition, “paying bank” re
fers to the paying bank as defined for pur
poses of subpart C.)
A check that has been preprinted or postencoded with a routing number that has been
retired (e.g., because of a merger) for at least
three years is a noncash item unless the cur15
§ 229.2
rent number is added for processing purposes
by placing the check in an encoded carrier
document or adding a strip to the check.
Checks that are accompanied by special in
structions are also noncash items. For exam
ple, a person concerned about whether a
check will be paid may request the depositary
bank to send a check for collection as a non
cash item with an instruction to the paying
bank to notify the depositary bank promptly
when the check is paid or dishonored.
For purposes of forward collection, a copy
of a check is neither a check nor a noncash
item, but may be treated as either. For pur
poses of return, a copy is generally a notice in
lieu of return. (See sections 229.30(f) and
229.31(f).)
2(y) Participant
“Participant” means a bank that is located in
the geographic area served by a clearinghouse
and that both collects checks drawn on other
clearinghouse participants and receives for
payment checks from other clearinghouse par
ticipants through the clearinghouse either di
rectly or through another participant. The
phrase “through a participant” covers associ
ate members of the clearinghouse, but a bank
is not a participant merely because it sends a
check to a correspondent that in turn presents
the check through a clearinghouse exchange.
2(z) Paying bank
The regulation uses this term in lieu of the
act’s “originating depository institution.” For
purposes of subpart B, the term “ paying
bank” includes the payor bank, the payable-at
bank to which a check is sent, or, if the check
is payable by a nonbank payor, the bank
through which the check is payable and to
which it is sent for payment or collection. For
purposes of subpart C, the term includes the
payable-through bank and the bank whose
routing number appears on the check, regard
less of whether the check is payable by a dif
ferent bank, provided that the check is sent
for payment or collection to the payable
through bank or the bank whose routing num
ber appears on the check.
Under sections 229.30 and 229.36(a), a
bank designated as a payable-through bank or
16
Regulation CC Commentary
payable-at bank and to which the check is
sent for payment or collection is responsible
for the expedited return of checks and noticeof-nonpayment requirements of subpart C. The
payable-through or payable-at bank may con
tract with the payor with respect to its liability
in discharging these responsibilities. The
Board believes that the act makes a clear con
nection between availability and the time it
takes for checks to be cleared and returned.
Allowing the payable-through bank additional
time to forward checks to the payor and await
return or pay instructions from the payor
would delay the return of these checks, in
creasing the risks to depositary banks. Subpart
C places on payable-through and payable-at
banks the requirements of expeditious return
based on the time the payable-through or pay
able-at bank received the check for forward
collection.
If a check is sent for forward collection
based on the routing number, the bank associ
ated with the routing number is a paying bank
for the purposes of subpart C requirements,
including notice of nonpayment, even if the
check is not drawn by a customer of that bank
or the check is fraudulent.
The phrase “and to which [the check] is
sent for payment or collection” includes send
ing not only the physical check, but informa
tion regarding the check under a truncation
arrangement.
Federal Reserve Banks and Federal Home
Loan Banks are also paying banks under all
subparts of the regulation with respect to
checks payable by them, even though such
banks are not defined as banks for purposes of
subpart B.
2(aa) Proprietary ATM
Under the temporary schedule, all deposits at
nonproprietary ATMs are treated as deposits
of nonlocal checks and deposits at proprietary
ATMs are generally treated as deposits at
banking offices. The conference report on the
act indicates that the special availability rules
for deposits received through nonproprietary
ATMs are provided because “nonproprietary
ATMs today do not distinguish among check
deposits or between check and cash deposits”
(H.R. Rep. No. 261, 100th Cong., 1st Sess.
Regulation CC Commentary
179 (1987)). Thus, during the temporary
schedule, a deposit of any combination of
cash and checks at a nonproprietary ATM may
be treated as if it were a deposit of nonlocal
checks, because the depositary bank does not
know the makeup of the deposit and conse
quently is unable to place different holds on
cash, local check, and nonlocal check deposits
made at the ATM.
A colloquy between Senators Proxmire and
Dodd during the floor debate on the Competi
tive Equality Banking Act (133 Cong. Rec.
SI 1289 (Aug. 4, 1987)) indicates that whether
a bank operates the ATM is the primary crite
rion in determining whether the ATM is pro
prietary to that bank. Since a bank should be
capable of ascertaining the composition of de
posits made to an ATM operated by that bank,
an exception to the availability schedules is
not warranted for these deposits. If more than
one bank meets the owns-or-operates criterion,
the ATM is considered proprietary to the bank
that operates it. For the purpose of this defini
tion, the bank that operates an ATM is the
bank that puts checks deposited into the ATM
into the forward-collection stream. An ATM
owned by one or more banks, but operated by
a nonbank servicer, is considered proprietary
to the bank or banks that own it.
The act also includes location as a factor in
determining whether an ATM that is either
owned or operated by a bank is proprietary to
that bank. The definition of proprietary ATM
includes an ATM located on the premises of
the bank, either inside the branch or on its
outside wall, regardless of whether the ATM
is owned or operated by that bank. Since the
act also defines a proprietary ATM as one that
is “in close proximity” to the bank, the regu
lation defines an ATM located within 50 feet
of a bank to be proprietary to that bank unless
it is identified as being owned or operated by
another entity. The Board believes that the
statutory proximity test was designed to apply
to situations where it would appear to the de
positor that the ATM is run by his or her
bank, because of the proximity of the ATM to
the bank. The Board believes that an ATM
located within 50 feet of a banking office
would be presumed proprietary to that bank
unless it is clearly identified as being owned
or operated by another entity.
§ 229.2
2(bb) Qualified Returned Check
Subpart C requires the paying bank and re
turning bank(s) to return checks in an expedi
tious manner. The banks may meet this re
sponsibility by returning a check to the
depositary bank by the same general means
used for forward collection of a check from
the depositary bank to the paying bank. One
way to speed the return process is to prepare
the returned check for automated processing.
Returned checks can be automated by either
the paying bank or a returning bank by plac
ing the return in a carrier envelope or by plac
ing a strip on the bottom of the return, and
encoding the envelope or strip with the rout
ing number of the depositary bank, the
amount of the check, and a special return
identifier. Returns are identified by placing a
“2” in position 44 of the MICR line. (See
American National Standards Committee on
Financial Services, Specification for the Place
ment and Location o f MICR Printing, X9.13
(Sept. 8, 1983), hereinafter referred to as
“ANSI X9.13-1983.”)
Generally, under the standard of care im
posed by section 229.38, a paying or returning
bank would be liable for any damages in
curred due to misencoding of the routing
number, the amount of the check, or return
identifier on a qualified returned check unless
the error was due to problems with the depos
itary bank’s indorsement. (See also discussion
of section 229.38(c).) A qualified returned
check that contains an encoding error would
still be a qualified returned check for purposes
of the regulation.
A qualified returned check need not contain
the elements of a check drawn on the deposi
tary bank, such as the name of the depositary
bank. Because indorsements and other infor
mation on carrier envelopes or strips will not
appear on a returned check itself, banks will
wish to retain carrier envelopes and/or micro
film or other records of carrier envelopes or
strips with their check records.
2(cc) Returning Bank
“Returning bank” is defined to mean any
bank (excluding the paying bank and the de
positary bank) handling a returned check. A
returning bank may or may not be a bank that
17
§ 229.2
handled the returned check in the forwardcollection process. A returning bank includes
a bank that agrees to handle a returned check
for expeditious return to the depositary bank
under section 229.31(a). A returning bank is
also a collecting bank for the purpose of a
collecting bank’s duty to act seasonably under
UCC 4-202(b) and is analogous to a collect
ing bank for purposes of final settlement. (See
the commentary to section 229.35(b).)
2(dd) Routing Number
Each bank is assigned a routing number by
Rand McNally & Co. as agent for the Ameri
can Bankers Association. The routing number
takes two forms: a fractional form and a nine
digit form. A paying bank is identified by
both the fractional form routing number
(which normally appears in the upper righthand comer of the check) and the nine-digit
form. The nine-digit routing number of the
paying bank is generally printed in magnetic
ink near the bottom of the check (the “MICR
strip;” see ANSI X9.13-1983). Subpart C re
quires depositary banks and subsequent col
lecting banks to place their routing numbers
in nine-digit form in their indorsements.
2(gg) Teller’s Check
“Teller’s check” is defined in the act to mean
a check issued by a depository institution and
drawn on another depository institution. The
definition in the regulation includes not only
checks drawn by a bank on another bank, but
also checks payable through or at a bank. This
would include checks drawn on a nonbank, as
long as the check is payable through or at a
bank. The definition does not include checks
that are drawn by a nonbank on a nonbank
even if payable through or at a bank. The def
inition includes checks provided to a customer
of the bank in connection with customer de
posit-account activity, such as account dis
bursements and interest payments. The defini
tion also includes checks acquired from a
bank by a noncustomer for remittance pur
poses, including loan-disbursement checks.
The definition excludes checks used by the
bank to pay employees or vendors and checks
issued by the bank in connection with a pay
ment service, such as a payroll or a bill-pay18
Regulation CC Commentary
ing service. Teller’s checks are generally sold
by banks to substitute the bank’s credit for the
customer’s credit and thereby enhance the col
lectibility of the checks. A check issued in
connection with a payment service is gener
ally provided as a convenience to the cus
tomer rather than as a guarantee of the
check’s collectibility. In addition, such checks
are often more difficult to distinguish from
other types of checks than are teller’s checks
as defined by this regulation. (See also the
commentary on the definition of “cashier’s
check.” )
2(hh) Traveler’s Check
The act and regulation require that traveler’s
checks be treated as cashier’s, teller’s, or cer
tified checks when a new depositor opens an
account. (See section 229.13(a); 12 USC
4003(a)(1)(C).) The act does not define trav
eler’s check.
One element of the definition states that a
traveler’s check is “drawn on or payable
through or at a bank.” Traveler’s checks that
are not issued by banks may not have any
words on them identifying a bank as drawee
or paying agent, but may bear unique routing
numbers with an 8000 prefix that identifies a
bank as paying agent.
Because a traveler’s check is payable by, at,
or through a bank, it is also a check for pur
poses of this regulation. When not subject to
the next-day availability requirement for new
accounts, a traveler’s check should be treated
as a local or nonlocal check depending on the
location of the paying bank. The depositary
bank may rely on the designation of the pay
ing bank by the routing number to determine
whether local or nonlocal treatment is
required.
2(ii) Uniform Commercial Code
“Uniform Commercial Code” is defined as
the version of the code adopted by the indi
vidual states. For purposes of uniform citation,
all citations to the UCC in this part refer to
the official text as approved by the American
Law Institute and the National Conference of
Commissioners on Uniform State Laws.
Regulation CC Commentary
2(kk) Unit of Local Government
“Unit of general local government” is defined
to include a city, county, parish, town, town
ship, village, or other general-purpose political
subdivision of a state. The term does not in
clude special-purpose units, such as school
districts, water districts, or Indian nations.
2(//) Wire Transfer
The act delegates to the Board the authority to
define the term “wire transfer.” The regula
tion defines “wire transfer” as an uncondi
tional order to a bank to pay a fixed or deter
minable amount of money to a beneficiary
upon receipt or on a day stated in the order
that is transmitted by electronic or other
means over certain networks or on the books
of banks and that is used primarily to transfer
funds between commercial accounts. Uncondi
tional means that no condition, such as pre
sentation of documents, must be met before
the bank receiving the order is to make pay
ment. A wire transfer may be transmitted by
electronic or other means. “Electronic means”
includes computer-to-computer links, on-line
terminals, telegrams (including TWX, TELEX,
or similar methods of communication), tele
phone calls, or other similar methods. Fedwire
(the Federal Reserve’s wire transfer network),
CHIPS (Clearing House Interbank Payments
System, operated by the New York Clearing
House), and book transfers among banks or
within one bank are covered by this definition.
Credits for credit and debit card transactions
are not wire transfers. The term “wire trans
fer” excludes “electronic fund transfers” as
that term is defined by the Electronic Fund
Transfer Act.
2(mm) [Reserved]
2(nn) Good Faith
This definition of good faith derives from
UCC section 3-103(a)(4).
2(oo) Interest Compensation
This calculation of interest compensation de
rives from UCC section 4A-506(b). (See sec
tions 229.34(d) and 229.36(f).)
§ 229.2
§ 229.3
SECTION 229.3—Administrative
Enforcement
(a) Enforcement agencies. Compliance with
this part is enforced under—
(1) Section 8 of the Federal Deposit Insur
ance Act (12 USC 1818) in the case of—
(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 Re
serve 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 De
posit 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;
(2) Section 8 of the Federal Deposit Insur
ance Act, by the director of the Office of
Thrift Supervision in the case of savings as
sociations the deposits of which are insured
by the Federal Deposit Insurance Corpora
tion; and
(3) The Federal Credit Union Act (12 USC
1751 et seq.) by the National Credit Union
Administration Board with respect to any
federal credit union or credit union insured
by the National Credit Union Share Insur
ance Fund.
The terms used in paragraph (a)(1) of this
section that are not defined in this part or oth
erwise defined in section 3(s) of the Federal
Deposit Insurance Act (12 USC 1813(s)) shall
have the meaning given to them in section
1(b) of the International Banking Act of 1978
(12 USC 3101).
(b) Additional powers.
(1) For the purposes of the exercise by any
agency referred to in paragraph (a) of this
section of its powers under any statute re
ferred to in that paragraph, a violation of
any requirement imposed under the act is
deemed to be a violation of a requirement
imposed under that statute.
(2) In addition to its powers under any pro
20
Regulation CC
vision of law specifically referred to in
paragraph (a) of this section, each of the
agencies referred to in that paragraph may
exercise, for purposes of enforcing compli
ance with any requirement imposed under
this part, any other authority conferred on it
by law.
(c) Enforcement by the Board.
(1) Except to the extent that enforcement of
the requirements imposed under this part is
specifically committed to some other gov
ernment agency, the Board shall enforce
such requirements.
(2) If the Board determines that—
(i) Any bank that is not a bank described
in paragraph (a) of this section; or
(ii) Any other person subject to the au
thority of the Board under the act and
this part,
has failed to comply with any requirement
imposed by this part, the Board may issue
an order prohibiting any bank, any Federal
Reserve Bank, or any other person subject
to the authority of the Board from engaging
in any activity or transaction that directly or
indirectly involves such noncomplying bank
or person (including any activity or transac
tion involving the receipt, payment, collec
tion, and clearing of checks, and any related
function of the payment system with respect
to checks.)
Regulation CC
SUBPART B—AVAILABILITY OF
FUNDS AND DISCLOSURE OF
FUNDS-AVAILABILITY POLICIES
SECTION 229.10—Next-Day
Availability
(a) Cash deposits.
(1) A bank shall make funds deposited in
an account by cash available for withdrawal
not later than the business day after the
banking day on which the cash is deposited,
if the deposit is made in person to an em
ployee of the depositary bank.
(2) A bank shall make funds deposited in
an account by cash available for withdrawal
not later than the second business day after
the banking day on which the cash is de
posited, if the deposit is not made in person
to an employee of the depositary bank.
(b) Electronic payments.
(1) In general. A bank shall make funds
received for deposit in an account by an
electronic payment available for withdrawal
not later than the business day after the
banking day on which the bank received the
electronic payment.
(2) When an electronic payment is received.
An electronic payment is received when the
bank receiving the payment has received
both—
(i) Payment in actually and finally col
lected funds; and
(ii) Information on the account and
amount to be credited.
A bank receives an electronic payment only
to the extent that the bank has received
payment in actually and finally collected
funds.
(c) Certain check deposits.
(1) General rule. A depositary bank shall
make funds deposited in an account by
check available for withdrawal not later
than the business day after the banking day
on which the funds are deposited, in the
case of—
(i) A check drawn on the Treasury of the
United States and deposited in an account
held by a payee of the check;
(ii) A U.S. Postal Service money order
deposited—
§ 229.10
(A) In an account held by a payee of
the money order; and
(B) In person to an employee of the
depositary bank.
(iii) A check drawn on a Federal Reserve
Bank or Federal Home Loan Bank and
deposited—
(A) In an account held by a payee of
the check; and
(B) In person to an employee of the
depositary bank;
(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 located in the
state that issued the check, or the same
state as the unit of general local gov
ernment that issued the check;
(C) In person to an employee of the
depositary bank; and
(D) With a special deposit slip or de
posit envelope, if such slip or envelope
is required by the depositary bank
under paragraph (c)(3) of this section.
(v) A cashier’s, certified, or teller’s
check deposited—
(A) In an account held by a payee of
the check;
(B) In person to an employee of the
depositary bank; and
(C) With a special deposit slip or de
posit envelope, if such slip or envelope
is required by the depositary bank
under paragraph (c)(3) of this section.
(vi) A check deposited in a branch of the
depositary bank and drawn on the same
or another branch of the same bank if
both branches are located in the same
state or the same check-processing re
gion; and,
(vii) The lesser of—
(A) $100, or
(B) The aggregate amount deposited
on any one banking day to all accounts
of the customer by check or checks not
subject to next-day availability under
paragraphs (c)(l)(i) through (vi) of this
section.
(2) Checks not deposited in person. A de
positary bank shall make funds deposited in
21
§ 229.10
an account by check or checks available for
withdrawal not later than the second busi
ness day after the banking day on which
funds are deposited, in the case of a check
deposit described in and that meets the re
quirements of paragraphs (c)(1)(h), (iii),
(iv), and (v), of this section, except that it
is not deposited in person to an employee
of the depositary bank.
(3) Special deposit slip.
(i) As a condition to making the funds
available for withdrawal in accordance
with this section, a depositary bank may
require that a state or local government
check or a cashier’s, certified, or teller’s
check be deposited with a special deposit
slip or deposit envelope that identifies the
type of check.
(ii) If a depositary bank requires the use
of a special deposit slip or deposit envel
ope, the bank must either provide the
special deposit slip or deposit envelope to
its customers or inform its customers
how the slip or envelope may be pre
pared or obtained and make the slip or
envelope reasonably available.
22
Regulation CC
Regulation CC Commentary
COMMENTARY
§ 229.10
10(b) Electronic Payments
The act provides next-day availability for
funds received for deposit by wire transfer.
The regulation uses the term “electronic pay
ment,” rather than “wire transfer,” to include
both wire transfers and ACH credit transfers
10(a) Cash Deposits
under the next-day availability requirement.
This paragraph implements the act’s require (See the discussion of definitions of “auto
ment for next-day availability for cash depos mated clearinghouse,” “electronic payment,”
its to accounts at a depositary bank “staffed and “wire transfer” in section 229.2.)
The act requires that funds received by wire
by individuals employed by such institution.”2
This paragraph, as well as other provisions of transfer be available for withdrawal not later
this subpart governing the availability of than the business day following the day a
funds, provides that funds must be made wire transfer is received. This paragraph clari
available for withdrawal not later than a speci fies what constitutes receipt of an electronic
fied number of business days following the payment. For the purposes of this paragraph, a
banking day on which the funds are deposited. bank receives an electronic payment when the
Thus, a deposit is only considered made on a bank receives both payment in finally col
banking day, i.e., a day that the bank is open lected funds and the payment instructions in
to the public for carrying on substantially all dicating the customer accounts to be credited
of its banking functions. For example, if a de and the amount to be credited to each ac
posit is made at an ATM on a Saturday, Sun count. For example, in the case of Fedwire,
day, or other day on which the bank is closed the bank receives finally collected funds at the
to the public, the deposit is considered re time the payment is made. (See 12 CFR
210.36.) Finally collected funds generally are
ceived on that bank’s next banking day.
Nevertheless, business days are used to de received for an ACH credit transfer when they
termine the number of days following the are posted to the receiving bank’s account on
banking day of deposit that funds must be the settlement day. In certain cases, the bank
available for withdrawal. For example, if a de receiving ACH credit payments will not re
posit of a local check were made on a Mon ceive the specific payment instructions indicat
day under the temporary schedule, which re ing which accounts to credit until after settle
quires that funds be available for withdrawal ment day. In these cases, the payments are not
on the third business day after deposit, funds considered received until the information on
must be made available on Thursday regard the account and amount to be credited is
less of whether the bank was closed on received.
This paragraph also establishes the extent to
Wednesday for other than a standard legal
holiday as specified in the definition of “busi which an electronic payment is considered
made. Thus, if a participant on a private net
ness day.”
Under this paragraph, cash deposited in an work fails to settle and the receiving bank re
account at a staffed teller station on a Monday ceives finally settled funds representing only a
must become available for withdrawal by the partial amount of the payment, it must make
start of business on Tuesday. It must become only the amount that it actually received avail
available for withdrawal by the start of busi able for withdrawal.
The availability requirements of this regula
ness on Wednesday if it is deposited by mail,
at a proprietary ATM (or at a nonproprietary tion do not preempt or invalidate other rules,
ATM under the permanent schedule), or by regulations, or agreements which require funds
other means other than at a staffed teller to be made available on a more prompt basis.
For example, the next-day availability require
station.
ment for ACH credits in this section does not
2 Nothing in the act or this regulation affects terms o f
preempt ACH association rules and Treasury
account arrangements, such as negotiable order o f with
regulations (31 CFR 210) which provide that
drawal accounts, which may require prior notice o f with
drawal. (See 12 CFR 204.2(e)(2).)
the proceeds of these credit payments be
23
SECTION 229.10—Next-Day
Availability
§ 229.10
available to the recipient for withdrawal on
the day the bank receives the funds.
10(c) Certain Check Deposits
The act generally requires that funds be made
available on the business day following the
banking day of deposit for Treasury checks;
state and local government checks; cashier’s,
certified, and teller’s checks; and on-us
checks, under specified conditions. (Treasury
checks are checks drawn on the Treasury of
the United States and have a routing number
beginning with the digits “0000.” ) This sec
tion also requires next-day availability for ad
ditional types of checks not addressed in the
act. Checks drawn on a Federal Reserve Bank
or a Federal Home Loan Bank and U.S. Pos
tal Service money orders must also be made
available on the next business day following
deposit under specified conditions. For the
purposes of this section, all checks drawn on
a Federal Reserve Bank or Federal Home
Loan Bank that contain in the MICR line a
routing number that is listed in appendix A
are subject to the next-day availability require
ment if they are deposited in an account held
by a payee of the check and in person to an
employee of the depositary bank, regardless of
the purpose for which the checks were issued.
For all new accounts, even if the new-account
exception is not invoked, traveler’s checks
must be included in the $5,000 aggregation of
checks deposited on any one banking day that
are subject to the next-day availability require
ment. (See section 229.13(a).)
Deposit in Account of Payee
One statutory condition to receipt of next-day
availability of Treasury checks; state and local
government checks; and cashier’s, certified,
and teller’s checks is that the check must be
“endorsed only by the person to whom it was
issued.” The act could be interpreted to in
clude a check that has been indorsed in blank
and deposited into an account of a third party
that is not named as payee. The Board be
lieves that such a check presents greater risks
than a check deposited by the payee and that
Congress did not intend to require next-day
availability to such checks. The regulation,
therefore, provides that funds must be avail24
Regulation CC Commentary
able on the business day following deposit
only if the check is deposited in an account
held by a payee of the check. For the pur
poses of this section, payee does not include
transferees other than named payees. The reg
ulation also applies this condition to Postal
Service money orders, and checks drawn on
Federal Reserve Banks and Federal Home
Loan Banks.
Deposits Made to an Employee o f the
Depositary Bank
In most cases, next-day availability of the pro
ceeds of checks subject to this section is con
ditioned on the deposit of these checks in per
son to an employee of the depositary bank. If
the deposit is not made to an employee of the
depositary bank on the premises of such bank,
the proceeds of the deposit must be made
available for withdrawal by the start of busi
ness on the second business day after deposit,
under paragraph (c)(2) of this section. For ex
ample, second-day availability rather than
next-day availability would be allowed for de
posits of checks subject to this section made
at a proprietary ATM (and at a nonproprietary
ATM under the permanent schedule), night
depository, through the mail or a lock box, or
at a teller station staffed by a person that is
not an employee of the depositary bank. Sec
ond-day availability may also be allowed for
deposits picked up by an employee of the de
positary bank at the customer’s premises; such
deposits would be considered made upon re
ceipt at the branch or other location of the
depositary bank.
The act and regulation do not condition the
receipt of next-day availability to deposits at
staffed teller stations in the case of Treasury
checks. Therefore, Treasury checks deposited
at a proprietary ATM must be accorded nextday availability, if the check is deposited to
an account of a payee of the check.
On-Us Checks
The act and regulation require next-day avail
ability for on-us checks, i.e., checks deposited
in a branch of the depositary bank and drawn
on the same or another branch of the same
bank, if both branches are located in the same
state or check-processing region. Thus, checks
Regulation CC Commentary
deposited in one branch of a bank and drawn
on another branch of the same bank must re
ceive next-day availability even if the branch
on which the checks are drawn is located in
another check-processing region but in the
same state as the branch in which the check is
deposited. For the purposes of this require
ment, deposits at facilities that are not located
on the premises of a brick-and-mortar branch
of the bank, such as off-premise ATMs and
remote depositories, are not considered depos
its made at branches of the depositary bank.
First $100
The act and regulation also require that up to
$100 of the aggregate deposit by check or
checks not subject to next-day availability on
any one banking day be made available on the
next business day. For example, if $70 were
deposited in an account by check(s) on a
Monday, the entire $70 must be available for
withdrawal at the start of business on Tues
day. If $200 were deposited by check(s) on a
Monday, this section requires that $100 of the
funds be available for withdrawal at the start
of business on Tuesday. The portion of the
customer’s deposit to which the $100 must be
applied is at the discretion of the depositary
bank, as long as it is not applied to any
checks subject to next-day availability. The
$100 next-day availability rule does not apply
to deposits at nonproprietary ATMs.
The $100 that must be made available
under this rule is in addition to the amount
that must be made available for withdrawal on
the business day after deposit under other pro
visions of this section. For example, if a cus
tomer deposits a $1,000 Treasury check and a
$1,000 local check in its account on Monday,
$1,100 must be made available for withdrawal
on Tuesday—the proceeds of the $1,000 Trea
sury check, as well as the first $100 of the
local check.
A depositary bank may aggregate all local
and nonlocal check deposits made by the cus
tomer on a given banking day for the pur
poses of the $100 next-day availability rule.
Thus, if a customer has two accounts at the
depositary bank, and on a particular banking
day makes deposits to each account, $100 of
the total deposited to the two accounts must
be made available on the business day after
§ 229.10
deposit. Banks may aggregate deposits to indi
vidual and joint accounts for the purposes of
this provision.
If the customer deposits a $500 local check
and gets $100 cash back at the time of de
posit, the bank need not make an additional
$100 available for withdrawal on the follow
ing day. Similarly, if the customer depositing
the local check has a negative book balance,
or negative available balance in its account at
the time of deposit, the $100 that must be
available on the next business day may be
made available by applying the $100 to the
negative balance, rather than making the $100
available for withdrawal by cash or check on
the following day.
Special Deposit Slips
Under the act, a depositary bank may require
the use of a special deposit slip as a condition
to providing next-day availability for certain
types of checks. This condition was included
in the act because a number of banks deter
mine the availability of their customers’ check
deposits in an automated manner by reading
the MICR-encoded routing number on the de
posited checks. Using these procedures, a
bank can determine whether a check is a local
or nonlocal check; a check drawn on the Trea
sury, a Federal Reserve Bank, a Federal Home
Loan Bank, or a branch of the depositary
bank; or a U.S. Postal Service money order.
Appendix A includes the routing numbers of
certain categories of checks that are subject to
next-day availability. The bank cannot require
a special deposit slip for these checks.
A bank cannot distinguish whether the
check is a state or local government check or
a cashier’s, certified, or teller’s check by read
ing the MICR-encoded routing number, be
cause these checks bear the same routing
number as other checks drawn on the same
bank that are not accorded next-day availabil
ity. Therefore, a bank may require a special
deposit slip for these checks.
The regulation specifies that if a bank de
cides to require the use of a special deposit
slip (or a special deposit envelope in the case
of a deposit at an ATM or other unstaffed fa
cility) as a condition to granting next-day
availability under paragraphs (c)(l)(iv) or
(c)(l)(v) of this section or second day availa25
§ 229.10
bility under paragraph (c)(2) of this section,
and if the deposit slip that must be used is
different from the bank’s regular deposit slips,
the bank must either provide the special slips
to its customers or inform its customers how
such slips may be obtained and make the slips
reasonably available to the customers.
A bank may meet this requirement by pro
viding customers with an order form for the
special deposit slips and allowing sufficient
time for the customer to order and receive the
slips before this condition is imposed. If a
bank provides deposit slips in its branches for
use by its customers, it must also provide the
special deposit slips in the branches. If special
deposit envelopes are required for deposits at
an ATM, the bank must provide such enve
lopes at the ATM.
Generally, a teller is not required to advise
depositors of the availability of special deposit
slips merely because checks requiring special
deposit slips for next-day availability are de
posited without such slips. If a bank only pro
vides the special deposit slips upon the re
quest of a depositor, however, the teller must
advise the depositor of the availability of the
special deposit slips, or the bank must post a
notice advising customers that the slips are
available upon request. If a bank prepares a
deposit for a depositor, it must use a special
deposit slip where appropriate. A bank may
require the customer to segregate the checks
subject to next-day availability for which spe
cial deposit slips could be required, and to
indicate on a regular deposit slip that such
checks are being deposited, if the bank so in
structs its customers in its initial disclosure.
26
Regulation CC Commentary
Regulation CC
SECTION 229.11—Temporary
Availability Schedule
(a) Effective date. The temporary availability
schedule contained in this section is effective
from September 1, 1988, through August 31,
1990. For the permanent availability schedule,
which is effective September 1, 1990, see sec
tion 229.12.
(b) Local checks and certain other checks.
(1) In general. A depositary bank shall
make funds deposited in an account by a
check available for withdrawal not later
than the third business day following the
banking day on which funds are deposited,
in the case of—
(i) A local check;
(ii) A check drawn on the Treasury of
the United States that is not governed by
the availability requirements of section
229.10(c);
(iii) A U.S. Postal Service money order
that is not governed by the availability
requirements of section 229.10(c); and
(iv) 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, certi
fied, or teller’s check; if any check re
ferred to in this paragraph (b)(l)(iv) of
this section is a local check that is not
governed by the availability requirements
of section 229.10(c).
(2) 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 local checks are available for
withdrawal by cash or similar means unless
the checks are drawn on or payable at or
through a local paying bank that is a par
ticipant in the same check clearinghouse as
sociation as the depositary bank. Similar
means include electronic payment, issuance
of a cashier’s or teller’s check, certification
of a check, or other irrevocable commit
ment to pay, but do not include the granting
of credit to a bank, Federal Reserve Bank,
or Federal Home Loan Bank that presents a
check to the depositary bank for payment.
A depositary bank shall, however, make
$400 of these funds available for with
§ 229.11
drawal by cash or similar means not later
than 5:00 p.m. on the third business day
following the banking day on which the
funds are deposited. This $400 is in addi
tion to the $100 available under section
229.10(c)(l)(vii).
(c) Nonlocal checks.
(1) In general. A depositary bank shall
make funds deposited in an account by a
check available for withdrawal not later
than the seventh business day following the
banking day on which funds are deposited,
in the case of—
(i) A nonlocal check; and
(ii) 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; a cashier’s, certified,
or teller’s check; or a check deposited in
a branch of the depositary bank and
drawn on the same or another branch of
the same bank, if any check referred to
in this paragraph (c)(l)(ii) is a nonlocal
check that is not governed by the availa
bility requirements of section 229.10(c).
(2) Reduction in schedule for certain check
deposits. Nonlocal checks specified in ap
pendix B -l to this part must be made avail
able for withdrawal not later than the times
prescribed in that appendix.
(d) Deposits at nonproprietary ATMs. A de
positary bank shall make funds deposited in
an account at a nonproprietary ATM by cash
or check available for withdrawal not later
than the seventh business day following the
banking day on which the funds are deposited.
(e) Extension o f schedule for certain deposits
in Alaska, Hawaii, Puerto Rico, and the U.S.
Virgin Islands. The depositary bank may ex
tend the time periods set forth in this section
by one business day in the case of any de
posit, other than a deposit described in section
229.10, that is—
(1) Deposited in an account at a branch of
a depositary bank if the branch is located in
Alaska, Hawaii, Puerto Rico, or the U.S.
Virgin Islands; and
(2) Deposited by a check drawn on or pay
able at or through a paying bank not lo
cated in the same state as the depositary
bank.
27
§ 229.11
COMMENTARY
SECTION 229.11—Temporary
Availability Schedule
11(a) Effective Date
Checks, other than those that must be ac
corded next-day availability, are categorized
as either local or nonlocal, with different
availability schedules attached to each. These
schedules are effective on September 1, 1988,
and will be superseded by more stringent
schedules on September 1, 1990.
11(b) Local Checks and Certain Other
Checks
This paragraph sets forth the maximum hold
period that can be placed on local checks dur
ing the temporary schedule. The regulation re
fers to the day on which funds must be avail
able for withdrawal as within a specified
number of business days after deposit, rather
than after a specified number of intervening
business days, as provided in the act. A de
positary bank must make funds from the de
posit of a local check available on the third
business day following the banking day on
which the check is deposited. This require
ment corresponds to the two intervening busi
ness days specified in the act. Thus, under the
temporary schedule, a local check deposited
on a Monday must be available for with
drawal on Thursday, except in the case of de
posits at nonproprietary ATMs and deposits to
accounts in banks located outside the 48 con
tiguous states.
The regulation provides that Treasury
checks and U.S. Postal Service money orders
be treated as local checks, where the condi
tions to receiving next-day (or second-day)
availability in section 229.10(c) are not met.
These checks are treated as local checks be
cause they are payable at any Federal Reserve
office. Thus, a Treasury check or a postal
money order that is indorsed and deposited in
an account not held by the payee must be
made available in accordance with the sched
ule for local checks.
Other types of checks described in section
229.10(c), such as checks drawn on a Federal
Reserve Bank or Federal Home Loan Bank;
28
Regulation CC Commentary
state and local government checks; and cash
ier’s, certified, and teller’s checks for which
next-day availability does not apply (e.g., be
cause they were not deposited in an account
of a payee of the check), are treated as either
local or nonlocal checks, depending on the
check-processing region in which they are
payable.
Time Period Adjustment for Withdrawal by
Cash
The act provides an adjustment to the avail
able rules for cash withdrawals. During the
temporary schedule, the act provides that
funds from local checks that are drawn on or
payable at or through a paying bank that is
not a participant in the same check clearing
house association as the depositary bank need
not be available for cash withdrawal until 5:00
p.m. on the day specified in the schedule. At
5:00 p.m., $400 of the deposit must be made
available for cash withdrawal. This $400 is in
addition to the first $100 of a day’s deposit,
which must be made available for withdrawal
at the start of business on the next business
day following the banking day of deposit. The
remainder of the funds must be available for
cash withdrawal at the start of business on the
business day following the business day speci
fied in the schedule. This special rule does
not, under the temporary schedule, apply to
deposits of local checks cleared through a
check clearinghouse association or to nonlocal
checks.
The act recognizes that the $400 that must
be provided on the day specified in the sched
ule 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. The Board believes that the ra
tionale for accommodating a bank’s ATM
withdrawal limit also applies to other cash
withdrawal limits established by that bank.
Section 229.19(c)(4) of the regulation ad
dresses the relation between a bank’s cashwithdrawal limit (for over-the-counter cash
withdrawals as well as ATM cash withdraw
als) and the requirements of this subpart.
The Board believes that the Congress in
cluded this special cash withdrawal rule to
provide a depositary bank with additional time
to learn of the nonpayment of a check before
§ 229.11
Regulation CC Commentary
it must make funds available to its customer.
If a customer deposits a local check on a
Monday, and that check is returned by the
paying bank, the depositary bank may receive
the returned check on Thursday (the day funds
must be made available under the temporary
schedule), but may not receive the returned
check by the start of business on Thursday.
Checks written by the customer that are pre
sented to the depositary bank on Thursday are
typically not posted to the customer’s account
until late Thursday night. Any returned checks
that have been received on that day are deb
ited to the customer’s account before the
checks being presented are posted. Thus, for
the purpose of checks written by the cus
tomer, the fact that a return is not received
until sometime during the day on which funds
must be made available does not increase the
bank’s risk.
Nonetheless, the depositary bank’s risk does
increase significantly if the customer with
draws the funds in cash, because the with
drawal may occur before the return is received
and posted. The intent of the special cash
withdrawal rule is to minimize this risk to the
depositary bank.
For this rule to minimize the depositary
bank’s risk, it must apply not only to cash
withdrawals, but also to withdrawals by other
means that result in an irrevocable debit to the
customer’s account or commitment to pay by
the bank on the customer’s behalf during the
day. Thus, the cash withdrawal rule also in
cludes withdrawals by electronic payment, is
suance of a cashier’s or teller’s check, certifi
cation of a check, or other irrevocable
commitment to pay, such as authorization of
an on-line point-of-sale debit. The rule would
also apply to checks presented over-thecounter for payment on the day of present
ment by the depositor or another person. Such
checks could not be dishonored for insuffi
cient funds if an amount sufficient to Cover
the check had became available for cash with
drawal under this rule; however, payment of
such checks would be subject to the bank’s
cut-off hour established under UCC 4-108.
The cash withdrawal rule does not apply to
checks and other provisional debits presented
to the bank for repayment that the bank has
the right to return.
11(c) Nonlocal Checks
Under the temporary schedule, funds depos
ited by nonlocal checks must be made avail
able for withdrawal not later than the seventh
business day following the banking day the
funds are deposited, except in the case of de
posits in accounts of banks located outside the
48 contiguous states. Thus, funds from a non
local check deposited on a Monday must be
available for withdrawal by Wednesday of the
following week. The act does not establish a
special rule for cash withdrawals for nonlocal
checks under the temporary schedule. There
fore, subject to section 229.19(c), the full
amount of the deposit becomes available for
withdrawal at the start of business on the bus
iness day specified in the schedule.
A reduction in schedules may apply even in
those cases where the determination that the
check is nonlocal cannot be made based on
the routing number on the check. For exam
ple, a nonlocal credit-union payable-through
share draft may be subject to a reduction in
schedules if the routing number of the pay
able-through bank which appears on the draft
is included in appendix B, even though the
determination that the payable-through share
draft is nonlocal is based on the location of
the credit union and not-the routing number
on the draft.
Reduction in Schedules
Section 603(d)(1) of the act (12 USC
4002(d)(1)) requires the Board to reduce the
statutory schedules for any category of checks
where most of those checks would be returned
in a shorter period of time than provided in
the schedules. The conferees indicated that “if
the new system makes it possible for twothirds of the items of a category of checks to
meet this test in a shorter period of time, then
the Federal Reserve must shorten the sched
ules accordingly” (H.R. Rep. No. 261, 100th
Cong., 1st Sess. 179 (1987)).
Reduced schedules are provided for certain
nonlocal checks where significant improve
ments can be made to the act’s schedules.
Specifically, shorter schedules are provided for
checks deposited in banks located in certain
Federal Reserve cities and drawn on or pay
able at or through banks located in certain
29
§ 229.11
other Federal Reserve cities, where transporta
tion arrangements allow for faster collection
and return. In addition, shorter shedules are
provided for checks drawn on or payable at or
through certain banks that are served by two
Federal Reserve offices, and for certain checks
deposited in and drawn on or payable at or
through banks in the New York City metro
politan area, where the proximity of the Fed
eral Reserve offices facilitates faster clearing
and return of these checks.
Appendix B-l sets forth the specific reduc
tion of schedules applicable to banks located
in each check-processing region.
11(d) Deposits at Nonproprietary ATMs
The act and regulation provide a special rule
for deposits made at nonproprietary ATMs.
Notwithstanding other provisions of the regu
lation concerning availability requirements,
during the temporary schedule, a depositary
bank may treat all deposits made by its cus
tomers at a nonproprietary ATM as though the
deposits were nonlocal checks. A deposit at a
nonproprietary ATM on a Monday, including
any deposit by cash or checks that would oth
erwise be subject to next-day availability,
must be made available for withdrawal not
later than Wednesday of the following week.
This rule does not apply to deposits made at
proprietary ATMs.
11(e) Extension of Schedule for Certain
Deposits in Alaska, Hawaii, Puerto
Rico, and the U.S. Virgin Islands
The act and regulation provide an extension of
the availability schedules for check deposits at
a branch of a bank if the branch is located in
Alaska, Hawaii, Puerto Rico, or the U.S. Vir
gin Islands. The schedules for local checks,
nonlocal checks (including nonlocal checks
subject to the reduced schedules of appendix
B), and deposits at nonproprietary ATMs are
extended by one business day for checks de
posited to accounts in banks located in these
jurisdictions that are drawn on or payable at
or through a paying bank not located in the
same jurisdiction as the depositary bank. For
example, a check deposited in a bank in Ha
waii and drawn on a San Francisco paying
bank must be made available for withdrawal
30
Regulation CC Commentary
not later than the fourth business day follow
ing deposit. This extension does not apply to
deposits that must be made available for with
drawal on the next business day.
The Congress did not provide this extension
of the schedules to checks drawn on a paying
bank located in Alaska, Hawaii, Puerto Rico,
or the U.S. Virgin Islands and deposited in an
account at a depositary bank in the 48 contig
uous states. Therefore, a check deposited in a
San Francisco bank drawn on a Hawaii paying
bank must be made available for withdrawal
not later than the third rather than the fourth
business day following deposit.
Regulation CC
SECTION 229.12—Permanent
Availability Schedule
(a) Effective date. 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—
(1) A local check;
(2) A check drawn on the Treasury of the
United States that is not governed by the
availability requirements of section
229.10(c);
(3) A U.S. Postal Service money order that
is not governed by the availability require
ments of section 229.10(c); and
(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 require
ments of section 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 with
drawal not later than the fifth business day
following the banking day on which funds
are deposited, in the case of—
(i) A nonlocal check; and
(ii) 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; a cashier’s, certified,
or teller’s check; or a check deposited in
a branch of the depositary bank and
drawn on the same or another branch of
the same bank, if any check referred to
in this paragraph (c)(l)(ii) is a nonlocal
check that is not governed by the availa
bility requirements of section 229.10(c).
(2) Nonlocal checks specified in appendix
B-2 to this part must be made available for
§ 229.12
withdrawal not later than the times pre
scribed in that appendix.
(d) 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. Similar means include
electronic payment, issuance of a cashier’s or
teller’s check, or certification of a check, or
other irrevocable commitment to pay, but do
not include the granting of credit to a bank, a
Federal Reserve Bank, or a Federal Home
Loan Bank that presents a check to the depos
itary bank for payment. A depositary bank
shall, however, make $400 of these funds
available for withdrawal by cash or similar
means not later than 5:00 p.m. on the business
day on which the funds are available under
paragraphs (b), (c), or (f) of this section. This
$400 is in addition to the $100 available
under section 229.10(c)(l)(vii).
(e) Extension of schedule for certain deposits
in Alaska, Hawaii, Puerto Rico, and the U.S.
Virgin Islands. The depositary bank may ex
tend the time periods set forth in this section
by one business day in the case of any de
posit, other than a deposit described in section
229.10, that is—
(1) Deposited in an account at a branch of
a depositary bank if the branch is located in
Alaska, Hawaii, Puerto Rico, or the U.S.
Virgin Islands; and
(2) Deposited by a check drawn on or pay
able at or through a paying bank not lo
cated in the same state as the depositary
bank.
(f) Deposits at nonproprietary ATMs. A de
positary bank shall make funds deposited in
an account at a nonproprietary ATM by cash
or check available for withdrawal not later
than the fifth business day following the bank
ing day on which the funds are deposited.
31
§ 229.12
COMMENTARY
SECTION 229.12—Permanent
Availability Schedule
12(a) Effective Date
The permanent schedule supersedes the tem
porary schedule on September 1, 1990.
12(b) Local Checks and Certain Other
Checks
Under the permanent schedule, local checks
must be made available for withdrawal not
later than the second business day following
the banking day on which the checks were
deposited.
In addition, the proceeds of Treasury checks
and U.S. Postal Service money orders not
subject to next-day (or second-day) availabil
ity under section 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
section 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.
Exceptions are made for withdrawals by
cash or similar means and for deposits in
banks located outside the 48 contiguous states.
Thus, the proceeds of a local check deposited
on a Monday generally must be made avail
able for withdrawal on Wednesday.
12(c) Nonlocal Checks
Under the permanent schedule, the time pe
riod for availability of nonlocal checks is also
reduced. Nonlocal checks must be made avail
able for withdrawal not later than the fifth
business day following deposit, i.e., proceeds
of a nonlocal check deposited on a Monday
must be made available for withdrawal on the
following Monday. In addition, a check de
scribed in section 229.10(c) that does not
meet the conditions for next-day availability
(or second-day availability) is treated as a
nonlocal check, if the check is drawn on or
payable through or at a nonlocal paying bank.
Adjustments are made to the schedule for
32
Regulation CC Commentary
withdrawals by cash or similar means and de
posits in banks located outside the 48 contigu
ous states.
As described in the discussion of section
229.11(c), the Board is required to shorten the
schedules for any category of check where
most of these checks can be returned to the
depositary bank in a shorter period of time
than provided in the schedule. Appendix B-2
sets forth the reductions to the schedule for
certain nonlocal checks under the permanent
schedule.
12(d) Time-Period Adjustment for
Withdrawal by Cash or Similar Means
Unlike the temporary schedule, the act applies
the special cash withdrawal rule to all local
and nonlocal checks under the permanent
schedule. The regulation implementing this
rule is described in the discussion of the tem
porary schedule at section 229.11(b). Under
the permanent schedule, if the proceeds of lo
cal and nonlocal checks become available for
withdrawal on the same business day, the
$400 withdrawal limitation applies to the ag
gregate amount of the funds that became
available for w ithdraw al on that day.
12(e) Extension of Schedule for Certain
Deposits in Alaska, Hawaii, Puerto
Rico, and the U.S. Virgin Islands
The extension of the availability schedules
provided to check deposits at a branch of a
bank if the branch is located in Alaska, Ha
waii, Puerto Rico, or the U.S. Virgin Islands
under the temporary schedule also applies
when the permanent schedule becomes effec
tive. Explanation of this provision is provided
in the discussion of section 229.11(d).
12(f) Deposits at Nonproprietary ATMs
The act and regulation provide a special rule
for deposits made at nonproprietary ATMs.
This paragraph does not apply to deposits
made at proprietary ATMs. All deposits at a
nonproprietary ATM must be made available
for withdrawal by the fifth business day fol
lowing the banking day of deposit. For exam
ple, a deposit made at a nonproprietary ATM
on a Monday, including any deposit by cash
or checks that would otherwise be subject to
Regulation CC Commentary
§ 229.12
next-day (or second-day) availability, must be
made available for withdrawal not later than
Monday of the following week. The provi
sions of section 229.10(c)(l)(vii) requiring a
depositary bank to make up to $100 of an
aggregate daily deposit available for with
drawal on the next business day after the
banking day of deposit do not apply to depos
its at a nonproprietary ATM.
33
§ 229.13
SECTION 229.13—Exceptions
(a) New accounts.
(1) A deposit in a new account—
(i) Is subject to the requirements of sec
tion 229.10(a) and (b) to make funds
from deposits by cash and electronic pay
ments available for withdrawal on the
business day following the banking day
of deposit or receipt;
(ii) Is subject to the requirements of sec
tion 229.10(c)( 1)(i) through (v) and sec
tion 229.10(c)(2) only with respect to the
first $5,000 of funds deposited on any
one banking day; but the amount of the
deposit in excess of $5,000 shall be
available for withdrawal not later than
the ninth business day following the
banking day on which funds are depos
ited; and
(iii) Is not subject to the availability re
quirements of sections 229.10(c)(l)(vi)
and (vii), 229.11, and 229.12.
For purposes of this paragraph, checks sub
ject to section 229.10(c)( 1)(v) include trav
eler’s checks.
(2) An account is considered a new account
during the first 30 calendar days after the
account is established. An account is not
considered a new account if each customer
on the account has had, within 30 calendar
days before the account is established, an
other account at the depositary bank for at
least 30 calendar days.
Regulation CC
after the missing indorsement has been ob
tained, if the reason for return indication on
the check states that it was returned due to
a missing indorsement; or
(2) To a check that has been returned be
cause it was postdated, if the reason for re
turn indicated on the check states that it
was returned because it was postdated, and
if the check is no longer postdated when
redeposited.
(d) Repeated overdrafts. If any account or
combination of accounts of a depositary
bank’s customer has been repeatedly over
drawn, then for a period of six months after
the last such overdraft, sections 229.10(c) and
229.12 do not apply to any of the accounts. A
depositary bank may consider a customer’s
account to be repeatedly overdrawn if—
(1) On six or more banking days within the
preceding six months, the account balance
is negative, or the account balance would
have become negative if checks or other
charges to the account had been paid; or
(2) On two or more banking days within
the preceding six months, the account bal
ance is negative, or the account balance
would have become negative, in the amount
of $5,000 or more, if checks or other
charges to the account had been paid.
(e) Reasonable cause to doubt collectibility.
(1) In general. Sections 229.10(c) and
229.12 do not apply to a check deposited in
a depositary bank if the depositary bank has
(b) Large deposits. Sections 229.10(c) and
reasonable cause to believe that the check is
229.12 do not apply to the aggregate amount
uncollectible from the paying bank. Reason
of deposits by one or more checks to the ex
able cause to believe a check is uncollecti
tent that the aggregate amount is in excess of
ble requires the existence of facts that
$5,000 on any one banking day. For custom
would cause a well-grounded belief in the
ers that have multiple accounts at a depositary
mind of a reasonable person. Such belief
bank, the bank may apply this exception to
shall not be based on the fact that the check
the aggregate deposits to all accounts held by
is of a particular class or is deposited by a
the customer, even if the customer is not the
particular class of persons. The reason for
sole holder of the accounts and not all of the
the bank’s belief that the check is uncollect
holders of the accounts are the same.
ible shall be included in the notice required
under paragraph (g) of this section.
(c) Redeposited checks. Sections 229.10(c)
(2) Overdraft and returned-check fees. A
and 229.12 do not apply to a check that has
depositary bank that extends the time when
been returned unpaid and redeposited by the
funds will be available for withdrawal as
customer or the depositary bank. This excep
described in paragraph (e)(1) of this sec
tion does not apply—
(1)
To a check that has been returned due tion, and does not furnish the depositor
with written notice at the time of deposit
to a missing indorsement and redeposited
34
Regulation CC
shall not assess any fees for any subsequent
overdrafts (including use of a line of credit)
or return of checks of other debits to the
account, if—
(i) The overdraft or return of the check
would not have occurred except for the
fact that the deposited funds were
delayed under paragraph (e)(1) of this
section; and
(ii) The deposited check was paid by the
paying bank.
Notwithstanding the foregoing, the deposi
tary bank may assess an overdraft or retumed-check fee if it includes a notice con
cerning overdraft and retumed-check fees
with the notice of exception required in
paragraph (g) of this section and, when re
quired, refunds any such fees upon the re
quest of the customer. The notice must state
that the customer may be entitled to a re
fund of overdraft or retumed-check fees
that are assessed if the check subject to the
exception is paid and how to obtain a
refund.
(f) Emergency conditions. Sections 229.10(c)
and 229.12 do not apply to funds deposited by
check in a depositary bank in the case of—
(1) An interruption of communications or
computer or other equipment facilities;
(2 ) A su sp en sio n o f paym ents 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 o f exception.
(1) In general. Subject to paragraphs (g)(2)
and (g)(3) of this section, when a deposi
tary bank extends the time when funds will
be available for withdrawal based on the
application of an exception contained in
paragraphs (b) through (f) of this section, it
must provide the depositor with a written
notice.
(i) The notice shall include the following
information:
(A) The account number of the
customer;
(B) The date and amount of the
deposit;
§ 229.13
(C ) The amount of the deposit that is
being delayed;
(D) The reason the exception was in
voked; and
(E ) The time period within which the
funds will be available for withdrawal,
unless the emergency-conditions excep
tion in paragraph (f) of this section has
been invoked, and the depositary bank,
in good faith, does not know the dura
tion of the emergency and, conse
quently, when the funds must be made
available at the time the notice must
be given.
(ii) Timing of notice.
(A) The notice shall be provided to
the depositor at the time of the deposit,
unless the deposit is not made in per
son to an employee of the depositary
bank, or, if the facts upon which a de
termination to invoke one of the ex
ceptions in paragraphs (b) through (f)
of this section to delay a deposit only
become known to the depositary bank
after the time of the deposit. If the no
tice is not given at the time of the de
posit, the depositary bank shall mail or
deliver the notice to the customer as
soon as practicable, but no later than
the first business day following the day
the facts become known to the deposi
tary bank, or the deposit is made,
whichever is later.
(B) If the availability of funds is
delayed under the emergency-condi
tions exception provided in paragraph
(f) of this section, the depositary bank
is not required to provide a notice if
the funds subject to the exception be
come available before the notice must
be sent under paragraph (g)(l)(ii)(A)
of this section.
(2) One-time exception notice. In lieu of
providing notice pursuant to paragraph
(g)(1) of this section, a depositary bank that
extends the time when funds deposited in a
nonconsumer account will be available for
withdrawal based on an exception contained
in paragraph (b) or (c) of this section may
provide a single notice to the customer that
includes the following information—
35
§ 229.13
(i) The reason(s) the exception may be
invoked; and
(ii) The time period within which depos
its subject to the exception generally will
be available for withdrawal.
This one-time notice shall be provided only
if each type of exception cited in the notice
will be invoked for most check deposits in
the account to which the exception could
apply. This notice shall be provided at or
prior to the time notice must be provided
under paragraph (g)(l)(ii) of this section.
(3) Notice o f repeated-overdrafts exception.
In lieu of providing notice pursuant to para
graph (g)(1) of this section, a depositary
bank that extends the time when funds de
posited in an account will be available for
withdrawal based on the exception con
tained in paragraph (d) of this section may
provide a notice to the customer for each
time period during which the exception will
be in effect. The notice shall include the
following information—
(i) The account number of the customer;
(ii) The fact that the availability of funds
deposited in the customer’s account will
be delayed because the rep e a te d -o v e r
drafts exception will be invoked;
(iii) The time period within which depos
its subject to the exception generally will
be available for withdrawal; and
(iv) The time period during which the
exception will apply.
This notice shall be provided at or prior to
the time notice must be provided under
paragraph (g)(l)(ii) of this section and only
if the exception cited in the notice will be
invoked for most check deposits in the
account.
(4) Record retention. A depositary bank
shall retain a record, in accordance with
section 229.21(g), of each notice provided
pursuant to its application of the reasona
ble-cause exception under paragraph (e) of
this section, together with a brief statement
of the facts giving rise to the bank’s reason
to doubt the collectibility of the check.
(h) Availability o f deposits subject to excep
tions.
(1) If an exception contained in paragraphs
(b)
through (f) of this section applies, the
depositary bank may extend the time peri36
Regulation CC
ods established under sections 229.10(c)
and 229.12 by a reasonable period of time.
(2) If a depositary bank invokes an excep
tion contained in paragraphs (b) through (e)
of this section with respect to a check de
scribed in section 229.10(c)(l)(i) through
(v) or section 229.10(c)(2), it shall make
the funds available for withdrawal not later
than a reasonable period after the day the
funds would have been required to be made
available had the check been subject to sec
tion 229.12.
(3) If a depositary bank invokes an excep
tion under paragraph (f) of this section
based on an emergency condition, the de
positary bank shall make the funds avail
able for withdrawal not later than a reason
able period after the emergency has ceased
or the period established in sections
229.10(c) and 229.12, whichever is later.
(4) For the purposes of paragraphs (h)(1),
(h)(2), and (h)(3) of this section, a reasona
ble period is an extension of up to one bus
iness day for checks subject to section
229.10(c)( 1)(vi), five business days for
checks subject to section 229.12(b) and
checks that would be subject to section
229.12(b) under paragraph (h)(2) of this
section, and six business days for checks
subject to section 229.12(c) and checks that
would be subject to section 229.12(c) under
paragraph (h)(2) of this section. A longer
extension may be reasonable, but the bank
has the burden of so establishing.
Regulation CC Commentary
COMMENTARY
SECTION 229.13—Exceptions
While certain safeguard exceptions (such as
those for new accounts and checks the bank
has reasonable cause to believe are uncollecti
ble) are established in the act, the Congress
gave the Board the discretion to determine
whether certain other exceptions should be in
cluded in its regulations. Specifically, the act
gives the Board the authority to establish ex
ceptions to the schedules for large or redepos
ited checks and for accounts that have been
repeatedly overdrawn. These exceptions apply
to local and nonlocal checks as well as to
checks that must otherwise be accorded nextday (or second-day) availability under section
229.10(c).
Many checks will not be returned to the
depositary bank by the time funds must be
made available for withdrawal under the nextday (or second-day), local, and nonlocal
schedules. In order to reduce risk to deposi
tary banks, the Board has exercised its statu
tory authority to adopt these exceptions to the
schedules in the regulation to allow the depos
itary bank to extend the time within which it
is required to make funds available.
The act also gives the Board the authority
to suspend the schedules for any classification
of checks, if the schedules result in an unac
ceptable level of fraud losses. The Board will
adopt regulations or issue orders to implement
this statutory authority if and when circum
stances requiring its implementation arise.
13(a) New Accounts
Definition o f New Account
The act provides an exception to the availabil
ity schedule for new accounts. An account is
defined as a new account during the first 30
calendar days after the account is opened. An
account is open when the first deposit is made
to the account. An account is not considered a
new account, however, if each customer on
the account has a transaction-account relation
ship with the depositary bank, including a
dormant account, that is at least 30 calendar
days old on September 1, 1988, or at any time
thereafter (i.e., an established account), or has
§ 229.13
had an established account with the depositary
bank within the 30 calendar days prior to
opening the account.
The following are examples of what consti
tutes, and does not constitute, a new account:
1. If the customer has an established account
with a bank and opens a second account
with the bank, the second account is not
subject to the new account exception.
2. If a customer’s account were closed and
another account opened as a successor to
the original account (due, for example, to
the theft of checks or a debit card used to
access the original account), the successor
account is not subject to the new account
exception, assuming the previous account
relationship is at least 30 days old. Similar
ly, if a customer closed an established ac
count and opens a separate account within
30 days, the new account is not subject to
the new-account exception.
3. If a customer has a savings deposit or oth
er deposit that is not an account (as that
term is defined in section 229.2(a)) at the
bank, and opens an account, the account
may be subject to the new-account excep
tion.
4. If a person that is authorized to sign on a
corporate account (but has no other rela
tionship with the bank) opens a personal
account, the personal account is subject to
the new-account exception.
5. If a customer has an established joint ac
count at a bank, and subsequently opens an
individual account with that bank, the indi
vidual account is not subject to the newaccount exception.
6. If two customers that each have an estab
lished individual account with the bank
open a joint account, the joint account is
not subject to the new-account exception.
If one of the customers on the account has
no current or recent established account re
lationship with the bank, however, the joint
account is subject to the new-account ex
ception, even if the other individual on the
account has an established account relation
ship with the bank.
Rules Applicable to New Accounts
During the new-account exception period, the
37
§ 229.13
schedules for local and nonlocal checks do not
apply, and, unlike the other exceptions pro
vided in this section, the regulation provides
no maximum time frames within which the
proceeds of these deposits must be made
available for withdrawal. Maximum times
within which funds must be available for
withdrawal during the new-account period are
provided, however, for certain other deposits.
Deposits received by cash and electronic pay
ments must be made available for withdrawal
in accordance with section 229.10.
Special rules also apply to deposits of Trea
sury checks; U.S. Postal Service money or
ders; checks drawn on Federal Reserve Banks
and Federal Home Loan Banks; state and lo
cal government checks; cashier’s, certified,
and teller’s checks; and, for the purposes of
the new-account exception only, traveler’s
checks. The first $5,000 of funds deposited to
a new account on any one banking day by
these check deposits must be made available
for withdrawal in accordance with section
229.10(c). Thus, the first $5,000 of the pro
ceeds of these check deposits must be made
available on the next business day following
deposit, if the deposit is made in person to an
employee of the depositary bank and the other
conditions of next-day availability are met.
Funds must be made available on the second
business day after deposit for deposits that are
not made over the counter, in accordance with
section 229.10(c)(2). (Proceeds of Treasurycheck deposits must be made available on the
next business day after deposit, even if the
check is not deposited in person to an em
ployee of the depositary bank.) Funds in ex
cess of the first $5,000 deposited by these
types of checks on a banking day must be
available for withdrawal not later than the
ninth business day following the banking day
of deposit. The requirements of section
229.10(c)(l)(vi) and (vii) that on-us checks
and the first $100 of a day’s deposit be made
available for withdrawal on the next business
day do not apply during the new-account
period.
Representation by Customer
The depositary bank may rely on the represen
tation of the customer that the customer has
no established account relationship with the
38
Regulation CC Commentary
bank, and has not had any such account rela
tionship within the past 30 days, to determine
whether an account is subject to the new-ac
count exception.
13(b) Large Deposits
Under the large-deposit exception, a deposi
tary bank may extend the hold placed on
check deposits to the extent that the amount
of the aggregate deposit on any banking day
exceeds $5,000. This exception applies to lo
cal and nonlocal checks, as well as to checks
that would otherwise be made available on the
next (or second) business day after the day of
deposit under section 229.10(c). Although the
first $5,000 of a day’s deposit is subject to the
availability otherwise provided for checks, the
amount in excess of $5,000 may be held for
an additional period of time as provided in
section 229.13(h). When the large-deposit ex
ception is applied to deposits composed of a
mix of checks that would otherwise be subject
to differing availability schedules, the deposi
tary bank has the discretion to choose the por
tion of the deposit to which it applies the ex
ception. Deposits by cash or electronic
payment are not subject to this exception for
large deposits.
The following example illustrates the opera
tion of the large-deposit exception. If a cus
tomer deposits $2,000 in cash and a $9,000
local check on a Monday, $2,100 (the pro
ceeds of the cash deposit and $100 from the
local-check deposit) must be made available
for withdrawal on Tuesday. An additional
$4,900 of the proceeds of the local check
must be available for withdrawal on Wednes
day in accordance with the local schedule, and
the remaining $4,000 may be held for an ad
ditional period of time under the large-deposit
exception.
Where a customer has multiple accounts
with a depositary bank, the bank may apply
the large-deposit exception to the aggregate
deposits to all of the customer’s accounts,
even if the customer is not the sole holder of
the accounts and not all of the holders of the
customer’s accounts are the same. Thus, a de
positary bank may aggregate the deposits
made to two individual accounts in the same
name, to an individual and a joint account
with one common name, or to two joint ac
Regulation CC Commentary
counts with at least one common name for the
purpose of applying the large-deposit excep
tion. Aggregation of deposits to multiple ac
counts is permitted because the Board believes
that the risk to the depositary bank associated
with large deposits is similar regardless of
how the deposits are allocated among the cus
tomer’s accounts.
13(c) Redeposited Checks
The act gives the Board the authority to pro
mulgate an exception to the schedule for
checks that have been returned unpaid and re
deposited. Section 229.13(c) provides such an
exception for checks that have been returned
unpaid and redeposited by the customer or the
depositary bank. This exception applies to lo
cal and nonlocal checks, as well as to checks
that would otherwise be made available on the
next (or second) business day after the day of
deposit under section 229.10(c).
This exception addresses the increased risk
to the depositary bank that checks that have
been returned once will be uncollectible when
they are presented to the paying bank a sec
ond time. The Board, however, does not be
lieve that this increased risk is present for
checks that have been returned due to a miss
ing in d orsem en t. Thus, the ex cep tio n d o es not
apply to checks returned unpaid due to miss
ing indorsements and redeposited after the
missing indorsement has been obtained, if the
reason for return indicated on the check (see
section 229.30(d)) states that it was returned
due to a missing indorsement. For the same
reason, this exception does not apply to a
check returned because it was postdated (fu
ture-dated), if the reason for return indicated
on the check states that it was returned be
cause it was postdated, and if it is no longer
postdated when redeposited.
To determine when funds must be made
available for withdrawal, the banking day on
which the check is redeposited is considered
to be the day of deposit. A depositary bank
that made $100 of a check available for with
drawal under section 229.10(c)(l)(vii) can
charge back the full amount of the check, in
cluding the $100, if the check is returned un
paid, and the $100 need not be made available
again if the check is redeposited.
§ 229.13
13(d) Repeated Overdrafts
The act gives the Board the authority to estab
lish an exception for “deposit accounts which
have been overdrawn repeatedly.” This para
graph provides two tests to determine what
constitutes repeated overdrafts. Under the first
test, a customer’s accounts are considered re
peatedly overdrawn if, on six banking days
within the preceding six months, the available
balance in any account held by the customer
is negative, or the balance would have be
come negative if checks or other charges to
the account had been paid, rather than re
turned. This test can be met based on separate
occurrences (e.g., checks that are returned for
insufficient funds on six different days), or
based on one occurrence (e.g., a negative bal
ance that remains on the customer’s account
for six banking days). If the bank dishonors a
check that otherwise would have created a
negative balance, however, the incident is
considered an overdraft only on that day.
The second test addresses substantial over
drafts. Such overdrafts increase the risk to the
depositary bank of dealing with the repeated
overdrafter. Under this test, a customer incurs
repeated overdrafts if, on two banking days
within the preceding six months, the available
balance in any account held by the customer
is negative in an amount of $5,000 or more,
or would have become negative in an amount
of $5,000 or more if checks or other charges
to the account had been paid.
The exception relates not only to overdrafts
caused by checks drawn on the account, but
also overdrafts caused by other debit charges
(e.g., ACH debits, point-of-sale transactions,
returned checks, account fees, etc.). If the po
tential debit is in excess of available funds,
the exception applies regardless of whether
the items were paid or returned unpaid. An
overdraft resulting from an error on the part
of the depositary bank, or from the imposition
of overdraft charges for which the customer is
entitled to a refund under sections 229.13(e)
or 229.16(c), cannot be considered in deter
mining whether the customer is a repeated
overdrafter. The exception excludes accounts
with overdraft lines of credit, unless the credit
line has been exceeded or would have been
exceeded if the checks or other charges to the
account had been paid.
39
§ 229.13
This exception applies to local and nonlocal
checks, as well as to checks that otherwise
would be made available on the next (or sec
ond) business day after the day of deposit
under section 229.10(c). When a bank places
or extends a hold under this exception, it need
not make the first $100 of a deposit available
for withdrawal on the next business day, as
otherwise would be required by section
229.10(c)( 1)(vii).
13(e) Reasonable Cause to Doubt
Collectibility
In the case of certain check deposits, if the
bank has reasonable cause to believe the
check is uncollectible, it may extend the time
funds must be made available for withdrawal.
This exception applies to local and nonlocal
checks, as well as to checks that would other
wise be made available on the next (or sec
ond) business day after the day of deposit
under section 229.10(c). When a bank places
or extends a hold under this exception, it need
not make the first $100 of a deposit available
for withdrawal on the next business day, as
otherwise would be required by section
229.10 (c)(l)(vii). If the reasonable-cause ex
ception is invoked, the bank must include in
the notice to its customer, required by section
229.13(g), the reason that the bank believes
that the check is uncollectible.
The following are several examples of cir
cumstances under which the reasonable-cause
exception may be invoked:
If a bank received a notice from the paying
bank that a check was not paid and is being
returned to the depositary bank, the depositary
bank could place a hold on the check or ex
tend a hold previously placed on that check,
and notify the customer that the bank had re
ceived notice that the check is being returned.
The exception could be invoked even if the
notice were incomplete, if the bank had rea
sonable cause to believe that the notice ap
plied to that particular check.
The depositary bank may have received in
formation from the paying bank, prior to the
presentment of the check, that gives the bank
reasonable cause to believe that the check is
uncollectible. For example, the paying bank
may have indicated that payment has been
stopped on the check, or that the drawer’s ac40
Regulation CC Commentary
count does not currently have sufficient funds
to honor the check. Such information may
provide sufficient basis to invoke this excep
tion. In these cases, the depositary bank could
invoke the exception and disclose as the rea
son the exception is being invoked the fact
that information from the paying bank indi
cates that the check may not be paid.
The fact that a check is deposited more
than six months after the date on the check
(i.e., a stale check) is a reasonable indication
that the check may be uncollectible, because
under UCC section 4-404 a bank has no duty
to its customer to pay a check that is more
than six months old. Similarly, if a check be
ing deposited is postdated (future-dated), the
bank may have a reasonable cause to believe
the check is uncollectible, because the check
is not properly payable under UCC section
4-401. The bank, in its notice, should specify
that the check is stale date or postdated.
There are reasons that may cause a bank to
believe that a check is uncollectible that are
based on confidential information. For exam
ple, a bank could conclude that a check being
deposited is uncollectible based on its reason
able belief that the depositor is engaging in
kiting activity. Reasonable belief as to the in
solvency or pending insolvency of the drawer
of the check or the drawee bank and that the
checks will not be paid may also justify in
voking this exception. In these cases, the bank
may indicate, as the reason it is invoking the
exception, that the bank has confidential infor
mation that indicates that the check might not
be paid.
The Board has included a reasonable-cause
exception notice as a model form in appendix
C (C-13A). The model notice includes a num
ber of reasons for which this exception may
be invoked. The Board does not intend to pro
vide a comprehensive list of reasons for which
this exception may be invoked; another reason
that does not appear on the model notice may
be used as the basis for extending a hold, if
the reason satisfies the conditions for invoking
this exception. A depositary bank may invoke
the reasonable-cause exception based on a
combination of factors that give rise to a rea
sonable cause to doubt the collectibility of a
check. In these cases, the bank should disclose
the primary reasons for which the exception
Regulation CC Commentary
was invoked in accordance with paragraph (g)
of this section.
The regulation provides that the determina
tion that a check is uncollectible shall not be
based on a class of checks or persons. For
example, a depositary bank cannot invoke this
exception simply because the check is drawn
on a paying bank in a rural area and the de
positary bank knows it will not have the op
portunity to learn of nonpayment of that check
before funds must be made available under
the availability schedules. Similarly, a deposi
tary bank cannot invoke the reasonable-cause
exception based on the race or national origin
of the depositor.
If a depositary bank invokes this exception
with respect to a particular check and does
not provide a written notice to the depositor at
the time of deposit, the depositary bank may
not assess any overdraft fee (such as an NSF
charge) or charge interest for use of overdraft
credit, if the check is paid by the paying bank
and these charges would not have occurred
had the exception not been invoked. A bank
may assess an overdraft fee under these cir
cumstances, however, if it provides notice to
the customer, in the notice of exception re
quired by paragraph (g) of this section, that
the fee may be subject to refund, and refunds
the charges upon the request of the customer.
The notice must state that the customer may
be entitled to a refund of any overdraft fees
that are assessed if the check being held is
paid, and indicate where such requests for a
refund of overdraft fees should be directed.
13(f) Emergency Conditions
Certain emergency conditions may arise that
delay the collection or return of checks, or
delay the processing and updating of customer
accounts. In the circumstances specified in
this paragraph, the depositary bank may ex
tend the holds that are placed on deposits of
checks that are affected by such delays, if the
bank exercises such diligence as the circum
stances require. For example, if a bank learns
that a check has been delayed in the process
of collection due to severe weather conditions
or other causes beyond its control, an emer
gency condition covered by this section may
exist and the bank may place a hold on the
check to reflect the delay. This exception ap
§ 229.13
plies to local and nonlocal checks, as well as
checks that would otherwise be made avail
able on the next (or second) business day af
ter the day of deposit under section 229.10(c).
When a bank places or extends a hold under
this exception, it need not make the first $100
of a deposit available for withdrawal on the
next business day, as otherwise would be re
quired by section 229.10(c)(l)(vii). In cases
where the emergency-conditions exception
does not apply, as in the case of deposits of
cash or electronic payments under section
229.10(a) and (b), the depositary bank may
not be liable for a delay in making funds
available for withdrawal if the delay is due to
a bona fide error such as an unavoidable com
puter malfunction.
13(g) Notice of Exception
If a depositary bank invokes any of the safe
guard exceptions to the schedules listed
above, other than the new-account exception,
and extends the hold on a deposit beyond the
time periods permitted in sections 229.10(c)
and 229.12, it must provide a notice to its
customer. Except in the cases described in
paragraphs (g)(2) and (g)(3) of the regulation,
notices must be given each time an exception
hold is invoked and must state the customer’s
account number, the date of deposit, the rea
son the exception was invoked, and the time
period within which funds will be available
for withdrawal.
With respect to paragraph (g)(1), the re
quirement that the notice state the time period
within which the funds shall be made avail
able may be satisfied if the notice identifies
the date the deposit is received and informa
tion sufficient to indicate when funds will be
available and the amounts that will be avail
able at those times. For example, for a deposit
involving more than one check, the bank need
not provide a notice that discloses when funds
from each individual check in the deposit will
be available for withdrawal; instead, the bank
may provide a total dollar amount for each of
the time periods when funds will be available,
or provide the customer with an explanation
of how to determine the amount of the deposit
that will be held and when the funds will be
available for deposit. Appendix C (C-13) con
tains a model form of this exception notice.
41
§ 229.13
For deposits made in person to an em
ployee of the depositary bank, the notice gen
erally must be given to the person making the
deposit, i.e., the “depositor,” at the time of
deposit. The depositor need not be the cus
tomer holding the account. For other deposits,
such as deposits received at an ATM, lobby
deposit box, night depository, or through the
mail, notice must be mailed to the customer
not later than the close of the business day
following the banking day on which the de
posit was made.
Notice to the customer also may be pro
vided at a later time, if the facts upon which
the determination to invoke the exception do
not become known to the depositary bank un
til after notice would otherwise have to be
given. In these cases, the bank must mail the
notice to the customer as soon as practicable,
but not later than the business day following
the day the facts become known. The Board
has clarified in the regulation when a deposi
tary bank is deemed to have knowledge of the
facts upon which the determination is made.
A bank is deemed to have knowledge when
the facts are brought to the attention of the
person or persons in the bank responsible for
making the determination, or when the facts
would have been brought to their attention if
the bank had exercised due diligence.
If the depositary bank extends the hold
placed on a deposit due to an emergency con
dition, the notice requirement generally ap
plies; however, the regulation provides that
the bank need not provide a notice if the
funds would be available for withdrawal
before the notice must be sent. For example,
if on the last day of a hold period the deposi
tary bank experiences a computer failure and
customer accounts cannot be updated in a
timely fashion to reflect the funds as available
balances, notices are not required if the funds
are made available before the notices must be
sent.
In those cases described in paragraphs
(g)(2) and (g)(3), the depositary bank need not
provide a notice every time an exception hold
is applied to a deposit. When paragraph (g)(2)
or (g)(3) requires disclosure of the time period
within which deposits subject to the exception
will be available for withdrawal, the require
ment may be satisfied if the one-time notice
42
Regulation CC Commentary
states when on-us, local, and nonlocal checks
will be available for withdrawal if an excep
tion is invoked.
Under paragraph (g)(2), if a nonconsumer
account (see commentary to section 229.2(n))
is subject to the large-deposit or redepositedcheck exception, the depositary bank may
give its customer a single notice at or prior to
the time notice must be provided under para
graph (g)(1). Notices provided under para
graph (g)(2) must contain the reason the ex
ception may be invoked and the time period
within which deposits subject to the exception
will be available for withdrawal (see model
notice C-13B). A depositary bank may pro
vide a one-time notice to a nonconsumer cus
tomer under paragraph (g)(2) only if each ex
ception 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. A one-time notice may state that
the depositary bank will apply exception holds
to certain subsets of deposits to which the
large-deposit or redeposited-check exception
may apply, and the notice should identify
such subsets. For example, the depositary
bank may apply the redeposited-check excep
tion only to checks that were redeposited au
tomatically by the depositary bank in accor
dance with an agreement with the customer,
rather than to all redeposited checks. In lieu
of sending the one-time notice, a depositary
bank may send individual hold notices for
each deposit subject to the large-deposit or re
deposited-check exception in accordance with
section 229.13(g)(1) (see model notice C-13).
A depositary bank may continue to send hold
notices for each deposit subject to the largedeposit or redeposited-check exception in ac
cordance with section 229.13(g)(1) (see model
notice C-13).
In the case of a deposit of multiple checks,
the depositary bank has the discretion to place
an exception hold on any combination of
checks in excess of $5,000. The notice should
enable a customer to determine the availability
of the deposit in the case of a deposit of mul
tiple checks. For example, if a customer de
posits a $5,000 local check and a $5,000 non
local check, under the large-deposit exception,
the depositary bank may make funds available
Regulation CC Commentary
in the amount of (1) $100 on the business day
after deposit, $4,900 on the second business
day after deposit (local check), and $5,000 on
the eleventh business day after deposit (nonlo
cal check with six-day exception hold), or (2)
$100 on the first business day after deposit,
$4,900 on the fifth business day after deposit
(nonlocal check), and $5,000 on the seventh
business day after deposit (local check with
five-day exception hold). The notice should
reflect the bank’s priorities in placing excep
tion holds on next-day (or second-day), local,
„ and nonlocal checks.
Under paragraph (g)(3), if an account 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. Notices sent pursu
ant to paragraph (g)(3) must state the cus
tomer’s account number, the fact the excep
tion was invoked under the repeated-overdraft
exception, the time period within which de
posits subject to the exception will be made
available for withdrawal, and the time period
during which the exception will apply (see
model form C-13C). A depositary bank may
provide a one-time notice to a customer under
paragraph (g)(3) only if the repeated-overdraft
exception will be invoked for most check de
posits to the customer’s account.
A depositary bank must retain a record of
each notice of a reasonable-cause exception
for a period of two years, or such longer time
as provided in the record-retention require
ments of section 229.21. This record must
contain a brief description of the facts on
which the depositary bank based its judgment
that there was reasonable cause to doubt the
collectibility of a check. In many cases, such
as where the exception was invoked on the
basis of a notice of nonpayment received, the
record requirement may be met by retaining a
copy of the notice sent to the customer. In
other cases, such as where the exception was
invoked on the basis of confidential informa
tion, a further description to the facts, such as
insolvency of drawer, should be included in
the record.
13(h) Availability of Deposits Subject to
Exceptions
If a depositary bank invokes any exception
§ 229.13
other than the new-account exception, the
bank may extend the time within which funds
must be made available under the schedule by
a reasonable period of time. This provision es
tablishes that an extension of up to one busi
ness day for on-us checks, five business days
for local checks, and six business days for
nonlocal checks is reasonable. Under certain
circumstances, however, a longer extension of
the schedules may be reasonable. In these
cases, the burden is placed on the depositary
bank to establish that a longer period is
reasonable.
For example, assume a bank extended the
hold on a local check deposit by five business
days based on its reasonable cause to believe
that the check is uncollectible. If, on the day
before the extended hold is scheduled to ex
pire, the bank receives a notification from the
paying bank that the check is being returned
unpaid, the bank may determine that a longer
hold is warranted, if it decides not to charge
back the customer’s account based on the no
tification. If the bank decides to extend the
hold, the bank must send a second notice, in
accordance with paragraph (g) of this section,
indicating the new date that the funds will be
available for withdrawal.
With respect to Treasury checks, U.S. Pos
tal Service m on ey orders, checks draw n on
Federal Reserve Banks or Federal Home Loan
Banks, state and local government checks, and
cashier’s, certified, and teller’s checks subject
to the next-day or (second-day) availability re
quirement, the depositary bank may extend
the time funds must be made available for
withdrawal under the large-deposit, redeposited-check, repeated-overdraft, or reasonablecause exception by a reasonable period
beyond the delay that would have been per
mitted under the regulation had the checks not
been subject to the next-day (or second-day)
availability requirement. The additional hold is
added to the local or nonlocal schedule that
would apply based on the location of the pay
ing bank.
One business day for on-us checks, five
business days for local checks, and six busi
ness days for nonlocal checks, in addition to
the time period provided in the schedule,
should provide adequate time for the deposi
tary bank to learn of the nonpayment of virtu43
§ 229.13
ally all checks that are returned. For example,
if a customer deposits a $7,000 cashier’s
check drawn on a nonlocal bank, and the de
positary bank applies the large-deposit excep
tion to that check, $5,000 must be available
for withdrawal on the next business day after
the day of deposit and the remaining $2,000
must be available for withdrawal on the elev
enth business day following the day of deposit
(six business days added to the five-day
schedule for nonlocal checks), unless the de
positary bank establishes that a longer hold is
reasonable.
In the case of the application of the emer
gency-conditions exception, the depositary
bank may extend the hold placed on a check
by not more than a reasonable period follow
ing the end of the emergency or the time
funds must be available for withdrawal under
sections 229.10(c) or 229.12, whichever is
later.
This provision does not apply to holds im
posed under the new-account exception. Under
that exception, the maximum time period
within which funds must be made available
for withdrawal is specified for deposits that
generally must be accorded next-day availabil
ity under section 229.10. This subpart does
not specify the maximum time period within
which the proceeds of local and nonlocal
checks must be made available for withdrawal
during the new-account period.
44
Regulation CC Commentary
Regulation CC
§ 229.14
SECTION 229.14— Payment of Interest
(a) In general. A depositary bank shall begin
to accrue interest or dividends on funds de
posited in an interest-bearing account not later
than the business day on which the depositary
bank receives credit for the funds. For the
purposes of this section, the depositary bank
may—
(1) Rely on the availability schedule of its
Federal Reserve Bank, Federal Home Loan
Bank, or correspondent bank to determine
the time credit is actually received; and
(2) Accrue interest or dividends on funds
deposited in interest-bearing accounts by
checks that the depositary bank sends to
paying banks or subsequent collecting
banks for payment or collection based on
the availability of funds the depositary bank
receives from the paying or collecting
banks.
(b) Special rule for credit unions. Paragraph
(a) of this section does not apply to any ac
count at a bank described in section
229.2(e)(4), if the bank—
(1) Begins the accrual of interest or divi
dends at a later date than the date described
in paragraph (a) of this section with respect
to all funds, including cash, deposited in
the account; and
(2) Provides notice of its interest- or divi
dend-payment policy in the manner required
under section 229.16(d).
(c) Exception fo r checks returned unpaid.
This subpart does not require a bank to pay
interest or dividends on funds deposited by a
check that is returned unpaid.
45
§ 229.14
COMMENTARY
SECTION 229.14— Payment of Interest
14(a) In General
This section requires that a depositary bank
begin accruing interest on interest-bearing ac
counts not later than the day on which the
depositary bank receives credit for the funds
deposited.3 A depositary bank generally re
ceives credit on checks within one or two
days following deposit. A bank receives credit
on a cash deposit, an electronic payment, and
the deposit of a check that is drawn on the
depositary bank itself on the day the cash,
electronic payment, or check is received. In
the case of a deposit at a nonproprietary
ATM, credit is generally received on the day
the bank that operates the ATM credits the
depositary bank for the amount of the deposit.
Because “account” includes only transac
tion accounts, other interest-bearing accounts
of the depositary bank, such as money market
deposit accounts, savings deposits, and time
deposits, are not subject to this requirement;
however, a bank m ay accrue interest on such
deposits in the same way that it accrues inter
est under this paragraph for simplicity of op
eration. The Board intends the term “interest”
to refer to payments to or for the account of
any customer as compensation for the use of
funds, but to exclude the absorption of ex
penses incident to providing a normal banking
function or a bank’s forbearance from charg
ing a fee in connection with such a service.
(See 12 CFR 217.2(d).) Thus, earnings credits
often applied to corporate accounts are not in
3 This section implements section 606 o f the act (12 USC
4005). The act keys the requirement to pay interest to the
time the depositary bank receives “provisional credit” for a
check. “Provisional credit” is a term used in the UCC that
is derived from the code’s concept o f “provisional settle
ment.” (See UCC 4-214 and 4-215.) Provisional credit is
credit that is subject to charge-back if the check is returned
unpaid; once the check is finally paid, the right to charge
back expires and the provisional credit becomes “final.”
Under subpart C, a paying bank no longer has an auto
matic right to charge back credits given in settlement o f a
check, and the concept o f provisional settlement is no
longer useful and has been eliminated by the regulation.
Accordingly, this section uses the term “credit” rather than
“provisional credit,” and this section applies regardless o f
whether a credit would be provisional or final under the
UCC. “Credit” does not include a bookkeeping entry
(sometimes referred to as “deferred credit” ) that does not
represent funds actually available for the bank’s use.
46
Regulation CC Commentary
terest payments for the purposes of this
section.
It may be difficult for a depositary bank to
track which day the depositary bank receives
credit for specific checks in order to accrue
interest properly on the account to which the
check is deposited. This difficulty may be pro
nounced if the bank uses different means of
collecting checks based on the time of day the
check is received, the dollar amount of the
check, and/or the paying bank to which it
must be sent. Thus, for the purpose of the
interest-accrual requirement, a bank may rely
on an availability schedule from its Federal
Reserve Bank, Federal Home Loan Bank, or
correspondent to determine when the deposi
tary bank receives credit. If availability is
delayed beyond that specified in the availabil
ity schedule, a bank may charge back interest
erroneously accrued or paid on the basis of
that schedule.
This paragraph also permits a depositary
bank to accrue interest on checks deposited to
all of its interest-bearing accounts based on
when the bank receives credit on all checks
sent for payment or collection. For example, if
a bank receives credit on 20 percent of the
funds deposited in the bank by check as of
the business day of deposit (e.g., on-us
checks), 70 percent as of the business day fol
lowing deposit, and 10 percent on the second
business day following deposit, the bank can
apply these percentages to determine the day
interest must begin to accrue on check depos
its to all interest-bearing accounts, regardless
of when the bank received credit on the funds
deposited in any particular account. Thus, a
bank may begin accruing interest on a uni
form basis for all interest-bearing accounts,
without the need to track the type of check
deposited to each account.
This section is not intended to limit a pol
icy of a depositary bank that provides that in
terest only accrues on balances that exceed a
specified amount, or on the minimum balance
maintained in the account during a given pe
riod, provided that the balance is determined
based on the date that the depositary bank re
ceives credit for the funds. This section is also
not intended to limit any policy providing that
interest accrues sooner than required by this
paragraph.
Regulation CC Commentary
§ 229.14
14(b) Special Rule for Credit Unions
This provision implements a requirement in
section 606(b) and provides an exemption
from the payment of interest requirements for
credit unions that do not begin to accrue inter
est or dividends on their customer accounts
until a later date than the day the credit union
receives credit for those deposits, including
cash deposits. These credit unions are exempt
from the payment-of-interest requirements, as
long as they provide notice of their interestaccrual policies in accordance with section
229.16(d). For example, if a credit union has
a policy of computing interest on all deposits
received by the 10th of the month from the
first of that month, and on all deposits re
ceived after the 10th of the month from the
first of the next month, that policy is not su
perseded by this regulation, if the credit union
provides proper disclosure of this policy to its
customers.
The act limits this exemption to credit un
ions; other types of banks must comply with
the payment-of-interest requirements. In addi
tion, credit unions that compute interest from
the day of deposit or day of credit should not
change their existing practices in order to
avoid compliance with the requirement that
interest accrue from the day the credit union
receives credit.
14(c) Exception for Checks Returned
Unpaid
This provision is based on section 606(c) of
the act (12 USC 4005(c)) and provides that
interest need not be paid on funds deposited
in an interest-bearing account by check that
has been returned unpaid, regardless of the
reason for return.
47
§ 229.15
SECTION 229.15—General Disclosure
Requirements
(a) Form o f disclosures. A bank shall make
the disclosures required by this subpart clearly
and conspicuously in writing. Disclosures,
other than those posted at locations where em
ployees accept consumer deposits and ATMs
and the notice on preprinted deposit slips,
must be a form that the customer may keep.
The disclosures shall be grouped together and
shall not contain any information not related
to the disclosures required by this subpart. If
contained in a document that sets forth other
account terms, the disclosures shall be high
lighted within the document by, for example,
use of a separate heading.
(b) Uniform reference to day o f availability.
In its disclosure, a bank shall describe funds
as being available for withdrawal on “the
business day after” the day of de
posit. In this calculation, the first business day
is the business day following the banking day
the deposit was received, and the last business
day is the day on which the funds are made
available.
(c) Multiple accounts and multiple account
holders. A bank need not give multiple disclo
sures to a customer that holds multiple ac
counts if the accounts are subject to the same
availability policies. Similarly, a bank need
not give separate disclosures to each customer
on a jointly held account.
(d) Dormant or inactive accounts. A bank
need not give availability disclosures to a cus
tomer that holds a dormant or inactive
account.
48
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.15—General Disclosure
Requirements
15(a) Form of Disclosures
This paragraph sets forth the general require
ments for the disclosures required under sub
part B. All of the disclosures must be given in
a clear and conspicuous manner, must be in
writing, and, in most cases, must be in a form
the customer may keep. Disclosures posted at
locations where employees accept consumer
deposits, at ATMs, and on preprinted deposit
slips need not be in a form that the customer
may keep. Appendix C of the regulation con
tains model forms, clauses, and notices to as
sist banks in preparing disclosures.
Disclosures concerning availability must be
grouped together and may not contain any in
formation that is not related to the disclosures
required by this subpart. Therefore, banks may
not intersperse the required disclosures with
other account disclosures and may not include
other account information that is not related to
their availability policy within the text of the
required disclosures. Banks may, however, in
clude information that is related to their avail
ability policies. For example, a bank may in
form its customers that, even when the bank
has already made funds available for with
drawal, the customer is responsible for any
problem with the deposit, such as the return
of a deposited check.
The regulation does not require that the dis
closures be segregated from other account
terms and conditions. For example, banks may
include the disclosure of their specific availa
bility policy in a booklet or pamphlet that sets
out all of the terms and conditions of the
bank’s accounts. The required disclosures
must, however, be grouped together and high
lighted or identified in some manner, for ex
ample, by use of a separate heading for the
disclosures, such as “When Deposits are
Available for Withdrawal.”
§ 229.15
available for withdrawal. Banks must disclose
when deposited funds are available for with
drawal by stating the business day on which
the customer may begin to withdraw funds.
The business day funds will be available must
be disclosed as “the ________ business day
after” the day of deposit, or substantially sim
ilar language. The business day of availability
is determined by counting the number of busi
ness days starting with the business day fol
lowing the banking day on which the deposit
is received, as determined under section
229.19(a), and ending with the business day
on which the customer may begin to withdraw
funds. For example, a bank that imposes de
lays of four intervening business days for non
local checks must describe those checks as be
ing available on “the fifth business day after”
the day of the deposit.
15(c) Multiple Accounts and Multiple
Account Holders
This paragraph clarifies that banks need not
provide multiple disclosures under the regula
tion. A single disclosure to a customer that
holds multiple accounts, or a single disclosure
to one of the account holders of a jointly held
account, satisfies the disclosure requirements
of the regulation.
15(d) Dormant or Inactive Accounts
This paragraph makes clear that banks need
not provide disclosure of their specific availa
bility policies to customers that hold accounts
that are either dormant or inactive. The deter
mination that certain accounts are dormant or
inactive must be made by the bank. If a bank
considers an account dormant or inactive for
purposes other than this regulation and no
longer provides statements and other mailings
to an account for this reason, such an account
is considered dormant or inactive for purposes
of this regulation.
15(b) Uniform Reference to Day of
Availability
This paragraph requires banks to disclose in a
uniform manner when deposited funds will be
49
§ 229.16
SECTION 229.16— Specific AvailabilityPolicy Disclosure
(a) General. To meet the requirements of a
specific availability-policy disclosure under
sections 229.17 and 229.18(d), a bank shall
provide a disclosure describing the bank’s pol
icy as to when funds deposited in an account
are available for withdrawal. The disclosure
must reflect the policy followed by the bank
in most cases. A bank may impose longer de
lays on a case-by-case basis or by invoking
one of the exceptions in section 229.13, pro
vided this is reflected in the disclosure.
(b) Content o f specific availability-policy dis
closure. The specific availability-policy disclo
sure shall contain the following, as
applicable—
(1) A summary of the bank’s availability
policy;
(2) A description of any categories of de
posits or checks used by the bank when it
delays availability (such as local or nonlo
cal checks); how to determine the category
to which a particular deposit or check be
longs; and when each category will be
available for withdrawal (including a
description of the bank’s business days and
when a deposit is considered received);33
(3) A description of any of the exceptions
3a N o later than December 31, 1988, a bank that distin
guishes in its disclosure between local and nonlocal checks
based on the routing number on the check must disclose
that certain checks, such as some credit-union share drafts
that are payable by one bank but payable through another
bank, w ill be treated as local or nonlocal checks based
upon the location o f the bank by which they are payable
and not on the basis o f the location o f the bank whose
routing number appears on the check. A bank that makes
funds from nonlocal checks available for withdrawal within
the time periods required for local checks under sections
229.11, 229.12, and 229.13 is not required to provide this
disclosure on payable-through checks to its customers. The
statement concerning payable-through checks must describe
how the customer can determine whether these checks will
be treated as local or nonlocal, or state that special rules
apply to such checks and that the customer may ask about
the availability o f these checks. The statement may be in
the form o f an attachment or insert to the bank’s existing
specific policy disclosures. In addition, banks subject to this
disclosure requirement must provide a similar notice con
cerning the payable-through checks to existing account cus
tomers no later than December 31, 1988. (Even though a
bank need not make a disclosure concerning payablethrough checks until December 31, 1988, the bank must
characterize these checks correctly as local or nonlocal
checks under amended section 229.2, and provide availabil
ity in accordance with sections 229.11, 229.12, and 229.13,
effective September 1, 1988.)
50
Regulation CC
in section 229.13 that may be invoked by
the bank, including the time following a de
posit that funds generally will be available
for withdrawal and a statement that the
bank will notify the customer if the bank
invokes one of the exceptions;
(4) A description, as specified in paragraph
(c)(1) of this section, of any case-by-case
policy of delaying availability that may re
sult in deposited funds’ being available for
withdrawal later than the time periods
stated in the bank’s availability policy; and
(5) A description of how the customer can
differentiate between a proprietary and a
nonproprietary ATM, if the bank makes
funds from deposits at nonproprietary
ATMS available for withdrawal later than
funds from deposits at proprietary ATMs.
(c) Longer delays on a case-by-case basis.
(1) Notice in specific policy disclosure. A
bank that has a policy of making deposited
funds available for withdrawal sooner than
required by this subpart may extend the
time when funds are available up to the
time periods allowed under this subpart on
a case-by-case basis, provided the bank in
cludes the following in its specific policy
disclosure—
(i) A statement that the time when de
posited funds are available for with
drawal may be extended in some cases,
and the latest time following a deposit
that funds will be available for
withdrawal;
(ii) A statement that the bank will notify
the customer if funds deposited in the
customer’s account will not be available
for withdrawal until later than the time
periods stated in the bank’s availability
policy; and
(iii) A statement that customers should
ask if they need to be sure about when a
particular deposit will be available for
withdrawal.
(2) Notice at time of case-by-case delay.
(i) In general. When a depositary bank
extends the time when funds will be
available for withdrawal on a case-by
case basis, it must provide the depositor
with a written notice. The notice shall in
clude the following information—
Regulation CC
(A) The account number of the
customer;
(B) The date and amount of the
deposit;
(C) The amount of the deposit that is
being delayed; and
(D) The day the funds will be avail
able for withdrawal.
(ii) Timing o f notice. The notice shall be
provided to the depositor at the time of
the deposit, unless the deposit is not
made in person to an employee of the
depositary bank or the decision to extend
the time when the deposited funds will
be available is made after the time of the
deposit. If notice is not given at the time
of the deposit, the depositary bank shall
mail or deliver the notice to the customer
not later than the first business day fol
lowing the banking day the deposit is
made.
(3) Overdraft and returned-check fees. A
depositary bank that extends the time when
funds will be available for withdrawal on a
case-by-case basis and does not furnish the
depositor with written notice at the time of
deposit shall not assess any fees for any
subsequent overdrafts (including use of a
line of credit) or return of checks or other
debits to the account, if—
(i) The overdraft or return of the check
or other debit would not have occurred
except for the fact that the deposited
funds were delayed under paragraph
(c)(1) of this section; and
(ii) The deposited check was paid by the
paying bank.
Notwithstanding the foregoing, the deposi
tary bank may assess an overdraft or retumed-check fee if it includes a notice con
cerning overdraft and returned-check fees
with the notice required in paragraph (c)(2)
of this section and, when required, refunds
any such fees upon the request of the cus
tomer. The notice must state that the cus
tomer may be entitled to a refund of over
draft or returned-check fees that are
assessed if the check subject to the delay is
paid and how to obtain a refund.
(d) Credit-union notice o f interest-payment
policy. If a bank described in section
229.2(e)(4) begins to accrue interest or divi
§ 229.16
dends on all deposits made in an interest-bear
ing account, including cash deposits, at a later
time than the day specified in section
229.14(a), the bank’s specific policy disclo
sures shall contain an explanation of when in
terest or dividends on deposited funds begin
to accrue.
§ 229.16
COMMENTARY
SECTION 229.16— Specific AvailabilityPolicy Disclosure
16(a) General
This section describes the information that
must be disclosed by banks to comply with
sections 229.17 and 229.18(d), which require
that banks furnish notices of their specific pol
icy regarding availability of deposited funds.
The disclosure provided by a bank must re
flect the availability policy followed by the
bank in most cases, even though a bank may
in some cases make funds available sooner or
impose a longer delay.
The disclosure must reflect the policy and
practice of the bank regarding availability as
to most accounts and most deposits into those
accounts. In disclosing the availability policy
that it follows in most cases, a bank may pro
vide a single disclosure that reflects one pol
icy to all its transaction account customers,
even though some of its customers may re
ceive faster availability than that reflected in
the policy disclosure. Thus, a bank need not
disclose to some customers that they receive
faster availability than indicated in the disclo
sure. If, however, a bank has a policy of im
posing delays in availability on any customers
longer than those specified in its disclosure,
those customers must receive disclosures that
reflect the longer applicable availability
periods.
A bank may disclose that funds are “avail
able for withdrawal” on a given day notwith
standing the fact that the bank uses the funds
to pay checks received before that day. For
example, a bank may disclose that its policy
is to make funds available from deposits of
local checks on the second business day fol
lowing the day of deposit, even though it may
use the deposited funds to pay checks prior to
the second business day; the funds used to
pay checks in this example are not available
for withdrawal until the second business day
after deposit because the funds are not avail
able for all uses until the second business day.
(See the definition of “available for with
drawal” in section 229.2(d).)
52
Regulation CC Commentary
16(b) Content of Specific Policy
Disclosure
This paragraph sets forth the items that must
be included, as applicable, in a bank’s specific
availability-policy disclosure. The information
that must be disclosed by a particular bank
will vary considerably depending upon the
bank’s availability policy. For example, a
bank that makes deposited funds available for
withdrawal on the business day following the
day of deposit need simply disclose that de
posited funds will be available for withdrawal
on the first business day after the day of de
posit, the bank’s business days, and when de
posits are considered received.
On the other hand, a bank that has a policy
of routinely delaying on a blanket basis the
time when deposited funds are available for
withdrawal would have a more detailed dis
closure. Such blanket hold policies might be
for the maximum time allowed under the fed
eral law or might be for shorter periods.
These banks must disclose the types of depos
its that will be subject to delays, how the cus
tomer can determine the type of deposit being
made, and the day that funds from each type
of deposit will be available for withdrawal.
Some banks may have a combination of
next-day availability and blanket delays. For
example, a bank may provide next-day availa
bility for all deposits except for one or two
categories, such as deposits at nonproprietary
ATMs and nonlocal personal checks over a
specified dollar amount. The bank would de
scribe the categories that are subject to delays
in availability and tell the customer when each
category would be available for withdrawal,
and state that other deposits will be available
for withdrawal on the first business day after
the day of deposit. Similarly, a bank that pro
vides availability on the second business day
for most of its deposits would need to identify
the categories of deposits which, under the
regulation, are subject to next-day availability
and state that all other deposits will be avail
able on the second business day.
Because many banks’ availability policies
may be complex, banks must give a brief
summary of its policy at the beginning of the
disclosure. In addition, the bank must describe
any circumstances when actual availability
may be longer than the schedules disclosed.
Regulation CC Commentary
Such circumstances would arise, for example,
when the bank invokes one of the exceptions
set forth in section 229.13 of the regulation,
or when the bank delays or extends the time
when deposited funds are available for with
drawal up to the time periods allowed by the
regulation on a case-by-case basis. Also, a
bank that must make certain checks available
faster under appendix B (reduction of sched
ules for certain nonlocal checks) must state
that some check deposits will be available for
withdrawal sooner because of special rules
and that a list of the pertinent routing num
bers is available upon request.
Generally, a bank that distinguishes in its
disclosure between local and nonlocal checks
based on the routing number on the check
must disclose to its customers that certain
checks, such as some credit-union payablethrough drafts, will be treated as local or non
local based on the location of the bank by
which they are payable (e.g., the credit union),
and not on the basis of the location of the
bank whose routing number appears on the
check. A bank is not required to provide this
disclosure, however, if it makes the proceeds
of both local and nonlocal checks available
for withdrawal within the time periods re
quired for local checks in sections 229.11,
229.12, and 229.13.
The business-day cut-off time used by the
bank must be disclosed and if some locations
have different cut-off times the bank must
note this in the disclosure and state the earli
est time that might apply. A bank need not
list all of the different cut-off times that might
apply.
A bank taking advantage of the extended
time period for making deposits at nonproprie
tary ATMs available for withdrawal under sec
tion 229.12 (f)(1) must explain this in the ini
tial disclosure. In addition, the bank must
provide a list (on or with the initial disclo
sure) of either the bank’s proprietary ATMs or
those ATMs that are nonproprietary at which
customers may make deposits. As an alterna
tive to providing such a list, the bank may
label all of its proprietary ATMs with the
bank’s name and state in the initial disclosure
that this has been done. Similarly, a bank tak
ing advantage of the cash withdrawal limita
tions of sections 229.11(b)(2) and 229.12(d),
§ 229.16
or the provision in section 229.19(e) allowing
holds to be placed on other deposits when a
deposit is made or a check is cashed, must
explain this in the initial disclosure.
A bank that provides availability based on
when the bank generally receives credit for
deposited checks need not disclose the time
when a check drawn on a specific bank will
be available for withdrawal. Instead, the bank
may disclose the categories of deposits that
must be available on the first business day af
ter the day of deposit (deposits subject to sec
tion 229.10) and state the other categories of
deposits and the time periods that will be ap
plicable to those deposits. For example, a
bank might disclose the four-digit Federal Re
serve routing symbol for local checks and in
dicate that such checks as well as certain non
local checks will be available for withdrawal
on the first or second business day following
the day of deposit, depending on the location
of the particular bank on which the check is
drawn, and disclose that funds from all other
checks will be available on the second or
third business day. The bank must also dis
close that the customer may request a copy of
the bank’s detailed schedule that would enable
the customer to determine the availability of
any check and must provide such schedule
upon request. A change in the bank’s detailed
schedule would not trigger the change-in
policy disclosure requirement of section
229.18(e).
16(c) Longer Delays on a Case-by-Case
Basis
16(c)(1) Notice in Specific Policy Disclosure
Banks that make deposited funds available for
withdrawal sooner than required by the regu
lation—for example, providing their customers
with immediate or next-day availability for
deposited funds—and delay the time when
funds are available for withdrawal only from
time to time determined on a case-by-case ba
sis must provide notice of this in their specific
availability-policy disclosure. This paragraph
outlines the requirements for that notice.
In addition to stating what their specific
availability policy is in most cases, banks that
may delay or extend the time when deposits
are available on a case-by-case basis must:
53
§ 229.16
state that from time to time funds may be
available for withdrawal later than th'e time
periods in their specific policy disclosure; dis
close the latest time that a customer may have
to wait for deposited funds to be available for
withdrawal when a case-by-case hold is
placed; state that customers will be notified
when availability of a deposit is delayed on a
case-by-case basis; and advise customers to
ask if they need to be sure of the availability
of a particular deposit.
A bank that imposes delays on a case-bycase basis is still subject to the availability
requirements of this regulation. If the bank
imposes a delay on a particular deposit that is
not longer than the availability required by
section 229.12 for local and nonlocal checks,
the reason for the delay need not be based on
the exceptions provided in section 229.13. If
the delay exceeds the time periods permitted
under section 229.12, however, then it must
be based on an exception provided in section
229.13, and the bank must comply with the
section 229.13 notice requirements. A bank
that imposes delays on a case-by-case basis
may avail itself of the one-time notice provi
sions in section 229.13(g)(2) and (3) for de
posits to which those provisions apply.
(16)(c)(2) Notice at Time o f Case-by-Case
Delay
In addition to including the disclosures re
quired by paragraph (c)(1) of this section in
their specific availability-policy disclosure,
banks that delay or extend the time period
when funds are available for withdrawal on a
case-by-case basis must give customers a no
tice when availability of funds from a particu
lar deposit will be delayed or extended be
yond the time when deposited funds are
generally available for withdrawal. The notice
must state that a delay is being imposed and
indicate when the funds will be available. In
addition, the notice must include the account
number, the date and amount of the deposit,
and the amount of the deposit being delayed.
If notice of the delay was not given at the
time the deposit was made and the bank as
sesses overdraft or retumed-check fees on ac
counts when a case-by-case hold has been
placed, the case-by-case hold notice provided
to the customer must include a notice con54
Regulation CC Commentary
ceming overdraft or retumed-check fees. The
notice must state that the customer may be
entitled to a refund of any overdraft or re
tumed-check fees that result from the depos
ited funds’ not being available if the check
that was deposited was in fact paid by the
payor bank, and explain how to request a re
fund of any fees. (See section 229.16(c)(3).)
The requirement that the case-by-case hold
notice state the day that funds will be made
available for withdrawal may be met by stat
ing the date or the number of business days
after deposit that the funds will be made
available. This requirement is satisfied if the
notice provides information sufficient to indi
cate when funds will be available and the
amounts that will be available at those times.
For example, for a deposit involving more
than one check, the bank need not provide a
notice that discloses when funds from each in
dividual item in the deposit will be available
for withdrawal. Instead, the bank may provide
a total dollar amount for each of the time pe
riods when funds will be available, or provide
the customer with an explanation of how to
determine the amount of the deposit that will
be held and when the held funds will be
available for withdrawal.
For deposits made in person to an em
ployee of the depositary bank, the notice gen
erally must be given at the time of the de
posit. The notice at the time of the deposit
must be given to the person making the de
posit, that is, the “depositor.” The depositor
need not be the customer holding the account.
For other deposits, such as deposits received
at an ATM, lobby deposit box, night deposi
tory, through the mail, or by armored car, no
tice must be mailed to the customer not later
than the close of the business day following
the banking day on which the deposit was
made. Notice to the customer also may be
provided not later than the close of the busi
ness day following the banking day on which
the deposit was made if the decision to delay
availability is made after the time of the
deposit.
(16)(c)(3) Overdraft and Retumed-Check
Fees
If a depositary bank delays or extends the
time when funds from a deposited check are
Regulation CC Commentary
§ 229.16
available for withdrawal on a case-by-case ba
sis and does not provide a written notice to its
depositor at the time of deposit, the depositary
bank may not assess any overdraft or returned-check fees (such as an insufficientfunds charge) or charge interest for use of an
overdraft line of credit, if the deposited check
is paid by the paying bank and these fees
would not have occurred had the additional
case-by-case delay not been imposed. A bank
may assess an overdraft or retumed-check fee
under these circumstances, however, if it pro
vides notice to the customer in the notice re
quired by paragraph (c)(2) of this section that
the fee may be subject to refund, and refunds
the fees upon the request of the customer
when required to do so. The notice must state
that the customer may be entitled to a refund
of any overdraft or retumed-check fees that
are assessed if the deposited check is paid,
and indicate where such requests for a refund
of overdraft fees should be directed. Para
graph (c)(3) applies when a bank provides a
case-by-case notice in accordance with para
graph (c)(2) and does not apply if the bank
has provided an exception-hold notice in ac
cordance with section 229.13.
16(d) Credit-Union Notice of InterestPayment Policy
This paragraph sets forth the special disclo
sure requirement for credit unions that delay
accrual of interest or dividends for all cash
and check deposits beyond the date of receiv
ing provisional credit for checks being depos
ited. (The interest-payment requirement is set
forth in section 229.14(a).) Such credit unions
are required to describe their policy with re
spect to accrual of interest or dividends on
deposits in their specific availability-policy
disclosure.
55
§ 229.17
SECTION 229.17— Initial Disclosures
(a) New accounts. Before opening an account,
a bank shall provide a potential customer with
the applicable specific availability-policy dis
closure described in section 229.16.
(b) Existing accounts.
(1) In the first regularly scheduled mailing
to customers after September 1, 1988, but
not later than October 31, 1988, a bank
shall send to existing customers the specific
availability-policy disclosure described in
section 229.16, unless the bank has previ
ously given disclosures that meet the re
quirements of that section.
(2) If the disclosure required by paragraph
(b)(1) of this section is included with a dis
closure of other account terms and condi
tions, the bank must direct the customer’s
attention to the availability disclosures by,
for example, the use of an insert or a letter.
(3) The disclosure required by paragraph
(b)(1) of this section may not be included
in a mailing of promotional material, such
as a solicitation for a new product or ser
vice, unless the mailing also includes the
customer’s account statement.
56
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.17— Initial Disclosures
17(a) New Accounts
This paragraph requires banks to provide a
notice of their availability policy to all poten
tial customers prior to opening an account.
The requirement of a notice prior to opening
an account requires banks to provide disclo
sures prior to accepting a deposit to open an
account. Disclosures must be given at the time
the bank accepts an initial deposit regardless
of whether the bank has opened the account
yet for the customer. If a bank, however, re
ceives a written request by mail from a person
asking that an account be opened and the re
quest includes an initial deposit, the bank may
open the account with the deposit, provided
the bank mails the required disclosures to the
customer not later than the business day fol
lowing the banking day on which the bank
receives the deposit. Similarly, if a bank re
ceives a telephone request from a customer
asking that an account be opened with a trans
fer from a separate account of the customer’s
at the bank, the disclosure may be mailed not
later than the business day following the
banking day of the request.
§ 229.17
for September 1, 1990, and beyond in a single
notice.
The notice of specific policy may be sent
alone in a separate mailing, instead of with an
account statement, provided the mailing is
made prior to the first statement mailing on
the account after September 1, 1988. Banks
may not furnish the required notice to custom
ers by including the notice with promotional
material, such as a solicitation for health or
hospitalization insurance, unless that material
is included with the account statement. A
bank is permitted to provide the notice by fur
nishing the customer with a booklet or pam
phlet that describes the terms and conditions
of the bank’s accounts generally. The bank,
however, must then direct the customer’s at
tention to the disclosures required by this sec
tion by, for example, use of a special insert or
a letter.
If a customer has requested that the bank
not mail any information regarding the ac
count, the bank need not make a special mail
ing that includes the disclosure of the bank’s
specific availability policy. The disclosure
should be made available to the customer in
accordance with the customer’s instructions to
the bank for statements and other account
information.
17(b) Existing Accounts
This section requires banks to send a notice of
their specific policy with respect to the availa
bility of deposited funds to all existing ac
count holders in the first scheduled mailing to
such customers occurring after September 1,
1988. The notice must be sent not later than
October 31, 1988. Thus, banks must include a
notice in the first statement mailed to custom
ers after September 1, 1988, unless, prior to
the mailing of this statement, the bank has
provided a notice to its customers of its avail
ability policy that meets the requirements of
section 229.16. A bank that has provided
availability-policy disclosures to its customers,
either under a state law or as a matter of bank
practices or policy, need not provide disclo
sures under this section if the disclosures that
were previously given comply with the re
quirements of this regulation. A bank may
disclose both its present policy and its policy
57
J
§ 229.18
SECTION 229.18— Additional
Disclosure Requirements
(a) Deposit slips. A bank shall include on all
preprinted deposit slips furnished to its cus
tomers a notice that deposits may not be
available for immediate withdrawal.
(b) Locations where employees accept con
sumer deposits. A bank shall post in a con
spicuous place in each location where its em
ployees receive deposits to consumer accounts
a notice that sets forth the time periods appli
cable to the availability of funds deposited in
a consumer account.
(c) Automated teller machines.
(1) A depositary bank shall post or provide
a notice at each ATM location that funds
deposited in the ATM may not be available
for immediate withdrawal.
(2) A depositary bank that operates an offpremises ATM from which deposits are re
moved not more than two times each week,
as described in section 229.19(a)(4), shall
disclose at or on the ATM the days on
which deposits made at the ATM will be
considered received.
(d) Upon request. A bank shall provide to any
person, upon oral or written request, a notice
containing the applicable specific availabilitypolicy disclosure described in section 229.16.
(e) Changes in policy. A bank shall send a
notice to holders of consumer accounts at
least 30 days before implementing a change to
the bank’s availability policy regarding such
accounts, except that a change that expedites
the availability of funds may be disclosed not
later than 30 days after implementation.
58
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.18— Additional
Disclosure Requirements
18(a) Deposit Slips
This paragraph requires banks to include a no
tice on all preprinted deposit slips. The de
posit-slip notice need only state, somewhere
on the front of the deposit slip, that deposits
may not be available for immediate with
drawal. The notice is required only on
preprinted deposit slips—those printed with
the customer’s account number and name and
furnished by the bank in response to a cus
tomer’s order to the bank. A bank need not
include the notice on deposit slips that are not
preprinted and supplied to the customer—such
as counter deposit slips—or on those special
deposit slips provided to the customer under
section 229.10(c). A bank is not responsible
for ensuring that the notice appear on deposit
slips that the customer does not obtain from
or through the bank.
This paragraph applies to preprinted deposit
slips furnished to customers on or after Sep
tember 1, 1988. A bank need not mail deposit
slips to customers to replace the customers’
existing supply, and customers may continue
to use any slips they were sent prior to Sep
tember 1, 1988. In addition, a bank may mail
or deliver to its customers after September 1,
1988, preprinted deposit slips requested by the
customers prior to September 1, 1988, even
though the deposit slips do not include the
required notice.
18(b) Locations W here Employees
Accept Consumer Deposits
This paragraph describes the statutory require
ment that a bank post in each location where
its employees accept consumer deposits a no
tice of its availability policy pertaining to con
sumer accounts. The notice that is required
must specifically state the availability periods
for the various deposits that may be made to
consumer accounts. The notice need not be
posted at each teller window, but the notice
must be posted in a place where consumers
seeking to make deposits are likely to see it
before making their deposits. For example, the
§ 229.18
notice might be posted at the point where the
line forms for teller service in the lobby. The
notice is not required at any drive-through
teller windows nor is it required at night de
pository locations, or at locations where con
sumer deposits are not accepted.
18(c) Automated Teller Machines
This paragraph sets forth the required notices
for ATMs. Paragraph (c)(1) provides that the
depositary bank is responsible for posting a
notice on all ATMs at which deposits can be
made to accounts at the depositary bank. The
depositary bank may arrange for a third party,
such as the owner or operator of the ATM, to
post the notice and indemnify the depositary
bank from liability if the depositary bank is
liable under section 229.21 for the owner or
operator failing to provide the required notice.
The notice may be posted on a sign, shown
on the screen, or included on deposit enve
lopes provided at the ATM. This disclosure
must be given before the customer has made
the deposit. Therefore, a notice provided on
the customer’s deposit receipt or appearing on
the ATM’s screen after the customer has made
the deposit would not satisfy this requirement.
Paragraph (c)(2) requires a depositary bank
that operates an off-premises ATM from
which deposits are removed not more than
two times a week to make a disclosure of this
fact on the off-premises ATM. The notice
must disclose to the customer the days on
which deposits made at the ATM will be con
sidered received.
18(d) Upon Request
This paragraph requires banks to provide writ
ten notice of their specific availability policy
to any person upon that person’s oral or writ
ten request. The notice must be sent within a
reasonable period of time following receipt of
the request.
18(e) Changes in Policy
This paragraph requires banks to send notices
to their customers when the banks change
their availability policies with regard to con
sumer accounts. A notice may be given in any
form as long as it is clear and conspicuous. If
the bank gives notice of a change by sending
59
§ 229.18
the customer a complete new availability dis
closure, the bank must direct the customer to
the changed terms in the disclosure by use of
a letter or insert, or by highlighting the
changed terms in the disclosure.
Generally, a bank must send a notice at
least 30 calendar days before implementing
any change in its availability policy. If the
change results in faster availability of depos
its—for example, if the bank changes its
availability for nonlocal checks from the fifth
business day after deposit to the fourth busi
ness day after deposit—the bank need not
send advance notice. The bank must, however,
send notice of the change no later than 30
calendar days after the change is imple
mented. A bank is not required to give a no
tice when there is a change in appendix B
(Reduction of Schedules for Certain Nonlocal
Checks).
A bank that has provided its customers with
a list of ATMs under section 229.16(b)(5)
shall provide its customers with an updated
list of ATMs once a year if there are changes
in the list of ATMs previously disclosed to the
customers.
In disclosing changes due to the implemen
tation of the permanent schedule, a bank may
provide notice in any form that is clear and
conspicuous. For example, in disclosing the
change in the maximum period for case-by
case holds, banks that used the previous ver
sion of Form C-3 could use language such as
the following on account statements or inserts:
“Our disclosure on funds availability indicated
that, in certain circumstances, funds from de
posits would not be available until the seventh
business day following the day of your de
posit. Effective September 1, 1990, that period
[was/will be] reduced to five business days.”
A bank reserving the right to apply the cashwithdrawal limitation in section 229.12(d)
when invoking a case-by-case hold should in
dicate that the period is reduced to six, rather
than five, business days.
60
Regulation CC Commentary
Regulation CC
SECTION 229.19— Miscellaneous
(a) When funds are considered deposited. For
the purposes of this subpart—
(1) Funds deposited at a staffed facility or
an ATM are considered deposited when
they are received at the staffed facility or
ATM;
(2) Funds mailed to the depositary bank are
considered deposited on the day they are
received by the depositary bank;
(3) Funds deposited to a night depository,
lock box, or similar facility are considered
deposited on the day on which the deposit
is removed from such facility and is avail
able for processing by the depositary bank;
(4) Funds deposited at an ATM that is not
on, or within 50 feet of, the premises of the
depositary bank are considered deposited on
the day the funds are removed from the
ATM, if funds normally are removed from
the ATM not more than two times each
week; and
(5) Funds may be considered deposited on
the next banking day, in the case of funds
that are deposited—
(i) On a day that is not a banking day
for the depositary bank; or
(ii) After a cut-off hour set by the depos
itary bank for the receipt of deposits of
2:00 p.m. or later, or, for the receipt of
deposits at ATMs or off-premise facili
ties, of 12:00 noon or later. Different cut
off hours later than these times may be
established for receipt of different types
of deposits, or receipt of deposits at dif
ferent locations.
(b) Availability at start of business day. Ex
cept as otherwise provided in sections
229.11(b)(2) and 229.12(d), if any provision
of this subpart requires that funds be made
available for withdrawal on any business day,
the funds shall be available for withdrawal by
the later of—
(1) 9:00 a.m. (local time of the depositary
bank); or
(2) The time the depositary bank’s teller fa
cilities (including ATMs) are available for
customer-account withdrawals.
(c) Effect on policies o f depositary bank. This
part does not—
(1) Prohibit a depositary bank from making
§ 229.19
funds available to a customer for with
drawal in a shorter period of time than the
time required by this subpart;
(2) Affect a depositary bank’s right—
(i) To accept or reject a check for
deposit;
(ii) To revoke any settlement made by
the depositary bank with respect to a
check accepted by the bank for deposit,
to charge back the customer’s account for
the amount of a check based on the re
turn of the check or receipt of a notice of
nonpayment of the check, or to claim a
refund of such credit; and
(iii) To charge back funds made available
to its customer for an electronic payment
for which the bank has not received pay
ment in actually and finally collected
funds;
(3) Require a depositary bank to open or
otherwise to make its facilities available for
customer transactions on a given business
day; or
(4) Supersede any policy of a depositary
bank that limits the amount of cash a cus
tomer may withdraw from its account on
any one day, if that policy—
(i) Is not dependent on the time the
funds have been deposited in the account,
as long as the funds have been on de
posit for the time period specified in sec
tion 229.10, 229.11, 229.12, or 229.13;
and—
(ii) In the case of withdrawals made in
person to an employee of the depositary
bank—
(A) Is applied without discrimination
to all customers of the bank; and
(B) Is related to security, operating, or
bonding requirements of the depositary
bank.
(d) Use o f calculated availability. A deposi
tary bank may provide availability to its non
consumer accounts based on a sample of
checks that represents the average composition
of the customer’s deposits, if the terms for
availability based on the sample are equivalent
to or more prompt than the availability re
quirements of this subpart.
(e) Holds on other funds.
(1) A depositary bank that receives a check
61
§ 229.19
for deposit in an account may not place a
hold on any funds of the customer at the
bank, where—
(i) The amount of funds that are held ex
ceeds the amount of the check; or
(ii) The funds are not made available for
withdrawal within the times specified in
229.10, 229.11, 229.12, and 229.13.
(2) A depositary bank that cashes a check
for a customer over the counter, other than
a check drawn on the depositary bank, may
not place a hold on funds in an account of
the customer at the bank, if—
(i) The amount of funds that are held ex
ceeds the amount of the check; or
(ii) The funds are not made available for
withdrawal within the times specified in
229.10, 229.11, 229.12, and 229.13.
(f) Employee training and compliance. Each
bank shall establish procedures to ensure that
the bank complies with the requirements of
this subpart, and shall provide each employee
who performs duties subject to the require
ments of this subpart with a statement of the
procedures applicable to that employee.
(g) Effect o f merger transaction. For purposes
of this subpart, except for the purposes of the
new-accounts exception of section 229.13(a),
and when funds are considered deposited
under section 229.19(a), two or more banks
that have engaged in a merger transaction may
be considered to be separate banks for a pe
riod of one year following the consummation
of the merger transaction.
62
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.19—Miscellaneous
19(a) When Funds Are Considered
Deposited
The time funds must be made available for
withdrawal under this subpart is determined
by the day the deposit is made. This para
graph provides rules to determine the day
funds are considered deposited in various cir
cumstances. Funds received at a staffed teller
station or ATM are considered deposited when
received by the teller or placed in the ATM.
Funds deposited to a deposit box in a bank
lobby that is accessible to customers only dur
ing regular business hours are generally con
sidered deposited when placed in the lobby
box; a bank may, however, treat deposits to
lobby boxes the same as deposits to night de
positories
(as provided
in section
229.19(a)(3)), provided a notice appears on
the lobby box informing the customer when
such deposits will be considered received.
Funds mailed to the depositary bank are con
sidered deposited on the banking day they are
received by the depositary bank. The funds
are received by the depositary bank at the
time the mail is delivered to the bank, even if
it is initially delivered to a mail room, rather
than the check-processing area.
In addition to deposits at staffed facilities,
at ATMs, and by mail, funds may be depos
ited at a facility such as a night depository or
a lock box. A night depository is a receptacle
for receipt of deposits, typically used by cor
porate depositors when the branch is closed.
Funds deposited at a night depository are con
sidered deposited on the banking day the de
posit is removed, and the contents of the de
posit are accessible to the depositary bank for
processing. For example, some businesses de
posit their funds in a locked bag at the night
depository late in the evening, and return to
the bank the following day to open the bag.
Other depositors may have an agreement with
their bank that the deposit bag must be
opened under the dual control of the bank and
the depositor. In these cases, the funds are
considered deposited when the customer re
turns to the bank and opens the deposit bag.
A lock box is a post office box used by a
§ 229.19
corporation for the collection of bill payments
or other check receipts. The depositary bank
generally assumes the responsibility for col
lecting the mail from the lock box, processing
the checks, and crediting the corporation for
the amount of the deposit. Funds deposited
through a lock-box arrangement are consid
ered deposited on the day the deposit is re
moved from the lock box and are accessible
to the depositary bank for processing.
A special provision is made for certain offpremises ATMs that are not serviced daily.
Funds deposited at such an ATM are consid
ered deposited on the day they are removed
from the ATM, if the ATM is not serviced
more than two times each week. This provi
sion is intended to address the practices of
some banks of servicing certain remote ATMs
infrequently. If a depositary bank applies this
provision with respect to an ATM, a notice
must be posted at the ATM informing deposi
tors that funds deposited at the ATM may not
be considered received on the day of deposit,
in accordance with section 229.18.
This paragraph also provides that a deposit
received on a day that the depositary bank is
closed, or after the bank’s cut-off hour, may
be considered made on the next banking day.
Generally, for purposes of the availability
schedules of this subpart, a bank may estab
lish a cut-off hour of 2:00 p.m. or later for
receipt of deposits at its head office or branch
offices. For receipt of deposits at ATMs or
off-premise facilities, such as night deposito
ries or lock boxes, the depositary bank may
establish a cut-off hour of 12:00 noon or later
(either local time of the branch or other loca
tion of the depositary bank at which the ac
count is maintained or local time of the ATM
or off-premise facility). The depositary bank
must use the same method for establishing the
cutoff hour for all ATMs and off-premise fa
cilities used by its customers. The choice of
cut-off hour must be reflected in the bank’s
internal procedures, and the bank must inform
its customers of the cut-off hour upon request.
This earlier cut-off for ATM or off-premises
deposits is intended to provide greater flexibil
ity in the servicing of ATMs and other offpremises facilities.
Different cut-off hours may be established
for different types of deposits. For example, a
63
§ 229.19
bank may establish a 2:00 p.m. cut-off for the
receipt of check deposits, but a later cut-off
for the receipt of wire transfers. Different cut
off hours may also be established for deposits
received at different locations. For example, a
different cut-off may be established for ATM
deposits than for over-the-counter deposits, or
for different teller stations at the same branch.
A bank is not required to remain open until
2:00 p.m. If a bank closes before 2:00 p.m.,
deposits received after the closing may be
considered received on the next banking day.
Further, as section 229.2(f) defines the term
“banking day” as the portion of a business
day on which a bank is open to the public for
substantially all of its banking functions, a
day, or a portion of a day, is not necessarily a
banking day merely because the bank is open
for only limited functions, such as keeping
drive-in or walk-up teller windows open,
when the rest of the bank is closed to the
public. For example, a banking office that
usually provides a full range of banking ser
vices may close at 12:00 noon but leave a
drive-in teller window open for the limited
purpose of receiving deposits and making cash
withdrawals. Under those circumstances, the
bank is considered closed and may consider
deposits received after 12:00 noon as having
been received on the next banking day. The
fact that a bank may reopen for substantially
all of its banking functions after 2:00 p.m., or
that it continues its back office operations
throughout the day, would not affect this re
sult. A bank may not, however, close individ
ual teller stations and reopen them for next
day’s business before 2:00 p.m. during a
banking day.
19(b) Availability at Start of Business
Day
If funds must be made available for with
drawal on a business day, the funds must be
available for withdrawal by the later of 9:00
a.m. or the time the depositary bank’s teller
facilities, including ATMs, are available for
customer account withdrawals, except under
the special rule for cash withdrawals set forth
in sections 229.11(b)(2) and 229.12(d). Thus,
if a bank has no ATMs and its branch facili
ties are available for customer transactions be
ginning at 10:00 a.m., funds must be available
64
Regulation CC Commentary
for customer withdrawal beginning at 10:00
a.m. If the bank has ATMs that are available
24 hours a day, rather than establishing 12:01
a.m. as the start of the business day, this para
graph sets 9:00 a.m. as the start of the day
with respect to ATM withdrawals. The Board
believes that this rule provides banks with
sufficient time to update their accounting sys
tems to reflect the available funds in customer
accounts for that day.
The start of business is determined by the
local time of the branch or other location of
the depositary bank at which the account is
maintained. For example, if funds in a cus
tomer’s account at a West Coast bank are first
made available for withdrawal at the start of
business on a given day, and the customer at
tempts to withdraw the funds at an East Coast
ATM, the depositary bank is not required to
make the funds available until 9:00 a.m. West
Coast time (12:00 noon East Coast time).
19(c) Effect on Policies of Depositary
Bank
This subpart establishes the maximum hold
that may be placed on customer deposits. A
depositary bank may provide availability to its
customers in a shorter time than prescribed in
this subpart. A depositary bank may also
adopt different funds-availability policies for
different segments of its customer base, as
long as each policy meets the schedules in the
regulation. For example, a bank may differen
tiate between its corporate and consumer cus
tomers, or may adopt different policies for its
consumer customers based on whether a cus
tomer has an overdraft line of credit associ
ated with the account.
This regulation does not affect a depositary
bank’s right to accept or reject a check for
deposit, to charge back the customer’s account
based on a returned check or notice of non
payment, or to claim a refund for any credit
provided to the customer. For example, even
if a check is returned or a notice of nonpay
ment is received after the time by which
funds must be made available for withdrawal
in accordance with this regulation, the deposi
tary bank may charge back the customer’s ac
count for the full amount of the check. (See
section 229.33(d) and commentary.)
Nothing in the regulation requires a deposi
Regulation CC Commentary
tary bank to have facilities open for customers
to make withdrawals at specified times or on
specified days. For example, even though the
special cash-withdrawal rule set forth in sec
tions 229.11(b)(2) and 229.12(d) states that a
bank must make up to $400 available for cash
withdrawals no later than 5:00 p.m. on spe
cific business days, if a bank does not partici
pate in an ATM system and does not have any
teller windows open at or after 5:00 p.m., the
bank need not join an ATM system or keep
offices open. In this case, the bank complies
with this rule if the funds that are required to
be available for cash withdrawal at 5:00 p.m.
on a particular day tire available for with
drawal at the start of business on the follow
ing day. Similarly, if a depositary bank is
closed for customer transactions, including
ATMs, on a day funds must be made available
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
a bank’s daily ATM cash withdrawal limit and
explicitly provides that the act does not super
sede a bank’s policy in this regard. As a re
sult, if a bank has a policy of limiting cash
withdrawals from automated teller machines
to $250 per day, the regulation would not re
quire that the bank dispense $400 of the pro
ceeds of the customer’s deposit that must be
made available for cash withdrawal on that
day.
Even though the act clearly provides that
the bank’s ATM withdrawal limit is not super
seded by the federal availability rules on the
day funds must first be made available, the act
does not specifically permit banks to limit
cash withdrawals at ATMs on subsequent days
when the entire amount of the deposit must be
made available for withdrawal. The Board be
lieves that the rationale behind the act’s provi
sion that a bank’s ATM withdrawal limit is
not superseded by the requirement that funds
be made available for cash withdrawal applies
on subsequent days. Nothing in the regulation
prohibits a depositary bank from establishing
ATM cash-withdrawal limits that vary among
customers of the bank, as long as the limit is
not dependent on the length of time funds
§ 229.19
have been in the customer’s account, provided
that the permissible hold has expired.
A number of small banks, particularly
credit unions, due to lack of secure facilities,
keep no cash on their premises and hence of
fer no cash-withdrawal capability to their cus
tomers. Other banks limit the amount of cash
on their premises due to bonding requirements
or cost factors, and consequently reserve the
right to limit the amount of cash each cus
tomer can withdraw over the counter on a
given day. For example, some banks require
advance notice for large cash withdrawals in
order to limit the amount of cash needed to be
maintained on hand at any time.
Nothing in the regulation is intended to
prohibit a bank from limiting the amount of
cash that may be withdrawn at a staffed teller
station, if the bank has a policy limiting the
amount of cash that may be withdrawn and
that policy is applied equally to all customers
of the bank, is based on security, operating, or
bonding requirements, and is not dependent
on the length of time the funds have been in
the customer’s account, as long as the permis
sible hold has expired. The regulation, how
ever, does not authorize such policies if they
are otherwise prohibited by statutory, regula
tory, or common law.
19(d) Use of Calculated Availability
A depositary bank may provide availability to
its nonconsumer accounts on a calculated
availability basis. Under calculated availabil
ity, a specified percentage of funds from
check deposits may be made available to the
customer on the next business day, with the
remaining percentage deferred until subse
quent days. The determination of the percent
age of deposited funds that will be made
available each day is based on the customer’s
typical deposit mix as determined by a sample
of the customer’s deposits. Use of calculated
availability is permitted only if, on average,
the availability terms that result from the sam
ple are equivalent to or more prompt than the
requirements of this subpart.
19(e) Holds on Other Funds
Section 607(d) of the act (12 USC 4006(d))
provides that once funds are available for
65
§ 229.19
withdrawal under the act, such funds shall not
be frozen solely due to the subsequent deposit
of additional checks that are not yet available
for withdrawal. This provision of the act is
designed to prevent evasion of the act’s avail
ability requirements.
This paragraph clarifies that if a customer
deposits a check in an account (as defined in
section 229.2(a)), the bank may not place a
hold on any of the customer’s funds so that
the funds that are held exceed the amount of
the check deposited or the total amount of
funds held are not made available for with
drawal within the times required in this sub
part. For example, if a bank places a hold on
funds in a customer’s nontransaction account,
rather than a transaction account, for deposits
made to the customer’s transaction account,
the bank may place such a hold only to the
extent that the funds held do not exceed the
amount of the deposit and the length of the
hold does not exceed the time periods permit
ted by this regulation.
These restrictions also apply to holds placed
on funds in a customer’s account (as defined
in section 229.2(a)) if a customer cashes a
check at a bank (other than a check drawn on
that bank) over the counter. The regulation
does not prohibit holds that may be placed on
other funds of the customer for checks cashed
over the counter, to the extent that the trans
action does not involve a deposit to an ac
count. A bank may not, however, place a hold
on any account when an on-us check is
cashed over the counter. On-us checks are
considered finally paid when cashed (see UCC
4-215(a)(1)).
19(f) Employee Training and
Compliance
The act requires banks to take such actions as
may be necessary to inform fully each em
ployee that performs duties subject to the act
of the requirements of the act, and to establish
and maintain procedures reasonably designed
to ensure and monitor employee compliance
with such requirements.
This paragraph requires a bank to establish
procedures to ensure compliance with these
requirements and provide these procedures to
the employees responsible for carrying them
out.
66
Regulation CC Commentary
19(g) Effect of Merger Transaction
After banks merge, there is often a period of
adjustment before their operations are consoli
dated. This paragraph accommodates this ad
justment period by allowing merged banks to
be treated as separate banks for purposes of
this subpart for a period of up to one year
after consummation of the merger transaction,
except that a customer of any bank that is a
party to the transaction that has an established
account with that bank may not be treated as
a new account holder for any other party to
the transaction for purposes of the new ac
count exception of section 229.13(a), and a
deposit in any branch of the merged bank is
considered deposited in the bank for purposes
of the availability schedules in accordance
with section 229.19(a).
This rule affects the status of the combined
entity in a number of areas. For example:
1. When the resulting bank is a “participant”
in a check clearinghouse association (sec
tion 229.2(y) and (/) and section
229.11(b)(2))
2. When an ATM is a “proprietary ATM”
(section 229.2(aa), section 229.11(d), and
section 229.12(b))
3. When a check is drawn on a branch of the
depositary bank (section 229.10(c)(l)(vi))
“Merger transaction” is defined in section
229.2(t).
Regulation CC
SECTION 229.20— Relation to State
Law
(a) In general. Any provision of a law or reg
ulation of any state in effect on or before Sep
tember 1, 1989, that requires funds deposited
in an account at a bank chartered by the state
to be made available for withdrawal in a
shorter time than the time provided in subpart
B, and, in connection therewith, subpart A,
shall—
(1) Supersede the provisions of the act and
subpart B, and, in connection therewith,
subpart A, to the extent the provisions re
late to the time by which funds deposited
or received for deposit in an account are
available for withdrawal; and
(2) Apply to all federally insured banks lo
cated within the state.
No amendment to a state law or regulation
governing the availability of funds that be
comes effective after September 1, 1989, shall
supersede the act and subpart B, and, in con
nection therewith, subpart A, but amended
provisions of state law shall remain in effect.
§ 229.20
bank, or other interested party, whether the act
and subpart B, and, in connection therewith,
subpart A, preempt provisions of state laws
relating to the availability of funds.
(e) Procedures for preemption determinations.
A request for a preemption determination shall
include the following—
(1) A copy of the full text of the state law
in question, including any implementing
regulations or judicial interpretations of that
law; and
(2) A comparison of the provisions of state
law with the corresponding provisions in
the act and subparts A and B of this part,
together with a discussion of the reasons
why specific provisions of state law are ei
ther consistent or inconsistent with corre
sponding sections of the act and subparts A
and B of this part.
A request for a preemption determination
shall be addressed to the Secretary, Board of
Governors of the Federal Reserve System.
(b) Preemption o f inconsistent law. Except as
provided in paragraph (a), the act and subpart
B, and, in connection therewith, subpart A,
supersede any provision of inconsistent state
law.
(c) Standards for preemption. A provision of
a state law in effect on or before September 1,
1989, is not inconsistent with the act, or sub
part B, or in connection therewith, subpart A,
if it requires that funds shall be available in a
shorter period of time than the time provided
in this subpart. Inconsistency with the act and
subpart B, and in connection therewith, sub
part A, may exist when state law—
(1) Permits a depositary bank to make
funds deposited in an account by cash, elec
tronic payment, or check available for with
drawal in a longer period of time than the
maximum period of time permitted under
subpart B, and, in connection therewith,
subpart A; or
(2) Provides for disclosures or notices con
cerning funds availability relating to
accounts.
(d) Preemption determinations. The Board
may determine, upon the request of any state,
67
§ 229.20
COMMENTARY
SECTION 229.20— Relation to State
Law
20(a) In General
A number of states have enacted laws that
govern when banks in those states must make
funds available to their customers. The act
provides that any state law in effect on Sep
tember 1, 1989, that provides that funds be
made available in a shorter period of time
than provided in this regulation, will super
sede the time periods in the act and the regu
lation. The conference report on the act clari
fies this provision by stating that any state law
enacted on or before September 1, 1989, may
supersede federal law to the extent that the
law relates to the time funds must be made
available for withdrawal (H.R. Rep. No. 261,
100th Cong. 1st Sess. 182 (1987)).
Thus, if a state wishes to adopt a law gov
erning funds availability, it must do so, effec
tive on or before September 1, 1989. Laws
adopted after that date will not supersede fed
eral law, even if they provide for shorter
availability periods than are provided under
federal law. If a state that has a law gov
erning funds availability in effect before Sep
tember 1, 1989, amends its law after that date,
the amendment will not supersede federal law,
but an amendment deleting a state requirement
will be effective.
If a state provides for a shorter hold for a
certain category of checks than is provided for
under federal law, that state requirement will
supersede the federal provision. For example,
most state laws base some hold periods on
whether the check being deposited is drawn
on an in-state or out-of-state bank. If a state
contains more than one check-processing re
gion, the state’s hold period for in-state
checks may be shorter than the federal maxi
mum hold period for nonlocal checks. Thus,
the state schedule would supersede the federal
schedule to the extent that it applies to instate,
nonlocal checks.
The act also provides that any state law that
provides for availability in a shorter period of
time than required by federal law is applicable
to all federally insured institutions in that
state, including federally chartered institutions.
68
Regulation CC Commentary
If a state law provides shorter availability only
for deposits in accounts in certain categories
of banks, such as commercial banks, the su
perseding state law continues to apply only to
those categories of banks, rather than to all
federally insured banks in the state.
20(b) Preemption of Inconsistent Law
This paragraph reflects the statutory provision
that other provisions of state law that are in
consistent with federal law are preempted.
Preemption does not require a determination
by the Board to be effective.
20(c) Standards for Preemption
This section describes the standards the Board
will use in making determinations on whether
federal law will preempt state laws governing
funds availability. A provision of state law is
considered inconsistent with federal law if it
permits a depositary bank to make funds
available to a customer in a longer period of
time than the maximum period permitted by
the act and this regulation. For example, a
state law that permits a hold of four business
days or longer for local checks permits a hold
that is longer than that permitted under the act
and this regulation, and therefore is inconsis
tent and preempted. State availability sched
ules that provide for availability in a shorter
period of time than required under Regulation
CC supersede the federal schedule.
Under a state law, some categories of de
posits could be available for withdrawal
sooner or later than the time required by this
subpart, depending on the composition of the
deposit. For example, the act and this regula
tion (§ 229.10(c)(l)(vii)) require next-day
availability for the first $100 of the aggregate
deposit of local or nonlocal checks on any
day, and a state law could require next-day
availability for any check of $100 or less that
is deposited. Under the act and this regulation,
if either one $150 check or three $50 checks
are deposited on a given day, $100 must be
made available for withdrawal on the next
business day, and $50 must be made available
in accordance with the local or nonlocal
schedule. Under the state law, however, the
two deposits would be subject to different
availability rules. In the first case, none of the
Regulation CC Commentary
proceeds of the deposit would be subject to
next-day availability; in the second case, the
entire proceeds of the deposit would be sub
ject to next-day availability. In this example,
because the state law would, in some of these
situations, permit a hold longer than the maxi
mum permitted by the act, this provision of
state law is inconsistent and preempted in its
entirety.
In addition to the differences between state
and federal availability schedules, a number of
state laws contain exceptions to the state
availability schedules that are different from
those provided under the act and this regula
tion. The state exceptions continue to apply
only in those cases where the state schedule is
shorter than or equal to the federal schedule,
and then only up to the limit permitted by the
Regulation CC schedule. Where a deposit is
subject to a state exception under a state
schedule that is not preempted by Regulation
CC and is also subject to a federal exception,
the hold on the deposit cannot exceed the
hold permissible under the federal exception
in accordance with Regulation CC. In such
cases, only one exception notice is required,
in accordance with section 229.13(g). This no
tice need only include the applicable federal
exception as the reason the exception was in
voked. For those categories of checks for
which the state schedule is preempted by the
federal schedule, only the federal exceptions
may be used.
State laws that provide maximum availabil
ity periods for categories of deposits that are
not covered by the act would not be pre
empted. Thus, state funds-availability laws
that apply to funds in time and savings depos
its are not affected by the act or this regula
tion. In addition, the availability schedules of
several states apply to “items” deposited to
an account. The term “items” may encompass
deposits, such as nonnegotiable instruments,
that are not subject to the Regulation CC
availability schedules. Deposits that are not
covered by Regulation CC continue to be sub
ject to the state availability schedules. State
laws that provide maximum availability peri
ods for categories of institutions that are not
covered by the act would also not be pre
empted. For example, a state law that governs
§ 229.20
money market mutual funds would not be af
fected by the act or this regulation.
Generally, state rules governing the disclo
sure or notice of availability policies applica
ble to accounts are also preempted. Neverthe
less, a state law requiring disclosure of
funds-availability policies that apply to depos
its other than “accounts,” such as savings or
time deposits, are not inconsistent with the act
and this subpart. Banks in these states would
have to follow the state disclosure rules for
these deposits.
20(d) Preemption Determinations
The Board may issue preemption determina
tions upon the request of an interested party
in a state. The determinations will relate only
to the provisions of subparts A and B; gener
ally the Board will not issue individual pre
emption determinations regarding the relation
of state UCC provisions to the requirements
of subpart C.
20(e) Procedures for Preemption
Determinations
This provision sets forth the information that
must be included in a request by an interested
party for a preemption determination by the
Board.
69
§ 229.21
SECTION 229.21—Civil Liability
(a) Civil liability. A bank that fails to comply
with any requirement imposed under subpart
B, and in connection therewith, subpart A, of
this part or any provision of state law that
supersedes any provision of subpart B, and in
connection therewith, subpart A, with respect
to any person is liable to that person 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 action,
liability under this paragraph shall not be
less than $100 nor greater than $1,000;
and
(ii) In the case of a class action—
(A) No minimum recovery shall be
applicable to each member of the
class; and
(B) The total recovery under this para
graph in any class action or series of
class actions arising out of the same
failure to comply by the same deposi
tary bank shall not be more than the
lesser of $500,000 or 1 percent of the
net worth of the bank involved; and,
(3) In the case of a successful action to en
force the foregoing liability, the costs of the
action, together with a reasonable attorney’s
fee as determined by the court.
(b) Class action awards. In determining the
amount of any award in any class action, the
court shall consider, among other relevant
factors—
(1) The amount of any damages awarded;
(2) The frequency and persistence of fail
ures of compliance;
(3) The resources of the bank;
(4) The number of persons adversely af
fected; and
(5) The extent to which the failure of com
pliance was intentional.
(c) Bona fide errors.
(1) General rule. A bank is not liable in
any action brought under this section for a
violation of this subpart if the bank demon
strates by a preponderance of the evidence
that the violation was not intentional and
resulted from a bona fide error, notwith
70
Regulation CC
standing the maintenance of procedures rea
sonably adapted to avoid any such error.
(2) Examples. Examples of a bona fide er
ror include clerical, calculation, computer
malfunction and programming, and printing
errors, except that an error of legal judg
ment with respect to the bank’s obligation
under this subpart is not a bona fide error.
(d) Jurisdiction. Any action under this section
may be brought in any United States district
court or in any other court of competent juris
diction, and shall be brought within one year
after the date of the occurrence of the viola
tion involved.
(e) Reliance on Board rulings. No provision
of this subpart imposing any liability shall ap
ply to any act done or omitted in good faith
in conformity with any rule, regulation, or in
terpretation thereof by the Board, regardless
of whether such rule, regulation, or interpreta
tion is amended, rescinded, or determined by
judicial or other authority to be invalid for
any reason after the act or omission has
occurred.
(f) Exclusions. This section does not apply to
claims that arise under subpart C of this part
or to actions for wrongful dishonor.
(g) Record retention.
(1) A bank shall retain evidence of compli
ance with the requirements imposed by this
subpart for not less than two years. Records
may be stored by use of microfiche, micro
film, magnetic tape, or other methods capa
ble of accurately retaining and reproducing
information.
(2) If a bank has actual notice that it is
being investigated, or is subject to an en
forcement proceeding by an agency charged
with monitoring that bank’s compliance
with the act and this subpart, or has been
served with notice of an action filed under
this section, it shall retain the records per
taining to the action or proceeding pending
final disposition of the matter, unless an
earlier time is allowed by order of the
agency or court.
Regulation CC Commentary
COMMENTARY
SECTION 229.21—Civil Liability
21(a) Civil Liability
This paragraph sets forth the statutory penal
ties for failure to comply with the require
ments of this subpart. These penalties apply to
provisions of state law that supersede provi
sions of this regulation, such as requirements
that funds deposited in accounts at banks be
made available more promptly than required
by this regulation, but they do not apply to
other provisions of state law. (See the com
mentary to section 229.20.)
21(b) Class-Action Awards
This paragraph sets forth the provision in the
act concerning the factors that should be con
sidered by the court in establishing the
amount of a class-action award.
21(c) Bona Fide Errors
A bank is shielded from liability under this
section for a violation of a requirement of this
subpart if it can demonstrate, by a preponder
ance of the evidence, that the violation re
sulted from a bona fide error and that it main
tains procedures designed to avoid such
errors. For example, a bank may make a bona
fide error if it fails to give next-day availabil
ity on a check drawn on the Treasury because
the bank’s computer system malfunctions in a
way that prevents the bank from updating its
customer’s account or if it fails to identify
whether a payable-through check is a local or
nonlocal check despite procedures designed to
make this determination accurately.
21(d) Jurisdiction
The act confers subject matter jurisdiction on
courts of competent jurisdiction and provides
a time limit for civil actions for violations of
this subpart.
21(e) Reliance on Board Rulings
This provision shields banks from civil liabil
ity if they act in good faith in reliance on any
rule, regulation, model form (if the disclosure
actually corresponds to the bank’s availability
§ 229.21
policy), or interpretation of the Board, even if
it were subsequently determined to be invalid.
Banks may rely on this commentary, which is
issued as an official Board interpretation, as
well as on the regulation itself.
21(f) Exclusions
This provision clarifies that liability under this
section 229.21 does not apply to violations of
the requirements of subpart C of this regula
tion, or to actions for wrongful dishonor of a
check by a paying bank’s customer.
21(g) Record Retention
Banks must keep records to show compliance
with the requirements of this subpart for at
least two years. This record-retention period is
extended in the case of civil actions and en
forcement proceedings. Generally, a bank is
not required to retain records showing that it
has actually given disclosures or notices re
quired by this subpart to each customer, but it
must retain evidence demonstrating that its
procedures reasonably ensure the customers’
receipt of the required disclosures and notices.
A bank must, however, retain a copy of each
notice provided pursuant to its use of the rea
sonable cause exception under section
229.13(g) as well as a brief description of the
facts giving rise to the availability of that
exception.
§ 229.30
SUBPART C— COLLECTION OF
CHECKS
SECTION 229.30— Paying Bank’s
Responsibility for Return of Checks
(a) Return o f checks. If a paying bank deter
mines not to pay a check, it shall return the
check in an expeditious manner as provided in
either paragraphs (a)(1) or (a)(2) of this
section.
(1) Two-day/four-day test. A paying bank
returns a check in an expeditious manner if
it sends the returned check in a manner
such that the check would normally be re
ceived by the depositary bank not later than
4:00 p.m. (local time of the depositary
bank) of—
(i) The second business day following
the banking day on which the check was
presented to the paying bank, if the pay
ing bank is located in the same check
processing region as the depositary bank;
or
(ii) The fourth business day following
the banking day on which the check was
presented to the paying bank, if the pay
ing bank is not located in the same
check-processing region as the depositary
bank.
If the last business day on which the paying
bank may deliver a returned check to the
depositary bank is not a banking day for
the depositary bank, the paying bank meets
the two-day/four-day test if the returned
check is received by the depositary bank on
or before the depositary bank’s next bank
ing day.
(2) Forward-collection test. A paying bank
also returns a check in an expeditious man
ner if it sends the returned check in a man
ner that a similarly situated bank would
normally handle a check—
(i) Of similar amount as the returned
check;
(ii) Drawn on the depositary bank; and
(iii) Deposited for forward collection in
the similarly situated bank by noon on
the banking day following the banking
day on which the check was presented to
the paying bank.
Subject to the requirement for expeditious re
turn, a paying bank may send a returned
72
Regulation CC
check to the depositary bank, or to any other
bank agreeing to handle the returned check
expeditiously under section 229.31(a). A pay
ing bank may convert a check to a qualified
returned check. A qualified returned check
must be encoded in magnetic ink with the
routing number of the depositary bank, the
amount of the returned check, and a “2” in
position 44 of the MICR line as a return iden
tifier, in accordance with the American Na
tional Standard Specifications for Placement
and Location of MICR Printing, X9.13 (Sept.
1983). This paragraph does not affect a pay
ing bank’s responsibility to return a check
within the deadlines required by the UCC,
Regulation J (12 CFR 210), or section
229.30(c).
(b) Unidentifiable depositary bank. A paying
bank that is unable to identify the depositary
bank with respect to a check may send the
returned check to any bank that handled the
check for forward collection even if that bank
does not agree to handle the check expedi
tiously under section 229.31(a). A paying
bank sending a returned check under this
paragraph to a bank that handled the check
for forward collection must advise the bank to
which the check is sent that the paying bank
is unable to identify the depositary bank. The
expeditious-return requirements in section
229.30(a) do not apply to the paying bank’s
return of a check under this paragraph.
(c) Extension o f deadline. The deadline for
return or notice of nonpayment under the
UCC or Regulation J (12 CFR 210), or sec
tion 229.36(f)(2) of this part is extended—
(1) if a paying bank, in an effort to expe
dite delivery of a returned check to a bank,
uses a means of delivery that would ordina
rily result in the returned check’s being re
ceived by the bank to which it is sent on or
before the receiving bank’s next banking
day following the otherwise applicable
deadline; this deadline is extended further if
a paying bank uses a highly expeditious
means of transportation, even if this means
of transportation would ordinarily result in
delivery after the receiving bank’s next
banking day; or
(2) if the deadline falls on a Saturday that
is a banking day, as defined in the applica-
Regulation CC
§ 229.30
ble UCC, for the paying bank, and the pay
ing bank uses a means of delivery that
would ordinarily result in the returned
check’s being received by the bank to
which it is sent prior to the cut-off hour for
the next processing cycle, in the case of a
returning bank, or on the next banking day,
in the case of a depositary bank, after mid
night Saturday night.
(d) Identification o f returned check. A paying
bank returning a check shall clearly indicate
on the face of the check that it is a returned
check and the reason for return.
(e) Depositary bank without accounts. The
expeditious-return requirements of paragraph
(a) of this section do not apply to checks de
posited in a depositary bank that does not
maintain accounts.
(f) Notice in lieu o f return. If a check is un
available for return, the paying bank may send
in its place a copy of the front and back of
the returned check, or, if no such copy is
available, a written notice of nonpayment con
taining the information specified in section
229.33(b). The copy or notice shall clearly
state that it constitutes a notice in lieu of re
turn. A notice in lieu of return is considered a
returned check subject to the expeditiousreturn requirements of this section and to the
other requirements of this subpart.
(g) Reliance on routing number. A paying
bank may return a returned check based on
any routing number designating the depositary
bank appearing on the returned check in the
depositary bank’s indorsement.
73
§ 229.30
COMMENTARY
SECTION 229.30— Paying Bank’s
Responsibility for Return o f Checks
30(a) Return of Checks
This section requires a paying bank (which,
for purposes of subpart C, may include a pay
able-through and payable-at bank; see section
229.2(z)) that determines not to pay a check
to return the check expeditiously. Generally, a
check is returned expeditiously if the return
process is as fast as the forward-collection
process. This paragraph provides two stan
dards for expeditious return, the two-day/
four-day test and the forward-collection test.
Under the two-day/four-day test, if a check
is returned such that it would normally be re
ceived by the depositary bank two business
days after presentment where both the paying
and depositary banks are located in the same
check-processing region or four business days
after presentment where the paying and depos
itary banks are not located in the same check
processing region, the check is considered re
turned expeditiously. In certain limited cases,
however, these times are shorter than the time
it would normally take a forward-collection
check deposited in the paying bank and pay
able by the depositary bank to be collected.
Therefore, the Board has included a forwardcollection test, whereby a check is nonetheless
considered to be returned expeditiously if the
paying bank uses transportation methods and
banks for return comparable to those used for
forward-collection checks, even if the check is
not received by the depositary bank within the
two-day or four-day period.
30(a)(1) Two-Day/Four-Day Test
Under the first test, a paying bank must return
the check so that the check would normally
be received by the depositary bank within
specified times, depending on whether or not
the paying and depositary banks are located in
the same check-processing region.
Where both banks are located in the same
check-processing region, a check is returned
expeditiously if it is returned to the depositary
bank by 4:00 p.m. (local time of the deposi
tary bank) of the second business day after
74
Regulation CC Commentary
the banking day on which the check was pre
sented to the paying bank. For example, a
check presented on Monday to a paying bank
must be returned to a depositary bank located
in the same check-processing region by 4:00
p.m. on Wednesday. For a paying bank that is
located in a different check-processing region
than the depositary bank, the deadline to com
plete return is 4:00 p.m. (local time of the
depositary bank) of the fourth business day
after the banking day on which the check was
presented to the paying bank. For example, a
check presented to such a paying bank on
Monday must be returned to the depositary
bank by 4:00 p.m. on Friday.
This two-day/four-day test does not neces
sarily require actual receipt of the check by
the depositary bank within these times.
Rather, the paying bank must send the check
so that the check would normally be received
by the depositary bank within the specified
time. Thus, the paying bank is not responsible
for unforeseeable delays in the return of the
check, such as transportation delays.
Often, returned checks will be delivered to
the depositary bank together with forward col
lection checks. Where the last day on which a
check could be delivered to a depositary bank
under this two-day/four-day test is not a bank
ing day for the depositary bank, a returning
bank might not schedule delivery of forwardcollection checks to the depositary bank on
that day. Further, the depositary bank may not
process checks on that day. Consequently, if
the last day of the time limit is not a banking
day for the depositary bank, the check may be
delivered to the depositary bank before the
close of the depositary bank’s next banking
day and the return will still be considered ex
peditious. Ordinarily, this extension of time
will allow the returned checks to be delivered
with the next shipment of forward-collection
checks destined for the depositary bank.
The times specified in this two-day/four-day
test are based on estimated forward-collection
times, but take into account the particular dif
ficulties that may be encountered in handling
returned checks. It is anticipated that the nor
mal process for forward collection of a check
coupled with these return requirements will
frequently result in the return of checks before
the proceeds of local and nonlocal checks,
§ 229.30
Regulation CC Commentary
other than those covered by section 229.10(c),
must be made available for withdrawal under
the temporary schedules in section 229.11.
Under this two-day/four-day test, no partic
ular means of returning checks is required,
thus providing flexibility to paying banks in
selecting means of return. The Board antici
pates that paying banks will often use re
turning banks (see section 229.31) as their
agents to return checks to depositary banks. A
paying bank may rely on the availability
schedule of the returning bank it uses in de
termining whether the returned check would
“normally” be returned within the required
time under this two-day/four-day test, unless
the paying bank has reason to believe that
these schedules do not reflect the actual time
for return of a check.
30(a)(2) Forward-Collection Test
Under the second, “forward collection” test, a
paying bank returns a check expeditiously if it
returns a check by means as swift as the
means similarly situated banks would use for
the forward collection of a check drawn on
the depositary bank.
Generally, the paying bank would satisfy
the forward-collection test if it uses a trans
portation method and collection path for re
turn comparable to those used for forward col
lection, provided that the returning bank
selected to process the return agrees to handle
the returned check under the standards for ex
peditious return for returning banks under sec
tion 229.31(a). This test allows many paying
banks a simple means of expeditious return of
checks and takes into account the longer time
for return that will be required by banks that
do not have ready access to direct courier
transportation.
The paying bank’s normal method of send
ing a check for forward collection would not
be expeditious, however, if it is materially
slower than that of other banks of similar size
and with similar check handling activity in its
community.
Under the forward-collection test, a paying
bank must handle, route, and transport a re
turned check in a manner designed to be at
least as fast as a similarly situated bank would
collect a forward-collection check (1) of simi
lar amount, (2) drawn on the depositary bank,
and (3) received for deposit by a branch of
the paying bank or a similarly situated bank
by noon on the banking day following the
banking day of presentment of the returned
check.
This test refers to similarly situated banks
to indicate a general community standard. In
the case of a paying bank (other than a Fed
eral Reserve Bank), a similarly situated bank
is a bank of similar asset size, in the same
community, and with similar check-handling
activity as the paying bank. (See section
229.2(ee).) A paying bank has similar check
handling activity to other banks that handle
similar volumes of checks for collection.
Under the forward-collection test, banks
that use means of handling returned checks
that are less efficient than the means used by
similarly situated banks must improve their
procedures. On the other hand, a bank with
highly efficient means of collecting checks
drawn on a particular bank, such as a direct
presentment of checks to a bank in a remote
community, is not required to use that means
for returned checks, i.e., direct return, if simi
larly situated banks do not present checks di
rectly to that depositary bank.
Examples
1. If a check is presented to a paying bank on
Monday and the depositary bank and the pay
ing bank are participants in the same clearing
house, the paying bank should arrange to have
the returned check received by the depositary
bank by Wednesday. This would be the same
day the paying bank would deliver a forwardcollection check to the depositary bank if the
paying bank received the deposit by noon on
Tuesday.
2. If a check is presented to a paying bank on
Monday and the paying bank would normally
collect checks drawn on the depositary bank
by sending them to a correspondent or a Fed
eral Reserve Bank by courier, the paying bank
could send the returned check to its corre
spondent or Federal Reserve Bank, provided
that the correspondent has agreed to handle
returned checks expeditiously under section
229.31(a). (All Federal Reserve Banks agree
to handle returned checks expeditiously.)
The paying bank must deliver the returned
75
§ 229.30
check to the correspondent or Federal Reserve
Bank by the correspondent’s or Federal Re
serve Bank’s appropriate cut-off hour. The ap
propriate cut-off hour is the cut-off hour for
returned checks that corresponds to the cutoff
hour for forward-collection checks drawn on
the depositary bank that would normally be
used by the paying bank or a similarly situ
ated bank. A retumed-check cut-off hour cor
responds to a forward-collection cut-off hour
if it provides for the same or faster availabil
ity for checks destined for the same depositary
banks.
In this example, delivery to the correspon
dent or a Federal Reserve Bank by the appro
priate cut-off hour satisfies the paying bank’s
duty, even if use of the correspondent or Fed
eral Reserve Bank is not the most expeditious
means of returning the check. Thus, a paying
bank may send a local returned check to a
correspondent instead of a Federal Reserve
Bank, even if the correspondent then sends
the returned check to a Federal Reserve Bank
the following day as a qualified returned
check. Where the paying bank delivers for
ward-collection checks by courier to the corre
spondent or the Federal Reserve Bank, mail
ing returned checks to the correspondent or
Federal Reserve Bank would not satisfy the
forward-collection test.
3. If a paying bank ordinarily mails its for
ward-collection checks to its correspondent or
Federal Reserve Bank in order to avoid the
costs of a courier delivery, but similarly situ
ated banks use a courier to deliver forwardcollection checks to their correspondent or
Federal Reserve Bank, the paying bank must
send its returned checks by courier to meet
the forward-collection test.
4. If a paying bank normally sends its for
ward-collection checks directly to the deposi
tary bank, which is located in another commu
nity, but similarly situated banks send
forward-collection checks drawn on the depos
itary bank to a correspondent or a Federal Re
serve Bank, the paying bank would not have
to send returned checks directly to the deposi
tary bank, but could send them to a corre
spondent or a Federal Reserve Bank.
The dollar amount of the returned check
has a bearing on how it must be returned. If
76
Regulation CC Commentary
the paying bank and similarly situated banks
present large-dollar checks drawn on the de
positary bank directly to the depositary bank,
but use a Federal Reserve Bank or a corre
spondent to collect small-dollar checks, gener
ally the paying bank would be required to
send its large-dollar returns directly to the de
positary bank (or through a returning bank, if
the checks are returned as quickly), but could
use a Federal Reserve Bank or a correspon
dent for its small-dollar returns.
In meeting the requirements of the forwardcollection test, the paying bank is responsible
for its own actions, but not for those of the
depositary bank or returning banks.4 For ex
ample, if the paying bank starts the return of
the check in a timely manner but return is
delayed by a returning bank (including delay
to create a qualified returned check), generally
the paying bank has met its requirements.
(See section 229.38.) If, however, the paying
bank selects a returning bank that the paying
bank should know is not capable of meeting
its return requirements, the paying bank will
not have met its obligation of exercising ordi
nary care in selecting intermediaries to return
the check. The paying bank is free to use a
method of return, other than its method of for
ward collection, as long as the alternate
method results in delivery of the returned
check to the depositary bank as quickly as the
forward collection of a check drawn on the
depositary bank or, where the returning bank
takes a day to create a qualified returned
check under section 229.31(a), one day later
than the forward-collection time. If a paying
bank returns a check on its banking day of
receipt without paying for the check, as per
mitted under UCC section 4-302(a), and re
ceives settlement for the returned check from
a returning bank, it must promptly pay the
amount of the check to the collecting bank
from which it received the check.
Although paying banks may wish to prepare
qualified returned checks because they will be
handled at a lower cost by returning banks,
the one-business-day extension provided to re
turning banks is not available to paying banks
because of the longer time that a paying bank
has to dispatch the check. Normally, paying
4 This is analogous to the responsibility o f collecting
banks under UCC 4-202(c).
Regulation CC Commentary
banks will be able to convert a check to a
qualified returned check at any time after the
determination is made to return the check un
til late in the day following presentment,
while a returning bank may receive returned
checks late on one day and be expected to
dispatch them early the next morning.
In effect, under either test, the paying
bank acts as an agent or subagent of the de
positary bank in selecting a means of return.
Under section 229.30(a), a paying bank is au
thorized to route the returned check in a vari
ety of ways:
1. It may send the returned check directly to
the depositary bank by courier or other
means of delivery, bypassing returning
banks; or
2. It may send the returned check to any re
turning bank agreeing to handle the re
turned check for expeditious return to the
depositary bank under section 229.31(a),
regardless of whether or not the returning
bank handled the check for forward
collection.
If the paying bank elects to return the
check directly to the depositary bank, it is not
necessarily required to return the check to the
branch of first deposit. The check may be re
turned to the depositary bank at any location
permitted under section 229.32(a).
Except for the extension permitted by sec
tion 229.30(c), discussed below, this section
does not relieve a paying bank from the re
quirement for timely return (i.e., midnight
deadline) under UCC sections 4-301 and
4-302, which continue to apply. Under section
4-302, a paying bank is “accountable” for the
amount of a demand item other than a docu
mentary draft if it does not pay or return the
item or send notice of dishonor by its mid
night deadline. Under UCC 3-418(c) and
4-215(a), late return constitutes payment and
would be final in favor of a holder in due
course or a person who has in good faith
changed his position in reliance on the pay
ment. Thus, retaining this requirement gives
the paying bank an additional incentive to
make a prompt return.
The expeditious-return requirement applies
to a paying bank that determines not to pay a
check. This requirement applies to a payable
§ 229.30
through or a payable-at bank that is defined as
a paying bank (see section 229.2(z)) and that
returns a check. This requirement begins when
the payable-through or payable-at bank re
ceives the check during forward collection,
not when the payor returns the check to the
payable-through or payable-at bank. Neverthe
less, a check sent for payment or collection to
a payable-through or payable-at bank is not
considered to be drawn on that bank for pur
poses of the midnight deadline provision of
UCC section 4-301. (See discussion of section
229.36(a).) The liability section of this subpart
(§ 229.38) provides that a paying bank is not
subject to both “accountability” for missing
the midnight deadline under the UCC and lia
bility for missing the timeliness requirements
of this regulation. Also, a paying bank is not
responsible for failure to make expeditious re
turn to a party that has breached a present
ment warranty under UCC section 4-208, not
withstanding that the paying bank has returned
the check. (See the commentary to section
229.33(a).)
This paragraph directly affects the follow
ing provisions of the UCC, and may affect
other sections or provisions:
1. Section 4-301(d), in that instead of re
turning a check through a clearinghouse or
to the presenting bank, a paying bank may
send a returned check to the depositary
bank or to a returning bank.
2. Section 4-301(a), in that time limits speci
fied in that section may be affected by the
additional requirement to make an expedi
tious return and in that settlement for re
turned checks is made under section
229.31(c), not by revocation of settlement.
30(b) Unidentifiable Depositary Bank
In some cases, a paying bank will be unable
to identify the depositary bank through the
use of ordinary care and good faith. The
Board expects that these cases will be unusual
as skilled return clerks will readily identify
the depositary bank from the depositary-bank
indorsement required under section 229.35 and
appendix D. In cases where the paying bank
is unable to identify the depositary bank, the
paying bank may, in accordance with section
229.30(a), send the returned check to a re77
§ 229.30
turning bank that agrees to handle the returned
check for expeditious return to the depositary
bank under section 229.31(a). The returning
bank may be better able to identify the depos
itary bank.
In the alternative, the paying bank may
send the check back up the path used for for
ward collection of the check. The presenting
bank and prior collecting banks will normally
be able to trace the collection path of the
check through the use of their internal records
in conjunction with the indorsements on the
returned check. In these limited cases, the
paying bank may send such a returned check
to any bank that handled the check for for
ward collection, even if that bank does not
agree to handle the returned check for expedi
tious return to the depositary bank under sec
tion 229.31(a). A paying bank returning a
check under this paragraph to a bank that has
not agreed to handle the check expeditiously
must advise that bank that it is unable to iden
tify the depositary bank. This advice must be
conspicuous, such as a stamp on each check
for which the depositary bank is unknown if
such checks are commingled with other re
turned checks, or, if such checks are sent in a
separate cash letter, by one notice on the cash
letter. The returned check may not be pre
pared for automated return. This information
will warn the bank that this check will require
special research and handling in accordance
with section 229.31(b). The return of a check
to a bank that handled the check for forward
collection is consistent with section 229.35
(b), which requires a bank handling a check to
take up the check if it has not been paid.
The sending of a check to a bank that han
dled the check for forward collection under
this paragraph is not subject to the require
ments for expeditious return by the paying
bank. Often, the paying bank will not have
courier or other expeditious means of trans
portation to the collecting or presenting bank.
Although the lack of a requirement of expedi
tious return will create risks for the depositary
bank, in many cases the inability to identify
the depositary bank will be due to the deposi
tary bank’s, or a collecting bank’s, failure to
use the indorsement required by section
229.35(a) and appendix D. If the depositary
bank failed to use the proper indorsement, it
78
Regulation CC Commentary
should bear the risks of less than expeditious
return. Similarly, where the inability to iden
tify the depositary bank is due to indorse
ments or other information placed on the back
of the check by the depositary bank’s cus
tomer or other prior indorser, the depositary
bank should bear the risk that it cannot charge
a returned check back to that customer. Where
the inability to identify the depositary bank is
due to subsequent indorsements of collecting
banks, these collecting banks may be liable
for a loss incurred by the depositary bank due
to less-than-expeditious return of a check;
those banks therefore have an incentive to re
turn checks sent to them under this paragraph
quickly.
This paragraph does not relieve a paying
bank from the liability for the lack of expedi
tious return in cases where the paying bank is
itself responsible for the inability to identify
the depositary bank, such as when the paying
bank’s customer has used a check with print
ing or other material on the bank in the area
reserved for the depositary bank’s indorse
ment, making the indorsement unreadable.
(See section 229.38(d).)
A paying bank’s return under this paragraph
is also subject to its midnight deadline under
UCC section 4-301, Regulation J, and the ex
ception provided in section 229.30(c). A pay
ing bank also may send a check to a prior
collecting bank to make a claim against that
bank under section 229.35(b) where the de
positary bank is insolvent or in other cases as
provided in section 229.35(b). Finally, a pay
ing bank may make a claim against a prior
collecting bank based on a breach of warranty
under UCC section 4-208.
30(c) Extension of Deadline
This paragraph permits extension of the dead
lines for returning a check for which the pay
ing bank has previously settled (generally
midnight of the banking day following the
banking day on which the check is received
by the paying bank) and for returning a check
without settling for it (generally midnight of
the banking day on which the check is re
ceived by the paying bank, or such other time
provided by section 210.9 of Regulation J (12
CFR 210) or section 229.36(f)(2) of this part),
§ 229.30
Regulation CC Commentary
but not of the duty of expeditious return, in
two circumstances:
1. A paying bank may have a courier that
leaves after midnight (or after any other
applicable deadline) to deliver its forwardcollection checks. This paragraph removes
the constraint of the midnight deadline for
returned checks if the returned check
reaches either the depositary bank or the
returning bank to which it is sent on that
bank’s banking day following the expira
tion of the applicable deadline. The exten
sion also applies if the check reaches the
bank to which it is sent later than the close
of that bank’s banking day, if highly expe
ditious means of transportation are used.
For example, a West Coast paying bank
may use this further extension to ship a
returned check by air courier directly to an
East Coast depositary bank even if the
check arrives after the close of the deposi
tary bank’s banking day.
2. A paying bank may observe a banking day,
as defined in the applicable UCC, on a Sat
urday, which is not a business day and
therefore not a banking day under Regula
tion CC. In such a case, the UCC deadline
for returning checks received on Friday, or
for returning checks received on Saturday
without settling for them, might require the
bank to return the checks by midnight Sat
urday. However, the bank may not have
couriers leaving on Saturday to carry re
turned checks, and even if it did, the re
turning or depositary bank to which the
returned checks were sent might not be
open until Sunday night or Monday morn
ing to receive and process the checks. This
paragraph extends the midnight deadline if
the returned checks reach the returning
bank by a cut-off hour (usually on Sunday
night or Monday morning) that permits
processing during its next processing cycle
or reach the depositary bank by the cut-off
hour on its next banking day following the
Saturday midnight deadline.
The time limits that are extended in each case
are the paying bank’s midnight deadline for
returning a check for which it has already set
tled and the paying bank’s deadline for re
turning a check without settling for it in UCC
sections 4-301 and 4-302, sections 210.9 and
210.12 of Regulation J (12 CFR 210.9 and
210.12) , and section 229.36(f)(2) of this part.
As these extensions are designed to speed
(§ 229.30(c)(1)), or at least not slow
(§ 229.30(c)(2)), the overall return of checks,
no modification or extension of the expedi
tious return requirements in section 229.30(a)
is required.
The paying bank satisfies its midnight or
other return deadline by dispatching returned
checks to another bank by courier, including a
courier under contract with the paying bank,
prior to expiration of the deadline.
This paragraph directly affects UCC sec
tions 4-301 and 4-302 and sections 210.9 and
210.12 of Regulation J (12 CFR 210.9 and
210.12) to the extent that this paragraph ap
plies by its terms, and may affect other
provisions.
30(d) Identification of Returned Check
Most paying banks currently use some form
of stamp indicating the reason for return. This
paragraph makes this practice mandatory. No
particular form of stamp is required, but the
stamp must indicate the reason for return. A
check is identified as a returned check by a
reason-for-return stamp, even though the
stamp does not specifically state that the
check is a returned check. A reason such as
“Refer to Maker” is permissible in appropri
ate cases. If the paying bank places the re
turned check in a carrier envelope, the carrier
envelope should indicate that it is a returned
check but need not repeat the reason for re
turn stated in the check if it in fact appears on
the check.
30(e) Depositary Bank Without
Accounts
Subpart B of this regulation applies only to
“checks” deposited in transaction-type “ac
counts.” Thus, a depositary bank with only
time or savings accounts need not comply
with the availability requirements of subpart
B. Collecting banks will not have couriers de
livering checks to these banks as paying
banks, because no checks are drawn on them.
Consequently, the costs of using a courier or
other expedited means to deliver returned
79
§ 229.30
checks directly to such a depositary bank may
not be justified. Thus, the expedited-retum re
quirement of section 229.30(a) and the noticeof-nonpayment requirement of section 229.33
do not apply to checks being returned to
banks that do not hold accounts. The paying
bank’s midnight deadline in UCC sections
4-301 and 4-302 and section 210.12 of Regu
lation J (12 CFR 210.12) would continue to
apply to these checks. Returning banks would
also be required to act on such checks within
their midnight deadline. Further, in order to
avoid complicating the process of returning
checks generally, banks without accounts are
required to use the standard indorsement, and
their checks are returned by returning banks
and paid for by the depositary bank under the
same rules as checks deposited in other banks,
with the exception of the expeditious-return
and notice-of-nonpayment requirements of
sections 229.30(a), 229.31(a), and 229.33.
The expeditious-return requirements also
apply to a check deposited in a bank that is
not a depository institution. Federal Reserve
Banks, Federal Home Loan Banks, private
bankers, and possibly certain industrial banks
are not “depository institutions” within the
meaning of the act, and are therefore not sub
ject to the expedited-availability and disclo
sure requirements of subpart B. These banks
do, however, maintain “accounts” as defined
in section 229.2(a), and a paying bank re
turning a check to one of these banks would
be required to return the check to the deposi
tary bank, in accordance with the require
ments of this section.
30(f) Notice in Lieu of Return
A check that is lost or otherwise unavailable
for return may be returned by sending a legi
ble copy of both sides of the check or, if such
a copy is not available to the paying bank, a
written notice of nonpayment containing the
information specified in section 229.33(b).
The copy or written notice must clearly indi
cate it is a notice in lieu of return and must
be handled in the same manner as other re
turned checks. Notice by telephone, telegraph,
or other electronic transmission, other than a
legible facsimile or similar image transmission
of both sides of the check, does not satisfy
the requirements for a notice in lieu of return.
80
Regulation CC Commentary
The requirement for a writing and the indica
tion that the notice is a substitute for the re
turned check is necessary so that the returning
and depositary banks are informed that the no
tice carries value. Notice in lieu of return is
permitted only when a bank does not have
and cannot obtain possession of the check or
must retain possession of the check for pro
test. A check is not unavailable for return if it
is merely difficult to retrieve from a filing sys
tem or from storage by a keeper of checks in
a truncation system. A notice in lieu of return
may be used by a bank handling a returned
check that has been lost or destroyed, includ
ing when the original returned check has been
charged back as lost or destroyed as provided
in section 229.35(b). A bank using a notice in
lieu of return gives a warranty under section
229.34(a)(4) that the original check has not
been and will not be returned.
The requirement of this paragraph super
sedes the requirement of UCC 4-301(a) as to
the form and information required of a notice
of dishonor or nonpayment. Reference in the
regulation and this commentary to a returned
check includes a notice in lieu of return un
less the context indicates otherwise.
The notice in lieu of return is subject to the
provisions of section 229.30 and is treated
like a returned check for settlement purposes.
If the original check is over $2,500, the notice
of nonpayment under section 229.33 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 section
229.33.
If not all of the information required by
section 229.33(b) is available, the paying bank
may make a claim against any prior bank han
dling the check as provided in section
229.35(b).
30(g) Reliance on Routing Number
Although section 229.35 and appendix D re
quire that the depositary-bank indorsement
contain its nine-digit routing number, it is
possible that a returned check will bear the
routing number of the depositary bank in frac
tional, nine-digit, or other form. This para
graph permits a paying bank to rely on the
routing number of the depositary bank as it
appears on the check (in the depositary bank’s
Regulation CC Commentary
§ 229.30
indorsement) when it is received by the pay
ing bank.
If there are inconsistent routing numbers,
the paying bank may rely on any routing
number designating the depositary bank. The
paying bank is not required to resolve the in
consistency prior to processing the check. The
paying bank remains subject to the require
ment to act in good faith and use ordinary
care under section 229.38(a).
81
§ 229.31
SECTION 229.31—Returning Bank’s
Responsibility for Return of Checks
(a) Return o f checks. A returning bank shall
return a returned check in an expeditious man
ner as provided in either paragraphs (a)(1) or
(a)(2) of this section.
(1) Two-day/four-day test. A returning bank
returns a check in an expeditious manner if
it sends the returned check in a manner
such that the check would normally be re
ceived by the depositary bank not later than
4:00 p.m. (local time) of—
(i) The second business day following
the banking day on which the check was
presented to the paying bank if the pay
ing bank is located in the same check
processing region as the depositary bank;
or
(ii) The fourth business day following
the banking day on which the check was
presented to the paying bank if the pay
ing bank is not located in the same
check-processing region as the depositary
bank.
If the last business day on which the re
turning bank may deliver a returned check
to the depositary bank is not a banking day
for the depositary bank, the returning bank
meets this requirement if the returned check
is received by the depositary bank on or
before the depositary bank’s next banking
day.
(2) Forward-collection test. A returning
bank also returns a check in an expeditious
manner if it sends the returned check in a
manner that a similarly situated bank would
normally handle a check—
(i) Of similar amount as the returned
check;
(ii) Drawn on the depositary bank; and
(iii) Received for forward collection by
the similarly situated bank at the time the
returning bank received the returned
check, except that a returning bank may
set a cut-off hour for the receipt of re
turned checks that is earlier than the sim
ilarly situated bank’s cut-off hour for
checks received for forward collection, if
the cut-off hour is not earlier than 2:00
p.m.
Subject to the requirement for expeditious re
turn, the returning bank may send the returned
82
Regulation CC
check to the depositary bank, or to any bank
agreeing to handle the returned check expedi
tiously under section 229.31(a). The returning
bank may convert the returned check to a
qualified returned check. A qualified returned
check must be encoded in magnetic ink with
the routing number of the depositary bank, the
amount of the returned check, and a “2” in
position 44 of the MICR line as a return iden
tifier, in accordance with the American Na
tional Standard Specification for Placement
and Location of MICR Printing, X9.13 (Sept.
1983). The time for expeditious return under
the forward-collection test, and the deadline
for return under the UCC and Regulation J
(12 CFR 210), are extended by one business
day if the returning bank converts a returned
check to a qualified returned check. This ex
tension does not apply to the two-day/four-day
test specified in paragraph (a)(1) of this sec
tion or when a returning bank is returning a
check directly to the depositary bank.
(b) Unidentifiable depositary bank. A re
turning bank that is unable to identify the de
positary bank with respect to a returned check
may send the returned check to—
(1) Any collecting bank that handled the
check for forward collection if the returning
bank was not a collecting bank with respect
to the returned check; or
(2) A prior collecting bank, if the returning
bank was a collecting bank with respect to
the returned check;
even if that collecting bank does not agree to
handle the returned check expeditiously under
section 229.31(a). A returning bank sending a
returned check under this paragraph must ad
vise the bank to which the check is sent that
the returning bank is unable to identify the
depositary bank. The expeditious-return re
quirements in paragraph (a) of this section do
not apply to return of a check under this para
graph. A returning bank that receives a re
turned check from a paying bank under sec
tion 229.30(b), or from a returning bank under
this paragraph, but that is able to identify the
depositary bank, must thereafter return the
check expeditiously to the depositary bank.
(c) Settlement. A returning bank shall settle
with a bank sending a returned check to it for
return by the same means that it settles or
Regulation CC
§ 229.31
would settle with the sending bank for a
check received for forward collection drawn
on the depositary bank. This settlement is fi
nal when made.
(d) Charges. A returning bank may impose a
charge on a bank sending a returned check for
handling the returned check.
(e) Depositary bank without accounts. The
expeditious-return requirements of paragraph
(a) of this section do not apply to checks de
posited with a depositary bank that does not
maintain accounts.
(f) Notice in lieu o f return. If a check is un
available for return, the returning bank may
send in its place a copy of the front and back
of the returned check, or, if no copy is avail
able, a written notice of nonpayment contain
ing the information specified in section
229.33(b). The copy or notice shall clearly
state that it constitutes a notice in lieu of re
turn. A notice in lieu of return is considered a
returned check subject to the expeditiousreturn requirements of this section and to the
other requirements of this subpart.
(g) Reliance on routing number. A returning
bank may return a returned check based on
any routing number designating the depositary
bank appearing on the returned check in the
depositary bank’s indorsement or in magnetic
ink on a qualified returned check.
83
§ 229.31
COMMENTARY
SECTION 229.31—Returning Bank’s
Responsibility for Return of Checks
31(a) Return of Checks
The standards for return of checks established
by this section are similar to those for paying
banks in section 229.30(a). This section re
quires a returning bank to return a returned
check expeditiously if it agrees to handle the
returned check for expeditious return under
this paragraph. In effect, the returning bank is
an agent or subagent of the paying bank and a
subagent of the depositary bank for the pur
poses of returning the check. A returning bank
agrees to handle a returned check for expedi
tious return to the depositary bank if it—
1. publishes or distributes availability sched
ules for the return of returned checks and
accepts the returned check for return;
2. handles a returned check for return that it
did not handle for forward collection; or
3. otherwise agrees to handle a returned
check for expeditious return.
As in the case of a paying bank, a returning
bank’s return of a returned check is expedi
tious if it meets either of two tests. Under the
two-day/four-day test, the check must be re
turned so that it would normally be received
by the depositary bank by 4:00 p.m. either
two or four business days after the check was
presented to the paying bank, depending on
whether or not the paying bank is located in
the same check-processing region as the de
positary bank. This is the same test as the
two-day/four-day test applicable to paying
banks. (See the commentary to section
229.30(a).) While a returning bank will not
have firsthand knowledge of the day on which
a check was presented to the paying bank, re
turning banks may, by agreement, allocate
with paying banks liability for late return
based on the delays caused by each. In effect,
the two-day/four-day test protects all paying
and returning banks that return checks from
claims that they failed to return a check expe
ditiously, where the check is returned within
the specified time following presentment to
the paying bank, or a later time as would re
sult from unforeseen delays.
84
Regulation CC Commentary
The forward-collection test is similar to the
forward-collection test for paying banks.
Under this test, a returning bank must handle
a returned check in the same manner that a
similarly situated collecting bank would han
dle a check of similar size drawn on the de
positary bank for forward collection. A simi
larly situated bank is a bank (other than a
Federal Reserve Bank) that is of similar asset
size and check-handling activity in the same
community. A bank has similar check-han
dling activity if it handles a similar volume of
checks for forward collection as the forwardcollection volume of the returning bank.
Under the forward-collection test, a re
turning bank must accept returned checks, in
cluding both qualified and other returned
checks (“raw returns” ), at approximately the
same times and process them according to the
same general schedules as checks handled for
forward collection. Thus, a returning bank
generally must process even raw returns on an
overnight basis, unless its time limit is ex
tended by one day to convert a raw return to
a qualified returned check.
A returning bank may establish earlier cut
off hours for receipt of returned checks than
for receipt of forward-collection checks, but
the cut-off hour for returned checks may not
be earlier than 2:00 p.m. The returning bank
also may set different sorting requirements for
returned checks than those applicable to other
checks. Thus, a returning bank may allow it
self more processing time for returns than for
forward-collection checks. All returned checks
received by a cut-off hour for returned checks
must be processed and dispatched by the re
turning bank by the time that it would dis
patch forward-collection checks received at a
corresponding forward-collection cut-off hour
that provides for the same or faster availabil
ity for checks destined for the same depositary
banks.
Examples
1. If a returning bank receives a returned
check by its cut-off hour for returned checks
on Monday and the depositary bank and the
returning bank are participants in the same
clearinghouse, the returning bank should ar
range to have the returned check received by
the depositary bank by Tuesday. This would
Regulation CC Commentary
be the same day that it would deliver a for
ward-collection check drawn on the depositary
bank and received by the returning bank at a
corresponding forward-collection cut-off hour
on Monday.
2. If a returning bank receives a returned
check, and the returning bank would normally
collect a forward-collection check drawn on
the depositary bank by sending the forwardcollection check to a correspondent or a Fed
eral Reserve Bank by courier, the returning
bank could send the returned check in the
same manner if the correspondent has agreed
to handle returned checks expeditiously under
section 229.31(a). The returning bank would
have to deliver the check by the correspon
dent’s or Federal Reserve Bank’s cut-off hour
for returned checks that corresponds to its cut
off hour for forward-collection checks drawn
on the depositary bank. A returning bank may
take a day to convert a check to a qualified
returned check. Where the forward-collection
checks are delivered by courier, mailing the
returned checks would not meet the duty es
tablished by this section for returning banks.
A returning bank must return a check to the
depositary bank by courier or other means as
fast as a courier, if similarly situated returning
banks use couriers to deliver their forwardcollection checks to the depositary bank.
For some depositary banks, no community
practice exists as to delivery of checks. For
example, a credit union whose customers use
payable-through drafts does not normally have
checks presented to it because the drafts are
normally sent to the payable-through bank for
collection. In these circumstances, the commu
nity standard is established by taking into ac
count the dollar volume of the checks being
sent to the depositary bank, and the location
of the depositary bank, and determining
whether similarly situated banks would nor
mally deliver forward-collection checks to the
depositary bank, taking into account the par
ticular risks associated with returned checks.
Where the community standard does not re
quire courier delivery, other means of deliv
ery, including mail, are acceptable.
The expeditious-return requirement for a re
turning bank in this regulation is more strin
gent in many cases than the duty of a collect
§ 229.31
ing bank to act seasonably under UCC section
4-202 in returning a check. A returning bank
is under a duty to act as expeditiously in re
turning a check as it would in the forward
collection of a check. Notwithstanding its duty
of expeditious return, its midnight deadline
under UCC section 4-202 and section
210.12(a) of Regulation J (12 CFR 210.12(a)),
under the forward-collection test, a returning
bank may take an extra day to qualify a re
turned check. A qualified returned check will
be handled by subsequent returning banks
more efficiently than a raw return. This para
graph gives a returning bank an extra business
day beyond the time that would otherwise be
required to return the returned check to con
vert a returned check to a qualified returned
check. The qualified returned check must in
clude the routing number of the depositary
bank, the amount of the check, and a return
identifier encoded on the check in magnetic
ink. If the returning bank is sending the re
turned check directly to the depositary bank,
this extra day is not available because prepar
ing a qualified returned check will not expe
dite handling by other banks.
If the returning bank makes an encoding er
ror in creating a qualified returned check, it
may be liable under section 229.38 for losses
caused by any negligence. The returning bank
would not lose the one-day extension avail
able to it for creating a qualified returned
check because of an encoding error.
Under section 229.31(a), the returning bank
is authorized to route the returned check in a
variety of ways:
1. It may send the returned check directly to
the depositary bank by courier or other ex
peditious means of delivery; or
2. It may send the returned check to any re
turning bank agreeing to handle the re
turned check for expeditious return to the
depositary bank under this section regard
less of whether or not the returning bank
handled the check for forward collection.
If the returning bank elects to send the re
turned check directly to the depositary bank, it
is not required to send the check to the branch
of the depositary bank that first handled the
check. The returned check may be sent to the
85
§ 229.31
depositary bank at any location permitted
under section 229.32(a).
In meeting the requirements of this section,
the returning bank is responsible for its own
actions, but not those of the paying bank,
other returning banks, or the depositary bank.
(See UCC 4-202(c) regarding the responsibil
ity of collecting banks.) For example, if the
paying bank has delayed the start of the return
process but the returning bank acts in a timely
manner, the returning bank may satisfy the re
quirements of this section even if the delayed
return results in a loss to the depositary bank.
(See section 229.38.) A returning bank must
handle a notice in lieu of return as expedi
tiously as a returned check.
This paragraph directly affects the follow
ing provisions of the UCC and may affect
other sections or provisions:
1. Section 4-202(b), in that time limits re
quired by that section may be affected by
the additional requirement to make an ex
peditious return.
2. Section 4-214(a), in that settlement for re
turned checks is made under section
229.31(c) and not by charge-back of provi
sional credit, and in that the time limits
may be affected by the additional require
ment to make an expeditious return.
31(b) Unidentifiable Depositary Bank
This section is similar to section 229.30(b) but
applies to returning banks instead of paying
banks. In some cases a returning bank will be
unable to identify the depositary bank with re
spect to a check. Returning banks agreeing to
handle checks for return to depositary banks
under section 229.31(a) are expected to be ex
pert in identifying depositary-bank indorse
ments. In the limited cases where the re
turning bank cannot identify the depositary
bank, the returning bank may send the re
turned check to a returning bank that agrees
to handle the returned check for expeditious
return under section 229.31(a), or it may send
the returned check to a bank that handled the
check for forward collection, even if that bank
does not agree to handle the returned check
expeditiously under section 229.31(a).
If the returning bank itself handled the
check for forward collection, it may send the
86
Regulation CC Commentary
returned check to a collecting bank that was
prior to it in the forward-collection process,
which will be better able to identify the de
positary bank. If there are no prior collecting
banks, the returning bank must research the
collection of the check and identify the depos
itary bank. As in the case of paying banks
under section 229.30(b), a returning bank’s
sending of a check to a bank that handled the
check for forward collection under section
229.31(b) is not subject to the expeditiousreturn requirements of section 229.31(a).
The returning bank’s return of a check
under this paragraph is subject to the midnight
deadline under UCC 4-202(b). (See the defini
tion of “returning bank” in section 229.2(cc).)
Where a returning bank receives a check
that it does not agree to handle expeditiously
under section 229.31(a), such as a check sent
to it under section 229.30(b), but the returning
bank is able to identify the depositary bank,
the returning bank must thereafter return the
check expeditiously to the depositary bank.
The returning bank returns a check expedi
tiously under this paragraph if it returns the
check by the same means it would use to re
turn a check drawn on it to the depositary
bank or by other reasonably prompt means.
As in the case of a paying bank returning a
check under section 229.30(b), a returning
bank returning a check under this paragraph to
a bank that has not agreed to handle the check
expeditiously must advise that bank that it is
unable to identify the depositary bank. This
advice must be conspicuous, such as a stamp
on each check for which the depositary bank
is unknown if such checks are commingled
with other returned checks, or, if such checks
are sent in a separate cash letter, by one no
tice on the cash letter. The returned check
may not be prepared for automated return.
31(c) Settlement
Under the UCC, a collecting bank receives
settlement for a check when it is presented to
the paying bank. The paying bank may re
cover the settlement when the paying bank re
turns the check to the presenting bank. Under
this regulation, however, 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
Regulation CC Commentary
these more efficient return paths, the paying
bank does not recover the settlement made to
the presenting bank. Thus, this paragraph re
quires the returning bank to settle for a re
turned check (either with the paying bank or
another returning bank) in the same way that
it would settle for a similar check for forward
collection. To achieve uniformity, this para
graph applies even if the returning bank han
dled the check for forward collection.
Any returning bank, including one that han
dled the check for forward collection, may
provide availability for returned checks pursu
ant to an availability schedule as it does for
forward-collection checks. These settlements
by returning banks, as well as settlements be
tween banks made during the forward collec
tion of a check, are considered final when
made, subject to any deferment of availability.
(See section 229.36(d) and the commentary to
section 229.35(b).)
A returning bank may vary the settlement
method it uses by agreement with paying
banks or other returning banks. Special rules
apply in the case of insolvency of banks. (See
section 229.39.) If payment cannot be ob
tained from a depositary or returning bank be
cause of its insolvency or otherwise, recovery
can be had by returning, paying, and collect
ing banks from prior banks on the basis of the
liab ility of prior banks under section
229.35(b).
This paragraph affects UCC 4-214(a) in that
a paying or collecting bank does not ordina
rily have a right to charge back against the
bank from which it received the returned
check, although it is entitled to settlement if it
returns the returned check to that bank, and
may affect other sections or provisions. Under
section 229.36(d), a bank collecting a check
remains liable to prior collecting banks and
the depositary bank’s customer under the
UCC.
§ 229.31
this paragraph to impose a charge for taking
up a check. This paragraph preempts state
laws to the extent that these laws prevent re
turning banks from charging fees for handling
returned checks.
31(e) Depositary Bank Without
Accounts
This paragraph is similar to section 229.30(e)
and relieves a returning bank of its obligation
to make expeditious return to a depositary
bank that does not maintain any accounts.
(See the commentary to section 229.30(e).)
31(f) Notice in Lieu of Return
This paragraph is similar to section 229.30(f)
and authorizes a returning bank to originate a
notice in lieu of return if the returned check is
unavailable for return. Notice in lieu of return
is permitted only when a bank does not have
and cannot obtain possession of the check or
must retain possession of the check for pro
test. A check is not unavailable for return if it
is merely difficult to retrieve from a filing sys
tem or from storage by a keeper of checks in
a truncation system. (See the commentary to
section 229.30(f).)
31(g) Reliance on Routing Number
This paragraph is similar to section 229.30(g)
and permits a returning bank to rely on rout
ing numbers appearing on a returned check
such as routing numbers in the depositary
bank’s indorsement or on qualified returned
checks. (See the commentary to section
229.30(g).)
31(d) Charges
This paragraph permits any returning bank,
even one that handled the check for forward
collection, to impose a fee on the paying bank
or other returning bank for its service in han
dling a returned check. Where a claim is
made under section 229.35(b), the bank on
which the claim is made is not authorized by
87
§ 229.32
SECTION 229.32—Depositary Bank’s
Responsibility for Returned Checks
(a) Acceptance o f returned checks. A deposi
tary bank shall accept returned checks and
written notices of nonpayment—
(1) At a location at which presentment of
checks for forward collection is requested
by the depositary bank; and
(2) (i) At a branch, head office, or other lo
cation consistent with the name and ad
dress of the bank in its indorsement on
the check;
(ii) If no address appears in the indorse
ment, at a branch or head office associ
ated with the routing number of the bank
in its indorsement on the check;
(iii) If the address in the indorsement is
not in the same check-processing region
as the address associated with the routing
number of the bank in its indorsement on
the check, at a location consistent with
the address in the indorsement and at a
branch or head office associated with the
routing number in the bank’s indorse
ment; or
(iv) If no routing number or address ap
pears in its indorsement on the check, at
any branch or head office of the bank.
A depositary bank may require that returned
checks be separated from forward-collection
checks.
(b) Payment. A depositary bank shall pay the
returning or paying bank returning the check
to it for the amount of the check prior to the
close of business on the banking day on
which it received the check (“payment date” )
by—
(1) Debit to an account of the depositary
bank on the books of the returning or pay
ing bank;
(2) Cash;
(3) Wire transfer; or
(4) Any other form of payment acceptable
to the returning or paying bank;
provided that the proceeds of the payment are
available to the returning or paying bank in
cash or by credit to an account of the re
turning or paying bank on or as of the pay
ment date. If the payment date is not a bank
ing day for the returning or paying bank or
the depositary bank is unable to make the
88
Regulation CC
payment on the payment date, payment shall
be made by the next day that is a banking day
for the returning or paying bank. These pay
ments are final when made.
(c) Misrouted returned checks and written no
tices o f nonpayment. If a bank receives a re
turned check or written notice of nonpayment
on the basis that it is the depositary bank, and
the bank determines that it is not the deposi
tary bank with respect to the check or notice,
it shall either promptly send the returned
check or notice to the depositary bank directly
or by means of a returning bank agreeing to
handle the returned check expeditiously under
section 229.31(a), or send the check or notice
back to the bank from which it was received.
(d) Charges. A depositary bank may not im
pose a charge for accepting and paying checks
being returned to it.
§ 229.32
Regulation CC Commentary
COMMENTARY
SECTION 229.32—Depositary Bank’s
Responsibility for Returned Checks
32(a) Acceptance of Returned Checks
This regulation seeks to encourage direct re
turns by paying and returning banks and may
result in a number of banks sending checks to
depositary banks with no preexisting arrange
ments as to where the returned checks should
be delivered. This paragraph states where the
depositary bank is required to accept returned
checks and written notices of nonpayment
under section 229.33. (These locations differ
from locations at which a depositary bank
must accept electronic notices.) It is derived
from UCC 3-111, which specifies that present
ment for payment may be made at the place
specified in the instrument or, if there is none,
at the place of business of the party to pay. In
the case of returned checks, the depositary
bank does not print the check and can only
specify the place of “payment” of the re
turned check in its indorsement.
The paragraph specifies four locations at
which the depositary bank must accept re
turned checks:
1. The depositary bank must accept returned
checks at any location at which it requests
presentment of forward-collection checks
such as a processing center. A depositary
bank does not request presentment of for
ward-collection checks at a branch of the
bank merely by paying checks presented
over the counter.
2. (i) If the depositary bank indorsement
states the name and address of the deposi
tary bank, it must accept returned checks at
the branch, head office, or other location,
such as a processing center, indicated by
the address. If the address is too general to
identify a particular location, then the de
positary bank must accept returned checks
at any branch or head office consistent
with the address. If, for example, the ad
dress is “New York, New York,” each
branch in New York City must accept re
turned checks.
(ii) If no address appears in the depositary
bank’s indorsement, the depositary bank
must accept returned checks at any branch
or head office associated with the deposita
ry bank’s routing number. The offices asso
ciated with the routing number of a bank
are found in a publication of Rand McNal
ly, Key to Routing Numbers, which lists a
city and state address for each routing
number.
(iii) The depositary bank must accept re
turned checks at the address in its indorse
ment and at an address associated with its
routing number in the indorsement if the
written address in the indorsement and the
address associated with the routing number
in the indorsement are not in the same
check-processing region. Under sections
229.30(g) and 229.31(g), a paying or re
turning bank may rely on the depositary
bank’s routing number in its indorsement
in handling returned checks and is not re
quired to send returned checks to an ad
dress in the depositary bank’s indorsement
that is not in the same check-processing re
gion as the address associated with the
routing number in the indorsement.
(iv) If no routing number or address ap
pears in its indorsement, the depositary
bank must accept a returned check at any
branch or head office of the bank. The in
dorsement requirement of section 229.35
and appendix D requires that the indorse
ment contain a routing number, a name,
and a location. Consequently, this provi
sion, as well as paragraph (a)(2)(ii) of this
section, only applies where the depositary
bank has failed to comply with the indorse
ment requirement.
For ease of processing, a depositary bank
may require that returning or paying banks re
turning checks to it separate returned checks
from forward-collection checks being
presented.
Under section 229.33(d), a depositary bank
receiving a returned check or notice of non
payment must send notice to its customer by
its midnight deadline or within a longer rea
sonable time.
32(b) Payment
As discussed in the comment to section
229.31(c), under this regulation a paying or
89
§ 229.32
returning bank does not obtain credit for a re
turned check by charge-back but by, in effect,
presenting the returned check to the depositary
bank. This paragraph imposes an obligation to
“pay” a returned check that is similar to the
obligation to pay a forward-collection check
by a paying bank, except that the depositary
bank may not return a returned check for
which it is the depositary bank. Also, certain
means of payment, such as remittance drafts,
may only be used with the agreement of the
returning bank.
The depositary bank must pay for a re
turned check by the close of the banking day
on which it received the returned check. The
day on which a returned check is received is
determined pursuant to UCC 4-108, which
permits the bank to establish a cut-off hour,
generally not earlier than 2:00 p.m., and treat
checks received after that hour as being re
ceived on the next banking day. If the de
positary bank is unable to make payment to a
returning or paying bank on the banking day
that it receives the returned check, because the
returning or paying bank is closed for a holi
day or because the time when the depositary
bank received the check is after the close of
Fedwire (e.g., West Coast banks with late cut
off hours), payment may be made on the next
banking day of the bank receiving payment.
Payment must be made so that the funds
are available for use by the bank returning the
check to the depositary bank on the day the
check is received by the depositary bank. For
example, a depositary bank meets this require
ment if it sends a wire transfer of funds to the
returning or paying bank on the day it re
ceives the returned check, even if the re
turning or paying bank has closed for the day.
A wire transfer should indicate the purpose of
the payment.
The depositary bank may use a net-settle
ment arrangement. Banks with net-settlement
agreements could net the appropriate credits
and debits for returned checks with the ac
counting entries for forward-collection checks
if they so desired. If, for purposes of estab
lishing additional controls or for other rea
sons, the banks involved desired a separate
settlement for returned checks, a separate netsettlement agreement could be established.
The bank sending the returned check to the
90
Regulation CC Commentary
depositary bank may agree to accept payment
at a later date if, for example, it does not
believe that the amount of the returned check
or checks warrants the costs of same-day pay
ment. Thus, a returning or paying bank may
agree to accept payment through an ACH
credit or debit transfer that settles the day af
ter the returned check is received instead of a
wire transfer that settles on the same day.
This paragraph and this subpart do not af
fect the depositary bank’s right to recover a
provisional settlement with its nonbank cus
tomer for a check that is returned. (See also
sections 229.33(d) and 229.35(d).)
32(c) Misrouted Returned Checks
This paragraph permits a bank receiving a
check on the basis that it is the depositary
bank to send the misrouted returned check to
the correct depositary bank, if it can identify
the correct depositary bank, either directly or
through a returning bank agreeing to handle
the check expeditiously under section
229.30(a). In these cases, the bank receiving
the check is acting as a returning bank. Alter
natively, the bank receiving the misrouted re
turned check must send the check back to the
bank from which it was received. In either
case the bank to which the returned check
was misrouted could receive settlement for the
check. The depositary bank would be required
to pay for the returned check under section
229.32(b), and any other bank to which the
check is sent under this paragraph would be
required to settle for the check as a returning
bank under section 229.31(c). If the check
was originally received “free,” that is, with
out a charge for the check, the bank incor
rectly receiving the check would have to re
turn the check, without a charge, to the bank
from which it came. The bank to which the
returned check was misrouted is required to
act promptly but is not required to meet the
expeditious-return requirements of section
229.31(a); however, it must act within its
midnight deadline. This paragraph does not
affect a bank’s duties under section 229.35(b).
32(d) Charges
This paragraph prohibits a depositary bank
from charging the equivalent of a presentment
Regulation CC Commentary
§ 229.32
fee for returned checks. A returning bank,
however, may charge a fee for handling re
turned checks. If the returning bank receives a
mixed cash letter of returned checks, which
includes some checks for which the returning
bank is also the depositary bank, the fee may
be applied to all the returned checks in the
cash letter. In the case of a sorted cash letter
containing only returned checks for which the
returning bank is the depositary bank, how
ever, no fee may be charged.
91
§ 229.33
SECTION 229.33—Notice of
Nonpayment
(a) Requirement. If a paying bank determines
not to pay a check in the amount of $2,500 or
more, it shall provide notice of nonpayment
such that the notice is received by the deposi
tary bank by 4:00 p.m. (local time) on the
second business day following the banking
day on which the check was presented to the
paying bank. If the day the paying bank is
required to provide notice is not a banking
day for the depositary bank, receipt of notice
on the depositary bank’s next banking day
constitutes timely notice. Notice may be pro
vided by any reasonable means, including the
returned check, a writing (including a copy of
the check), telephone, Fedwire, telex, or other
form of telegraph.
(b) Content o f notice. Notice must include
the—
(1) Name and routing number of the paying
bank;
(2) Name of the payee(s);
(3) Amount;
(4) Date of the indorsement of the deposi
tary bank;
(5) Account number of the customer(s) of
the depositary bank;
(6) Branch name or number of the deposi
tary bank from its indorsement;
(7) Trace number associated with the in
dorsement of the depositary bank; and
(8) Reason for nonpayment.
The notice may include other information
from the check that may be useful in identify
ing the check being returned and the cus
tomer, and, in the case of a written notice,
must include the name and routing number of
the depositary bank from its indorsement. If
the paying bank is not sure of an item of in
formation, it shall include the information re
quired by this paragraph to the extent possi
ble, and identify any item of information for
which the bank is not sure of the accuracy
with question marks.
(c) Acceptance of notice. The depositary bank
shall accept notices during its banking day—
(1)
Either at the telephone or telegraph
number of its return-check unit indicated in
the indorsement, or, if no such number ap
pears in the indorsement or if the number is
92
Regulation CC
illegible, at the general-purpose telephone
or telegraph number of its head office or
the branch indicated in the indorsement;
and
(2) At any other number held out by the
bank for receipt of notice of nonpayment,
and, in the case of written notice, as speci
fied in section 229.32(a).
(d) Notification to customer. If the depositary
bank receives a returned check or notice of
nonpayment, it shall send notice to its cus
tomer of the facts by midnight of the banking
day following the banking day on which it
received the returned check or notice, or
within a longer reasonable time.
(e) Depositary bank without accounts. The re
quirements of this section do not apply to
checks deposited in a depositary bank that
does not maintain accounts.
Regulation CC Commentary
COMMENTARY
SECTION 229.33—Notice of
Nonpayment
33(a) Requirement
Notice of nonpayment as required by this sec
tion and written notice in lieu of return as
provided in sections 229.30(f) and 229.31(f)
serve different functions. The two kinds of
notice, however, must meet the content re
quirements of this section. The paying bank
must send a notice of nonpayment if it de
cides not to pay a check of $2,500 or more. A
paying bank may rely on an amount encoded
on the check in magnetic ink to determine
whether the check is in the amount of $2,500
or more. The notice of nonpayment carries no
value, and the check itself (or the notice in
lieu of return) must be returned. The paying
bank must ensure that the notice of nonpay
ment is received by the depositary bank by
4:00 p.m. local time on the second business
day following presentment. A bank identified
by routing number as the paying bank is con
sidered the paying bank under this regulation
and would be required to create a notice of
nonpayment even though that bank determined
that the check was not drawn by a customer
of that bank. (See the commentary to the defi
nition of “paying bank” in section 229.2(z).)
The paying bank should not send a notice
of nonpayment until it has finally determined
not to pay the check. Under section 229.34(b),
by sending the notice the paying bank war
rants that it has returned or will return the
check. If a paying bank sends a notice and
subsequently decides to pay the check, the
paying bank may mitigate its liability on this
warranty by notifying the depositary bank that
the check has been paid.
Because the return of the check itself may
serve as the required notice of nonpayment, in
many cases no notice other than the return of
the check will be necessary. For example, in
many cases the return of a check through a
clearinghouse to another participant of the
clearinghouse will be made in time to meet
the time requirements of this section. If the
check will not normally be received by the
depositary bank within the time limits for no
tice, the return of the check will not satisfy
§ 229.33
the notice requirement. In determining
whether the returned check will satisfy the no
tice requirement, the paying bank may rely on
the availability schedules of returning banks
as the time that the returned check is expected
to be delivered to the depositary bank, unless
the paying bank has reason to know the avail
ability schedules are inaccurate.
Unless the returned check is used to satisfy
the notice requirement, the requirement for
notice is independent of and does not affect
the requirements for timely and expeditious
return of the check under section 229.30 and
the UCC. (See section 229.30(a).) If a paying
bank fails both to comply with this section
and to comply with the requirements for
timely and expeditious return under section
229.30 and the UCC and Regulation J (12
CFR 210), the paying bank shall be liable
under either this section or such other require
ments, but not both. (See section 229.38(b).)
A paying bank is not responsible for failure to
give notice of nonpayment to a party that has
breached a presentment warranty under UCC
4-208, notwithstanding that the paying bank
may have returned the check. (See UCC
4-208 and 4-302.)
33(b) Content of Notices
This paragraph provides that the notice must
at a minimum contain eight elements which
are specifically enumerated. In the case of
written notices, the name and routing number
of the depositary bank are also required.
If the paying bank cannot identify the de
positary bank from the check itself, it may
wish to send the notice to the earliest collect
ing bank it can identify and indicate that the
notice is not being sent to the depositary
bank. The collecting bank may be able to
identify the depositary bank and forward the
notice, but is under no duty to do so. In addi
tion, the collecting bank may actually be the
depositary bank.
33(c) Acceptance of Notice
In the case of a written notice, the depositary
bank is required to accept notices at the loca
tions specified in section 229.32(a). In the
case of telephone notices, the bank may not
refuse to accept notices at the telephone num93
§ 229.33
bers identified in this section, but may transfer
calls or use a recording device. Banks may
vary by agreement the location and manner in
which notices are received.
33(d) Notification to Customer
This paragraph requires a depositary bank to
notify its customer of nonpayment upon re
ceipt of a returned check or notice of nonpay
ment, regardless of the amount of the check
or notice. This requirement is similar to the
requirement under the UCC as interpreted in
Appliance Buyers Credit Corp. v. Prospect
National Bank, 708 F.2d 290 (7th Cir. 1983),
that a depositary bank may be liable for dam
ages incurred by its customer for its failure to
give its customer timely advice that it has re
ceived a notice of nonpayment. Notice must
also be given if a depositary bank receives a
notice of recovery under section 229.35(b).
The notice to the customer required under this
paragraph may also satisfy the notice require
ment of section 229.13(g) if the depositary
bank invokes the reasonable-cause exception
of section 229.13(e) due to the receipt of a
notice of nonpayment, provided the notice
meets the other requirements of section
229.13(g).
94
Regulation CC Commentary
Regulation CC
SECTION 229.34—Warranties
(a) Warranties. Each paying bank or returning
bank that transfers a returned check and re
ceives a settlement or other consideration for
it warrants to the transferee returning bank, to
any subsequent returning bank, to the deposi
tary bank, and to the owner of the check,
that—
(1) The paying bank, or in the case of a
check payable by a bank and payable
through another bank, the bank by which
the check is payable, returned the check
within its deadline under the UCC, Regula
tion J (12 CFR 210), or section 229.30(c)
of this part;
(2) It is authorized to return the check;
(3) The check has not been materially al
tered; and
(4) In the case of a notice in lieu of return,
the original check has not and will not be
returned.
These warranties are not made with respect to
checks drawn on the Treasury of the United
States, U.S. Postal Service money orders, or
checks drawn on a state or a unit of general
local government that are not payable through
or at a bank.
(b) Warranty o f notice o f nonpayment. Each
paying bank that gives a notice of nonpay
ment warrants to the transferee bank, to any
subsequent transferee bank, to the depositary
bank, and to the owner of the check that—
(1) The paying bank, or in the case of a
check payable by a bank and payable
through another bank, the bank by which
the check is payable, returned or will return
the check within its deadline under the
UCC, Regulation J (12 CFR 210), or sec
tion 229.30(c) of this part;
(2) It is authorized to send the notice; and
(3) The check has not been materially
altered.
These warranties are not made with respect to
checks drawn on a state or a unit of general
local government that are not payable through
or at a bank.
(c) Warranty o f settlement amount, encoding,
and offset.
(1) Each bank that presents one or more
checks to a paying bank and in return re
ceives a settlement or other consideration
§ 229.34
warrants to the paying bank that the total
amount of the checks presented is equal to
the total amount of the settlement de
manded by the presenting bank from the
paying bank.
(2) Each bank that transfers one or more
checks or returned checks to a collecting,
returning, or depositary bank and in return
receives a settlement or other consideration
warrants to the transferee bank that the ac
companying information, if any, accurately
indicates the total amount of the checks or
returned checks transferred.
(3) Each bank that presents or transfers a
check or returned check warrants to any
bank that subsequently handles it that, at
the time of presentment or transfer, the in
formation encoded after issue in magnetic
ink on the check or returned check is
correct.
(4) A paying bank may set off the amount
by which the settlement paid to a present
ing bank exceeds the total amount of the
checks presented against subsequent settle
ments for checks presented by that present
ing bank.
(d) Damages. Damages for breach of these
warranties shall not exceed the consideration
received by the bank that presents or transfers
a check or returned check, plus interest com
pensation and expenses related to the check or
returned check, if any.
(e) Tender o f defense. If a bank is sued for
breach of a warranty under this section, it
may give a prior bank in the collection or
return chain written notice of the litigation,
and the bank notified may then give similar
notice to any other prior bank. If the notice
states that the bank notified may come in and
defend and that failure to do so will bind the
bank notified in an action later brought by the
bank giving the notice as to any determination
of fact common to the two litigations, the
bank notified is so bound unless after seasona
ble receipt of the notice the bank notified does
come in and defend.
§ 229.34
COMMENTARY
SECTION 229.34—Warranties
34(a) Warranty of Returned Check
This paragraph includes warranties that a re
turned check, including a notice in lieu of re
turn, was returned by the paying bank, or in
the case of a check payable by a bank and
payable through another bank, the bank by
which the check is payable, within the dead
line under the UCC, Regulation J, or section
229.30(c); that the paying or returning bank is
authorized to return the check; that the re
turned check has not been materially altered;
and that, in the case of a notice in lieu of
return, the original check has not been and
will not be returned for payment (see the
commentary to section 229.30(f)). The war
ranty does not include a warranty that the
bank complied with the expeditious-return re
quirements of sections 229.30(a) and
229.31(a). These warranties do not apply to
checks drawn on the United States Treasury,
to Postal Service money orders, or to checks
drawn on a state or a unit of general local
government that are not payable through or at
a bank (see section 229.42).
34(b) Warranty of Notice of
Nonpayment
This paragraph provides for warranties for no
tices of nonpayment. This warranty does not
include a warranty that the notice is accurate
and timely under section 229.33. The require
ments of section 229.33 that are not covered
by the warranty are subject to the liability
provisions of section 229.38. These warranties
are designed to give the depositary bank more
confidence in relying on notices of nonpay
ment. This paragraph imposes liability on a
paying bank that gives notice of nonpayment
and then subsequently returns the check. (See
the commentary on section 229.33(a).)
34(c) Warranty of Settlement Amount,
Encoding, and Offset.
Paragraph (c)(1) provides that a bank that
presents and receives settlement for checks
warrants to the paying bank that the settle
ment it demands (e.g., as noted on the cash
96
Regulation CC Commentary
letter) equals the total amount of the checks it
presents. This paragraph gives the paying
bank a warranty claim against the presenting
bank for the amount of any excess settlement
made on the basis of the amount demanded,
plus expenses. If the amount demanded is un
derstated, a paying bank discharges its settle
ment obligation under UCC section 4-301 by
paying the amount demanded, but remains lia
ble for the amount by which the demand is
understated; the presenting bank is neverthe
less liable for expenses in resolving the
adjustment.
When checks or returned checks are trans
ferred to a collecting, returning, or depositary
bank, the transferor bank is not required to
demand settlement, as is required upon pre
sentment to the paying bank. However, often
the checks or returned checks will be accom
panied by information (such as a cash-letter
listing) that will indicate the total of the
checks or returned checks. Paragraph (c)(2)
provides that if the transferor bank includes
information indicating the total amount of
checks or returned checks transferred, it war
rants that the information is correct (i.e.,
equals the actual total of the items).
Paragraph (c)(3) provides that a bank that
presents or transfers a check or returned check
warrants the accuracy of the magnetic ink en
coding that was placed on the item after issue,
and that exists at the time of presentment or
transfer, to any bank that subsequently han
dles the check or returned check. Under UCC
section 4-209(a), only the encoder (or the en
coder and the depositary bank, if the encoder
is a customer of the depositary bank) warrants
the encoding accuracy, thus any claims on the
warranty must be directed to the encoder.
Paragraph (c)(3) expands on the UCC by pro
viding that all banks that transfer or present a
check or returned check make the encoding
warranty. In addition, under the UCC, the en
coder makes the warranty to subsequent col
lecting banks and the paying bank, while
paragraph (c)(3) provides that the warrranty is
made to banks in the return chain as well.
A paying bank that settles for an overstated
cash letter because of a misencoded check
may make a warranty claim against the
presenting bank under paragraph (c)(1) (which
would require the paying bank to show that
Regulation CC Commentary
§ 229.34
the check was part of the overstated cash let
ter) or an encoding warranty claim under
paragraph (c)(3) against the presenting bank
or any preceding bank that handled the misencoded check.
Paragraph (c)(4) provides that the paying
bank may set off any excess settlement made
against settlement owed to the presenting bank
for checks presented subsequently.
34(d) Damages
This paragraph adopts for the warranties in
section 229.34(a), (b), and (c) the damages
provided in UCC section 4-207(c) and
4A-506(b). (See definition of “interest com
pensation” in section 229.2(oo).)
34(e) Tender of Defense
This paragraph adopts for this regulation the
vouching-in provisions of UCC section 3-119.
97
§ 229.35
SECTION 229.35— Indorsements
(a) Indorsement standards. A bank (other than
a paying bank) that handles a check during
forward collection or a returned check shall
legibly indorse the check in accordance with
the indorsement standard set forth in appendix
D to this part.
(b) Liability o f bank handling check. A bank
that handles a check for forward collection or
return is liable to any bank that subsequently
handles the check to the extent that the subse
quent bank does not receive payment for the
check because of suspension of payments by
another bank or otherwise. This paragraph ap
plies whether or not a bank has placed its in
dorsement on the check. This liability is not
affected by the failure of any bank to exercise
ordinary care, but any bank failing to do so
remains liable. A bank seeking recovery
against a prior bank shall send notice to that
prior bank reasonably promptly after it learns
the facts entitling it to recover. A bank may
recover from the bank with which it settled
for the check by revoking the settlement,
charging back any credit given to an account,
or obtaining a refund. A bank may have the
rights of a holder with respect to each check
it handles.
(c) Indorsement by a bank. After a check has
been indorsed by a bank, only a bank may
acquire the rights of a holder—
(1) Until the check has been returned to the
person initiating collection; or
(2) Until the check has been specially in
dorsed by a bank to a person who is not a
bank.
(d) Indorsement for depositary bank. A de
positary bank may arrange with another bank
to apply the other bank’s indorsement as the
depositary-bank indorsement, provided that
any indorsement of the depositary bank on the
check avoids the area reserved for the deposi
tary-bank indorsement as specified in appen
dix D. The other bank indorsing as depositary
bank is considered the depositary bank for
purposes of subpart C of this part.
98
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.35—Indorsements
35(a) Indorsement Standards
This section and appendix D require banks to
use a standard form of indorsement when in
dorsing checks during the forward-collection
and return process. The standard provides for
indorsements by all collecting and returning
banks, plus a unique standard for depositarybank indorsements. It is designed to facilitate
the identification of the depositary bank and
the prompt return of checks. The regulation
places a duty on banks to ensure that their
indorsements are legible. The indorsement
standard specifies the information each in
dorsement must contain and its location and
ink color.
The indorsement standard requires that the
nine-digit routing number of the depositary
bank be wholly contained in an area on the
back of the check from 3.0 inches from the
leading edge to 1.5 inches from the trailing
edge of the check. This permits banks to use
encoding equipment that measures from either
the leading or trailing edge of the check to
place indorsements in this area. The standard
does not require that the entire depositary
bank indorsement be contained within the
specified area, but checks will be handled
most efficiently if depositary banks place as
much information as possible within the des
ignated area to ensure that the information is
protected from being overstamped by subse
quent indorsements. The location requirement
for subsequent collecting-bank indorsements
(not including retuming-bank indorsements)
limits these indorsements to the area on the
back of the check from the leading edge to
3.0 inches from the leading edge of the check.
The area from the trailing edge of the check
to 1.5 inches from the trailing edge is com
monly used for the payee indorsement.
The standard requires depositary banks to
use either purple or black ink. The Board en
courages depositary banks to indorse checks
in purple ink where possible, because use of a
unique ink color will facilitate the speedy
identification of the depositary bank. Black
ink, however, may be used when use of pur
ple ink is not feasible, such as where a bank
§ 229.35
uses the same equipment to apply both depos
itary-bank and subsequent collecting-bank in
dorsements, and the equipment has only one
source of ink. The standard requires subse
quent collecting banks to use an ink color
other than purple for their indorsements. The
standard also requires the depositary bank’s
indorsement to include its nine-digit routing
number set off by arrows, the bank’s name
and location, and the indorsement date, and
permits the indorsement to include other iden
tifying information.
The standard does not include the fractional
routing number for depositary banks; however,
a bank may include its fractional routing num
ber or repeat its nine-digit routing number in
its indorsement. If a depositary bank includes
its routing number in its indorsement more
than once, paying and returning banks will be
able to identify the depositary bank more
readily. Depositary banks should not include
information that can be confused with re
quired information. For example, a nine-digit
zip code could be confused with the nine-digit
routing number.
A depositary bank is not required to place a
street address in its indorsement; however, a
bank may want to put an address in its in
dorsement in order to limit the number of lo
cations at which it must accept returned
checks. In instances where this address is not
consistent with the routing number in the in
dorsement, the depositary bank is required to
accept returned checks at a branch or head
office consistent with the routing number.
Banks should note, however, that section
229.32 requires a depositary bank to accept
returned checks at the location(s) it accepts
forward-collection checks. The inclusion of a
depositary bank’s telephone number where it
would receive notices of large-dollar returns
in its indorsements is optional.
Under the UCC, a specific guarantee of
prior indorsement is not necessary. (See UCC
4-207(a) and 4-208(a).) Use of guarantee lan
guage in indorsements, such as “ P.E.G.”
(“prior endorsements guaranteed”), may result
in reducing the type size used in bank in
dorsements, thereby making them more diffi
cult to read. Use of this language may make it
more difficult for other banks to identify the
depositary bank. Subsequent collecting-bank
indorsements may not include this language.
99
§ 229.35
The standard for returning banks requires a
returning bank to apply an indorsement that
avoids the area on the back of the check from
3.0 inches from the leading edge of the check
to the trailing edge—the area reserved for the
payee and depositary-bank indorsements. Retuming-bank indorsements may differ from
subsequent collecting-bank indorsements. The
use of various methods to process returns us
ing a variety of equipment may also cause re
turning-bank indorsements to vary substan
tially in form, content, and placement on the
check. Thus, a returning-bank indorsement
may be on the face of the check or on the
back of the check. A retuming-bank indorse
ment may not be in purple ink. No content
requirements have been adopted for the re
tuming-bank indorsement.
If the bank maintaining the account into
which a check is deposited agrees with an
other bank (a correspondent, ATM operator, or
lock box operator) to have the other bank ac
cept returns and notices of nonpayment for the
bank of account, the indorsement placed on
the check as the depositary-bank indorsement
may be the indorsement of the bank that acts
as correspondent, ATM operator, or lock box
operator as provided in paragraph (d) of this
section.
The backs of many checks bear preprinted
information or blacked out areas for various
reasons. For example, some checks are printed
with a carbon band across the back that al
lows the transfer of information from the
check to a ledger with one writing. Also, con
tracts or loan agreements are printed on cer
tain checks. Other checks that are mailed to
recipients may contain areas on the back that
are blacked out so that they may not be read
through the mailer. On the deposit side, the
payee of the check may place its indorsement
or information identifying the drawer of the
check in the area specified for the depositarybank indorsement, thus making the depositarybank indorsement unreadable.
The indorsement standard does not prohibit
the use of a carbon band or other printed or
written matter on the backs of checks and
does not require banks to avoid placing their
indorsements in these areas. Nevertheless,
checks will be handled more efficiently if de
positary banks design indorsement stamps so
100
Regulation CC Commentary
that the nine-digit routing number avoids the
carbon band area. Indorsing parties other than
banks, e.g., corporations, will benefit from the
faster return of checks if they protect the
identifiability and legibility of the depositarybank indorsement by staying clear of the area
reserved for the depositary-bank indorsement.
Section 229.38(d) allocates responsibility
for loss resulting from a delay in return of a
check due to indorsements that are unreadable
because of material on the back of the check.
The depositary bank is responsible for a loss
resulting from a delay in return caused by the
condition of the check arising after its issu
ance until its acceptance by the depositary
bank that made the depositary bank’s indorse
ment illegible. The paying bank is responsible
for loss resulting from a delay in return
caused by indorsements that are not readable
because of other material on the back of the
check at the time that it was issued. Deposi
tary and paying banks may shift these risks to
their customers by agreement.
The standard does not require the paying
bank to indorse the check; however, if a pay
ing bank does indorse a check that is returned,
it should follow the indorsement standard for
returning banks. The standard requires collect
ing and returning banks to indorse the check
for tracing purposes.
35(b) Liability of Bank Handling Check
When a check is sent for forward collection,
the collection process results in a chain of in
dorsements extending from the depositary
bank through any subsequent collecting banks
to the paying bank. This section extends the
indorsement chain through the paying bank to
the returning banks, and would permit each
bank to recover from any prior indorser if the
claimant bank does not receive payment for
the check from a subsequent bank in the col
lection or return chain. For example, if a re
turning bank returned a check to an insolvent
depositary bank and did not receive the full
amount of the check from the failed bank, the
returning bank could obtain the unrecovered
amount of the check from any bank prior to it
in the collection-and-retum chain including
the paying bank. Because each bank in the
collection-and-retum chain could recover from
a prior bank, any loss would fall on the first
Regulation CC Commentary
collecting bank that received the check from
the depositary bank. To avoid circuity of ac
tions, the returning bank could recover di
rectly from the first collecting bank. Under the
UCC, the first collecting bank might ulti
mately recover from the depositary bank’s
customer or from the other parties on the
check.
Where a check is returned through the same
banks used for the forward collection of the
check, priority during the forward-collection
process controls over priority in the return
process for the purpose of determining prior
and subsequent banks under this regulation.
Where a returning bank is insolvent and
fails to pay the paying bank or a prior re
turning bank for a returned check, section
229.39(a) requires the receiver of the failed
bank to return the check to the bank that
transferred the check to the failed bank. That
bank could then either continue the return to
the depositary bank or recover based on this
paragraph. Where the paying bank is insol
vent, and fails to pay the collecting bank, the
collecting bank could also recover from a
prior collecting bank under this paragraph,
and the bank from which it recovered could in
turn recover from its prior collecting bank un
til the loss settled on the depositary bank
(which could recover from its customer).
A bank is not required to make a claim
against an insolvent bank before exercising its
right to recovery under this paragraph. Recov
ery may be made by charge-back or by other
means. This right of recovery is also permit
ted even where nonpayment of the check is
the result of the claiming bank’s negligence
such as failure to make expeditious return, but
the claiming bank remains liable for its negli
gence under section 229.38.
This liability is imposed on a bank handling
a check for collection or return regardless of
whether the bank’s indorsement appears on
the check. Notice must be sent under this
paragraph to a prior bank from which recov
ery is sought reasonably promptly after a bank
learns that it did not receive payment from
another bank, and learns the identity of the
prior bank. Written notice reasonably identify
ing the check and the basis for recovery is
sufficient if the check is not available. Receipt
of notice by the bank against which the claim
§ 229.35
is made is not a precondition to recovery by
charge-back or other means; however, a bank
may be liable for negligence for failure to
provide timely notice. A paying or returning
bank may also recover from a prior collecting
bank as provided in sections 229.30(b) and
229.31(b). This provision is not a substitute
for a paying or returning bank making expedi
tious return under sections 229.30(a) or
229.31(b). This paragraph does not affect a
paying bank’s accountability for a check
under UCC 4-215(a) and 4-302. Nor does this
paragraph affect a collecting bank’s accounta
bility under UCC 4-213 and 4-215(d). A col
lecting bank becomes accountable upon re
ceipt of final settlement as provided in the
foregoing UCC sections. The term “final set
tlement” in sections 229.31(c), 229.32(b), and
229.36(d) is intended to be consistent with the
use of the term “final settlement” in the UCC
(e.g., UCC 4-213, 4-214, and 4-215). (See
also section 229.2(cc) and commentary.)
This paragraph also provides that a bank
may have the rights of a “holder” based on
the handling of the check for collection or re
turn. A bank may become a holder or a
holder in due course regardless of whether
prior banks have complied with the indorse
ment standard in section 229.35(a) and appen
dix D.
This paragraph affects the following provi
sions of the UCC and may affect other
provisions:
1. Section 4-214(a), in that the right to recov
ery is not based on provisional settlement,
and recovery may be had from any prior
bank. Section 4-214(a) would continue to
permit a depositary bank to recover a pro
visional settlement from its customer. (See
section 229.33(d).)
2. Section 3-415 and related provisions (such
as section 3-503), in that such provisions
would not apply as between banks, or
as between the depositary bank and its
customer.
35(c) Indorsement by Bank
This section protects the rights of a customer
depositing a check in a bank without requiring
the words “pay any bank,” as required by the
UCC. (See UCC 4-201(b).) Use of this lan101
§ 229.35
guage in a depositary bank’s indorsement will
make it more difficult for other banks to iden
tify the depositary bank. The indorsement
standard in appendix D prohibits such material
in subsequent collecting bank indorsements.
The existence of a bank indorsement provides
notice of the restrictive indorsement without
any additional words.
35(d) Indorsement for Depositary Bank
This section permits a depositary bank to ar
range with another bank to indorse checks.
This practice may occur when a correspondent
indorses for a respondent, or when the bank
servicing an ATM or lock box indorses for the
bank maintaining the account in which the
check is deposited—i.e., the depositary bank.
If the indorsing bank applies the depositary
bank’s indorsement, checks will be returned to
the depositary bank. If the indorsing bank
does not apply the depositary bank’s indorse
ment, by agreement with the depositary bank
it may apply its own indorsement as the de
positary-bank indorsement. In that case, the
depositary bank’s own indorsement on the
check (if any) should avoid the location re
served for the depositary bank. The actual de
positary bank remains responsible for the
availability and other requirements of subpart
B, but the bank indorsing as depositary bank
is considered the depositary bank for purposes
of subpart C. The check will be returned, and
notice of nonpayment will be given, to the
bank indorsing as depositary bank.
Because the depositary bank for subpart B
purposes will desire prompt notice of nonpay
ment, its arrangement with the indorsing bank
should provide for prompt notice of nonpay
ment. The bank indorsing as depositary bank
may require the depositary bank to agree to
take up the check if the check is not paid
even if the depositary bank’s indorsement
does not appear on the check and it did not
handle the check. The arrangement between
the banks may constitute an agreement vary
ing the effect of provisions of subpart C under
section 229.37.
102
Regulation CC Commentary
Regulation CC
SECTION 229.36— Presentment and
Issuance of Checks
(a) Payable-through and payable-at checks. A
check payable at or through a paying bank is
considered to be drawn on that bank for pur
poses of the expeditious-return and notice-ofnonpayment requirements of this subpart.
(b) Receipt at bank office or processing
center. A check is considered received by the
paying bank when it is received—
(1) At a location to which delivery is re
quested by the paying bank;
(2) At an address of the bank associated
with the routing number on the check,
whether in magnetic ink or in fractional
form;
(3) At any branch or head office, if the
bank is identified on the check by name
without address; or
(4) At a branch, head office, or other loca
tion consistent with the name and address
of the bank on the check if the bank is
identified on the check by name and
address.
(c) Truncation. A bank may present a check
to a paying bank by transmission of informa
tion describing the check in accordance with
an agreement with the paying bank. A trunca
tion agreement may not extend return times or
otherwise vary the requirements of this part
with respect to parties interested in the check
that are not party to the agreement.
(d) Liability o f bank during forward collec
tion. Settlements between banks for the for
ward collection of a check are final when
made; however, a collecting bank handling a
check for forward collection may be liable to
a prior collecting bank, including the deposi
tary bank, and the depositary bank’s customer.
(e) Issuance o f payable-through checks. A
bank that arranges for checks payable by it to
be payable through another bank shall require
that the following information be printed con
spicuously on the face of each check:
(1) the name, location, and first four digits
of the nine-digit routing number of the
bank by which the check is payable; and
(2) the words “payable through” followed
by the name and location of the payable
through bank.
§ 229.36
This provision shall be effective February 1,
1991, and after that date banks that use pay
able-through arrangements must require their
customers to use checks that meet the require
ments of this provision. A bank is responsible
for damages under section 229.38 of this part
to the extent that a check payable by it and
not payable through another bank is labelled
as provided in this section.
(f) Same-day settlement
(1) A check is considered presented, and a
paying bank must settle for or return the
check pursuant to paragraph (f)(2) of this
section, if a presenting bank delivers the
check in accordance with reasonable deliv
ery requirements established by the paying
bank and demands payment under this
paragraph—
(i) at a location designated by the paying
bank for receipt of checks under this
paragraph that is in the check-processing
region consistent with the routing number
encoded in magnetic ink on the check
and at which the paying bank would be
considered to have received the check
under paragraph (b) of this section or, if
no location is designated, at any location
described in paragraph (b) of this section;
and
(ii) by 8:00 a.m. on a business day (local
time of the location described in para
graph (f)(l)(i) of this section).
A paying bank may require that checks pre
sented for settlement pursuant to this para
graph (f)(1) be separated from other for
ward-collection checks or returned checks.
(2) If presentment of a check meets the re
quirements of paragraph (f)(1) of this sec
tion, the paying bank is accountable to the
presenting bank for the amount of the check
unless, by the close of Fedwire on the busi
ness day it receives the check, it either—
(i) settles with the presenting bank for
the amount of the check by credit to an
account at a Federal Reserve Bank desig
nated by the presenting bank; or
(ii) returns the check.
(3) Notwithstanding paragraph (f)(2) of this
section, if a paying bank closes on a busi
ness day and receives presentment of a
check on that day in accordance with para
graph (f)(1) of this section, the paying bank
103
§ 229.36
is accountable to the presenting bank for
the amount of the check unless, by the
close of Fedwire on its next banking day, it
either—
(i) settles with the presenting bank for
the amount of the check by credit to an
account at a Federal Reserve Bank desig
nated by the presenting bank; or
(ii) returns the check.
If the closing is voluntary, unless the pay
ing bank settles for or returns the check in
accordance with paragraph (f)(2) of this
section, it shall pay interest compensation
to the presenting bank for each day after
the business day on which the check was
presented until the paying bank settles for
the check, including the day of settlement.
104
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.36—Presentment and
Issuance of Checks
36(a) Payable-Through and Payable-at
Checks
For purposes of subpart C, the regulation de
fines a payable-through or payable-at bank
(which could be designated the collectiblethrough or collectible-at bank) as a paying
bank. The requirements of section 229.30(a)
and the notice-of-nonpayment requirements of
section 229.33 are imposed on a payablethrough or payable-at bank and are based on
the time of receipt of the forward-collection
check by the payable-through or payable-at
bank. This provision is intended to speed the
return of checks that are payable through or at
a bank to the depositary bank.
36(b) Receipt at Bank Office or
Processing Center
This paragraph seeks to facilitate efficient pre
sentment of checks to promote early return or
notice of nonpayment to the depositary bank,
and clarifies the law as to the effect of pre
sentment. by routing number. This paragraph
differs from section 229.32(b) because pre
sentment of checks differs from delivery of
returned checks.
The paragraph specifies four locations at
which the paying bank must accept present
ment of checks. Where the check is payable
through a bank and the check is sent to that
bank, the payable-through bank is the paying
bank for purposes of this subpart, regardless
of whether the paying bank must present the
check to another bank or to a nonbank payor
for payment.1
1. Delivery of checks may be made, and pre
sentment is considered to occur, at a location
(including a processing center) requested by
the paying bank. This is the way most checks
are presented by banks today. This provision
adopts the common-law rule of a number of
legal decisions that the processing center acts
as the agent of the paying bank to accept pre
sentment and to begin the time for processing
of the check. (See also UCC 4-204(c).) If a
§ 229.36
bank designates different locations for the pre
sentment of forward-collection checks bearing
different routing numbers, for purposes of this
paragraph it only requests presentment of
checks bearing a particular routing number at
the location designated for receipt of forwardcollection checks bearing that routing number.
2. Delivery may be made at an office of the
bank associated with the routing number on
the check. The office associated with the rout
ing number of a bank is found in a publica
tion of Rand McNally, Key to Routing Num
bers, which lists a city and state address for
each routing number. Checks are generally
handled by collecting banks on the basis of
the nine-digit routing number encoded in mag
netic ink (or on the basis of the fractionalform routing number if the magnetic ink char
acters are obliterated) on the check, rather
than the printed name or address. The defini
tion of a paying bank in section 229.2(z) in
cludes a bank designated by routing number,
whether or not there is a name on the check,
and whether or not any name is consistent
with the routing number. Where a check is
payable by one bank, but payable through an
other, the routing number is that of the pay
able-through bank, not that of the payor bank.
As the payor bank has selected the payablethrough bank as the point through which pre
sentment is to be made, it is proper to treat
the payable-through bank as the paying bank
for purposes of this section.
There is no requirement in the regulation
that the name and address on the check agree
with the address associated with the routing
number on the check. A bank may generally
control the use of its routing number, just as
it does the use of its name. The address asso
ciated with the routing number may be a
processing center.
In some cases, a paying bank may have
several offices in the city associated with the
routing number. In such a case, it would not
be reasonable or efficient to require the
presenting bank to sort the checks by more
specific branch addresses that might be printed
on the checks, and to deliver the checks to
each branch. A collecting bank would nor
mally deliver all checks to one location. In
cases where checks are delivered to a branch
other than the branch on which they may be
105
§ 229.36
drawn, computer and courier communication
among branches should permit the paying
bank to determine quickly whether to pay the
check.
3. If the check specifies the name of the pay
ing bank but no address, the bank must accept
delivery at any office. Where delivery is made
by a person other than a bank, or where the
routing number is not readable, delivery will
be made based on the name and address of
the paying bank on the check. If there is no
address, delivery may be made at any office
of the paying bank. This provision is consis
tent with UCC 3-111, which states that pre
sentment for payment may be made at the
place specified in the instrument, or, if there
is none, at the place of business of the party
to pay. Thus, there is a trade-off for a paying
bank between specifying a particular address
on a check to limit locations of delivery and
simply stating the name of the bank to en
courage wider currency for the check.
4. If the check specifies the name and address
of a branch or head office, or other location
(such as a processing center), the check may
be delivered by delivery to that office or other
location. If the address is too general to iden
tify a particular office, delivery may be made
at any office consistent with the address. For
example, if the address is “San Francisco,
California,” each office in San Francisco must
accept presentment. The designation of an ad
dress on the check is generally in the control
of the paying bank.
This paragraph may affect UCC 3-111 to
the extent that the UCC requires presentment
to occur at a place specified in the instrument.
36(c) Truncation
Truncation includes a variety of procedures in
which the physical check is held or delayed
by the depositary or collecting bank, and the
information from the check is transmitted to
the paying bank electronically. Presentment
takes place when the paying bank receives the
electronic transmission. This process has the
potential to improve the efficiency of check
processing, and express provision for trunca
tion and electronic presentment is made in
UCC 4-110 and 4-406(b). This paragraph al
lows truncation by agreement with the paying
106
Regulation CC Commentary
bank; however, such agreement may not
prejudice the interests of prior parties to the
check. For example, a truncation agreement
may not extend the paying bank’s time for
return. Such an extension could damage the
depositary bank, which must make funds
available to its customers under mandatory
availability schedules.
36(d) Liability of Bank During Forward
Collection
This paragraph makes settlement between
banks during forward collection final when
made, subject to any deferrment of credit, just
as settlements between banks during the return
of checks are final. In addition, this paragraph
clarifies that this change does not affect the
liability scheme under UCC section 4-201
during forward collection of a check. That
UCC section provides that, unless a contrary
intent clearly appears, a bank is an agent or
subagent of the owner of a check, but that
article 4 of the UCC applies even though a
bank may have purchased an item and is the
owner of it. This paragraph preserves the lia
bility of a collecting bank to prior collecting
banks and the depositary bank’s customer for
negligence during the forward collection of a
check under the UCC, even though this para
graph provides that settlement between banks
during forward collection is “final” rather
than “provisional.” Settlement by a paying
bank is not considered to be final payment for
the purposes of UCC 4-215(a)(2) or (3), be
cause a paying bank has the right to recover
settlement from a returning or depositary bank
to which it returns a check under this subpart.
Other provisions of the UCC not superseded
by this subpart, such as section 4-202, also
continue to apply to the forward collection of
a check and may apply to the return of a
check. (See definition of “returning bank” in
section 229.2(cc).)
36(e) Issuance of Payable-Through
Checks
If a bank arranges for checks payable by it to
be payable through another bank, it must re
quire its customers to use checks that contain
conspicuously on their face the name, loca
tion, and first four digits of the nine-digit
Regulation CC Commentary
routing number of the bank by which the
check is payable and the legend “payable
through” followed by the name and location
of the payable-through bank. The first four
digits of the nine-digit routing number and the
location of the bank by which the check is
payable must be associated with the same
check-processing region. (This section does
not affect section 229.36(b).) The required in
formation is deemed conspicuous if it is
printed in a type size not smaller than sixpoint type and if it is contained in the title
plate, which is located in the lower left quad
rant of the check. The required information
may be conspicuous if it is located elsewhere
on the check.
If a payable-through check does not meet
the requirements of this paragraph, the bank
by which the check is payable may be liable
to the depositary bank or others as provided
in section 229.38. For example, a bank by
which a payable-through check is payable
could be liable to a depositary bank that suf
fers a loss, such as lost interest or liability
under subpart B, that would not have occurred
had the check met the requirements of this
paragraph. Similarly, a bank may be liable
under section 229.38 if a check payable by it
that is not payable through another bank is
labelled as provided in this section. For exam
ple, a bank that holds checking accounts and
processes checks at a central location but has
widely dispersed branches may be liable under
this section if it labels all of its checks as
“payable through” a single branch and in
cludes the name, address, and four-digit rout
ing symbol of another branch. These checks
would not be payable through another bank
and should not be labelled as payable-through
checks. (All of a bank’s offices within the
United States are considered part of the same
bank; see section 229.2(e).) In this example,
the bank by which the checks are payable
could be liable to a depositary bank that suf
fers a loss, such as lost interest or liability
under subpart B, due to the mislabelled check.
The bank by which the check is payable may
be liable for additional damages if it fails to
act in good faith.
36(f) Same-Day Settlement
This paragraph provides that, under certain
§ 229.36
conditions, a paying bank must settle with a
presenting bank for a check on the same day
the check is presented in order to avail itself
of the ability to return the check on its next
banking day under sections 4-301 and 4-302
of the UCC. This paragraph does not apply to
checks presented for immediate payment over
the counter. Settling for a check under this
paragraph does not constitute final payment of
the check under the UCC. This paragraph
does not supersede or limit the rules gov
erning collection and return of checks through
Federal Reserve Banks that are contained in
subpart A of Regulation J (12 CFR 210).
36(f)(1) Presentment Requirements
Location and time. For presented checks to
qualify for mandatory same-day settlement, in
formation accompanying the checks must indi
cate that presentment is being made under this
paragraph—e.g., “these checks are being pre
sented for same-day settlement”—and must
include a demand for payment of the total
amount of the checks together with appropri
ate payment instructions in order to enable the
paying bank to discharge its settlement re
sponsibilities under this paragraph. In addi
tion, the check or checks must be presented at
a location designated by the paying bank for
receipt of checks for same-day settlement by
8:00 a.m. local time of that location. The des
ignated presentment location must be a loca
tion at which the paying bank would be con
sidered to have received a check under section
229.36(b). The paying bank may not designate
a location solely for presentment of checks
subject to settlement under this paragraph; by
designating a location for the purposes of sec
tion 229.36(f), the paying bank agrees to ac
cept checks at that location for the purposes
of section 229.36(b).
The designated presentment location also
must be within the check-processing region
consistent with the nine-digit routing number
encoded in magnetic ink on the check. A pay
ing bank that uses more than one routing
number associated with a single check
processing region may designate, for purposes
of this paragraph, one or more locations in
that check-processing region at which checks
will be accepted, but the paying bank must
accept any checks with a routing number as107
§ 229.36
sociated with that check-processing region at
each designated location. A paying bank may
designate a presentment location for traveler’s
checks with an 8000-series routing number
anywhere in the country because these trav
eler’s checks are not associated with any
check-processing region. The paying bank,
however, must accept at that presentment lo
cation any other checks for which it is paying
bank that have a routing number consistent
with the check-processing region of that
location.
If the paying bank does not designate a pre
sentment location, it must accept presentment
for same-day settlement at any location identi
fied in section 229.36(b), i.e., at an address of
the bank associated with the routing number
on the check, at any branch or head office if
the bank is identified on the check by name
without address, or at a branch, head office, or
other location consistent with the name and
address of the bank on the check if the bank
is identified on the check by name and ad
dress. A paying bank and a presenting bank
may agree that checks will be accepted for
same-day settlement at an alternative location
(e.g., at an intercept processor located in a
different check-processing region) or that the
cut-off time for same-day settlement be earlier
or later than 8:00 a.m. local time.
In the case of a check payable through a
bank but payable by another bank, this para
graph does not authorize direct presentment to
the bank by which the check is payable. The
requirements of same-day settlement under
this paragraph would apply to a payablethrough or payable-at bank to which the check
is sent for payment or collection.
Reasonable delivery requirements. A check is
considered presented when it is delivered to
and payment is demanded at a location speci
fied in paragraph (f)(1). Ordinarily, a present
ing bank will find it necessary to contact the
paying bank to determine the appropriate pre
sentment location and any delivery instruc
tions. Further, because presentment might not
take place during the paying bank’s banking
day, a paying bank may establish reasonable
delivery requirements to safeguard the checks
presented, such as use of a night depository.
If a presenting bank fails to follow reasonable
delivery requirements established by the pay108
Regulation CC Commentary
ing bank, it runs the risk that it will not have
presented the checks. However, if no reasona
ble delivery requirements are established or if
the paying bank does not make provisions for
accepting delivery of checks during its non
business hours, leaving the checks at the pre
sentment location constitutes effective
presentment.
Sorting o f checks. A paying bank may require
that checks presented to it for same-day settle
ment be sorted separately from other forwardcollection checks it receives as a collecting
bank or returned checks it receives as a re
turning or depositary bank. For example, if a
bank provides correspondent check-collection
services and receives unsorted checks from a
respondent bank that include checks for which
it is the paying bank and that would otherwise
meet the requirements for same-day settlement
under this section, the collecting bank need
not make settlement in accordance with para
graph (f)(2). If the collecting bank receives
sorted checks from its respondent bank, con
sisting only of checks for which the collecting
bank is the paying bank and which meet the
requirements for same-day settlement under
this paragraph, the collecting bank may not
charge a fee for handling those checks and
must make settlement in accordance with this
paragraph.
36(f)(2) Settlement
If a bank presents a check in accordance with
the time and location requirements for pre
sentment under paragraph (f)(1), the paying
bank must either settle for the check on the
business day it receives the check without
charging a presentment fee or return the check
prior to the time for settlement. (This return
deadline is subject to extension under section
229.30(c).) The settlement must be in the
form of a credit to an account designated by
the presenting bank at a Federal Reserve Bank
(e.g., a Fedwire transfer). The presenting bank
may agree with the paying bank to accept set
tlement in another form (e.g., credit to an ac
count of the presenting bank at the paying
bank or debit to an account of the paying
bank at the presenting bank). The settlement
must occur by the close of Fedwire on the
business day the check is received by the pay
§ 229.36
Regulation CC Commentary
ing bank. Under the provisions of section
229.34(c), a settlement owed to a presenting
bank may be set off by adjustments for previ
ous settlements with the presenting bank. (See
also section 229.39(d).)
Checks that are presented after the 8:00
a.m. (local time) presentment deadline for
same-day settlement and before the paying
bank’s cut-off hour are treated as if they were
presented under other applicable law and set
tled for or returned accordingly. However, for
purposes of settlement only, the presenting
bank may require the paying bank to treat
such checks as presented for same-day settle
ment on the next business day in lieu of ac
cepting settlement by cash or other means on
the business day the checks are presented to
the paying bank. Checks presented after the
paying bank’s cut-off hour or on nonbusiness
days, but otherwise in accordance with this
paragraph, are considered presented for sameday settlement on the next business day.
36(f)(3) Closed Paying Bank
There may be certain business days that are
not banking days for the paying bank. Some
paying banks may continue to settle for
checks presented on these days (e.g., by open
ing their back-office operations or by using an
intercept processor). In other cases, a paying
bank may be unable to settle for checks pre
sented on a day it is closed. If the paying
bank closes on a business day and checks are
presented to the paying bank in accordance
with paragraph (f)(1), the paying bank is ac
countable for the checks unless it settles for
or returns the checks by the close of Fedwire
on its next banking day. In addition, checks
presented on a business day on which the
paying bank is closed are considered received
on the paying bank’s next banking day for
purposes of the UCC midnight deadline (UCC
4-301 and 4-302) and this regulation’s expedi
tious-return and notice-of-nonpayment
provisions.
If the paying bank is closed on a business
day voluntarily, the paying bank must pay in
terest compensation, as defined in section
229.2(oo), to the presenting bank for the value
of the float associated with the check from the
day of the voluntary closing until the day of
settlement. Interest compensation is not re
quired in the case of an involuntary closing
on a business day, such as a closing required
by state law. In addition, if the paying bank is
closed on a business day due to emergency
conditions, settlement delays and interest com
pensation may be excused under section
229.38(e) or UCC section 4-109(b).
Good Faith
Under section 229.38(a), both presenting
banks and paying banks are held to a standard
of good faith, defined in section 229.2(nn) to
mean honesty in fact and the observance of
reasonable commercial standards of fair deal
ing. For example, designating a presentment
location or changing presentment locations for
the primary purpose of discouraging banks
from presenting checks for same-day settle
ment might not be considered good faith on
the part of the paying bank. Similarly,
presenting a large volume of checks without
prior notice could be viewed as not meeting
reasonable commercial standards of fair deal
ing and therefore may not constitute present
ment in good faith. In addition, if banks, in
the general course of business, regularly agree
to certain practices related to same-day settle
ment, it might not be considered consistent
with reasonable commercial standards of fair
dealing, and therefore might not be considered
good faith, for a bank to refuse to agree to
those practices if agreeing would not cause it
harm.
UCC Sections Affected
This paragraph directly affects the following
provisions of the UCC and may affect other
sections or provisions:
1. Section 4-204(b)(l), in that a presenting
bank may not send a check for same-day
settlement directly to the paying bank, if
the paying bank designates a different loca
tion in accordance with paragraph (f)(1).
2. Section 4-213(a), in that the medium of
settlement for checks presented under this
paragraph is limited to a credit to an ac
count at a Federal Reserve Bank and that,
for checks presented after the deadline for
same-day settlement and before the paying
bank’s cut-off hour, the presenting bank
may require settlement on the next busi109
§ 229.36
ness day in accordance with this paragraph
rather than accept settlement on the busi
ness day of presentment by cash.
3. Section 4-301(a), in that, to preserve the
ability to exercise deferred posting, the
time limit specified in that section for set
tlement or return by a paying bank on the
banking day a check is received is super
seded by the requirement to settle for
checks presented under this paragraph by
the close of Fedwire.
4. Section 4-302(a), in that, to avoid account
ability, the time limit specified in that sec
tion for settlement or return by a paying
bank on the banking day a check is re
ceived is superseded by the requirement to
settle for checks presented under this para
graph by the close of Fedwire.
110
Regulation CC Commentary
Regulation CC
§ 229.37
SECTION 229.37—Variation by
Agreement
The effect of the provisions of subpart C may
be varied by agreement, except that no agree
ment can disclaim the responsibility of a bank
for its own lack of good faith or failure to
exercise ordinary care, or can limit the mea
sure of damages for such lack or failure; but
the parties may determine by agreement the
standards by which such responsibility is to
be measured if such standards are not mani
festly unreasonable.
Ill
§ 229.37
Regulation CC Commentary
COMMENTARY
SECTION 229.37—Variation by
Agreement
This section is similar to UCC section 4-103,
and permits consistent treatment of agree
ments varying article 4 or subpart C, given
the substantial interrelationship of the two
documents. To achieve consistency, the offi
cial comment to UCC 4-103(a) (which in turn
follows UCC section 1-201(3)) should be fol
lowed in construing this section. For example,
as stated in official comment 2 to section
4-103, owners of items and other interested
parties are not affected by agreements under
this section unless they are parties to the
agreement or are bound by adoption, ratifica
tion, estoppel, or the like. In particular, agree
ments varying this subpart that delay the re
turn of a check beyond the times required by
this subpart may result in liability under sec
tion 229.38 to entities not party to the agree
ment. This section is consistent with the limits
on truncation agreements in section 229.36(c).
The Board has not followed UCC 4-103(b),
which permits Federal Reserve regulations and
operating letters, clearinghouse rules, and the
like to apply to parties that have not specifi
cally assented. Nevertheless, this section does
not affect the status of such agreements under
the Uniform Commercial Code.
The following are examples of situations
where variation by agreement is permissible,
subject to the limitations of this section:
a. A depositary bank may authorize another
bank to apply the other bank’s indorsement
to a check as the “depositary bank.” (See
section 229.35(d).)
b. A depositary bank may authorize returning
banks to commingle qualified returned
checks with forward-collection checks.
(See section 229.32(a).)
c. A depositary bank may limit its liability to
its customer in connection with the late re
turn of a deposited check where the late
ness is caused by markings on the check
by the depositary bank’s customer or prior
indorser in the area of the depositary bank
indorsement. (See section 229.38(d).)
d. A paying bank may require its customer to
assume the paying bank’s liability for
112
e.
f.
g.
h.
delayed or missent checks where the delay
or missending is caused by markings
placed on the check by the paying bank’s
customer that obscured a properly placed
indorsement of the depositary bank. (See
section 229.38(d).)
A collecting or paying bank may agree to
accept forward-collection checks without
the indorsement of a prior collecting bank.
(See section 229.35(a).)
A bank may agree to accept returned
checks without the indorsement of a prior
bank. (See section 229.35(a).)
A presenting bank may agree with a pay
ing bank to present checks for same-day
settlement at a location that is not in the
check-processing region consistent with the
routing number on the checks. (See section
229.36(f)(l)(i).)
A presenting bank may agree with a pay
ing bank to present checks for same-day
settlement by a deadline earlier or later
than 8:00 a.m. (See section 229.36(f)
( l)(ii)-)
The Board expects to review the types of
variation by agreement that develop under this
section and will consider whether it is neces
sary to limit certain variations.
Regulation CC
SECTION 229.38—Liability
(a) Standard o f care; liability; measure o f
damages. A bank shall exercise ordinary care
and act in good faith in complying with the
requirements of this subpart. A bank that fails
to exercise ordinary care or act in good faith
under this subpart may be liable to the deposi
tary bank, the depositary bank’s customer, the
owner of a check, or another party to the
check. The measure of damages for failure to
exercise ordinary care is the amount of the
loss incurred, up to the amount of the check,
reduced by the amount of the loss that party
would have incurred even if the bank had ex
ercised ordinary care. A bank that fails to act
in good faith under this subpart may be liable
for other damages, if any, suffered by the
party as a proximate consequence. Subject to
a bank’s duty to exercise ordinary care or act
in good faith in choosing the means of return
or notice of nonpayment, the bank is not lia
ble for the insolvency, neglect, misconduct,
mistake, or default of another bank or person,
or for loss or destruction of a check or notice
of nonpayment in transit or in the possession
of others. This section does not affect a pay
ing bank’s liability to its customer under the
UCC or other law.
(b) Paying bank’s failure to make timely re
turn. If a paying bank fails both to comply
with section 229.30(a) and to comply with the
deadline for return under the UCC, Regulation
J (12 CFR 210), or section 229.30(c) in con
nection with a single nonpayment of a check,
the paying bank shall be liable under either
section 229.30(a) or such other provision, but
not both.
(c) Comparative negligence. If a person, in
cluding a bank, fails to exercise ordinary care
or act in good faith under this subpart in in
dorsing a check (section 229.35), accepting a
returned check or notice of nonpayment (sec
tions 229.32(a) and 229.33(c)), or otherwise,
the damages incurred by that person under
section 229.38(a) shall be diminished in pro
portion to the amount of negligence or bad
faith attributable to that person.
(d) Responsibility for certain aspects o f check.
(1) A paying bank, or in the case of a
check payable through the paying bank and
§ 229.38
payable by another bank, the bank by
which the check is payable, is responsible
for damages under paragraph (a) of this
section to the extent that the condition of
the back of a check when issued by it or its
customer adversely affects the ability of a
bank to indorse the check legibly in accor
dance with section 229.35. A depositary
bank is responsible for damages under para
graph (a) of this section to the extent that
the condition of the back of a check arising
after the issuance of the check and prior to
acceptance of the check by it adversely af
fects the ability of a bank to indorse the
check legibly in accordance with section
229.35. Responsibility under this paragraph
shall be treated as negligence of the paying
or depositary bank for purposes of para
graph (c) of this section.
(2) Responsibility fo r payable-through
checks. In the case of a check that is pay
able by a bank and payable through a pay
ing bank located in a different check
processing region than the bank by which
the check is payable, the bank by which the
check is payable is responsible for damages
under paragraph (a) of this section, to the
extent that the check is not returned to the
depositary bank through the payablethrough bank as quickly as the check would
have been required to be returned under
section 229.30(a) had the bank by which
the check is payable—
(i) received the check as paying bank on
the day the payable-through bank re
ceived the check; and
(ii) returned the check as paying bank in
accordance with section 229.30(a)(1).
Responsibility under this paragraph shall be
treated as negligence of the bank by which
the check is payable for purposes of para
graph (c) of this section.
(e) Timeliness o f action. If a bank is delayed
in acting beyond the time limits set forth in
this subpart because of interruption of com
munication or computer facilities, suspension
of payments by a bank, war, emergency con
ditions, failure of equipment, or other circum
stances beyond its control, its time for acting
is extended for the time necessary to complete
the action, if it exercises such diligence as the
circumstances require.
113
§ 229.38
(f) Exclusion. Section 229.21 of this part and
section 611(a), (b), and (c) of the act (12 USC
4010(a), (b), and (c)) do not apply to this
subpart.
(g) Jurisdiction. Any action under this subpart
may be brought in any United States district
court, or in any other court of competent ju
risdiction, and shall be brought within one
year after the date of the occurrence of the
violation involved.
(h) Reliance on Board rulings. No provision
of this subpart imposing any liability shall ap
ply to any act done or omitted in good faith
in conformity with any rule, regulation, or in
terpretation thereof by the Board, regardless
of whether the rule, regulation, or interpreta
tion is amended, rescinded, or determined by
judicial or other authority to be invalid for
any reason after the act or omission has
occurred.
114
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.38—Liability
38(a) Standard of Care; Liability;
Measure of Damages
The standard of care established by this sec
tion applies to any bank covered by the re
quirements of subpart C of the regulation.
Thus, the standard of care applies to a paying
bank under sections 229.30 and 229.33, to a
returning bank under section 229.31, to a de
positary bank under sections 229.32 and
229.33, to a bank erroneously receiving a re
turned check or written notice of nonpayment
as depositary bank under sections 229.32(d),
and to a bank indorsing a check under section
229.35. The standard of care is similar to the
standard imposed by UCC sections 1-203 and
4-103(a) and includes a duty to act in good
faith, as defined in section 229.2(nn) of this
regulation.
A bank not meeting this standard of care is
liable to the depositary bank, the depositary
bank’s customer, the owner of the check, or
another party to the check. The depositary
bank’s customer is usually a depositor of a
check in the depositary bank (but see section
229.35(d)). The measure of damages stated
derives from UCC 4 -103(e) and 4-202(c).
This subpart does not absolve a collecting
bank of liability to prior collecting banks
under UCC section 4-201.
Under this measure of damages, a deposi
tary bank or other person must show that the
damage incurred results from the negligence
proved. For example, the depositary bank may
not simply claim that its customer will not
accept a charge-back of a returned check, but
must prove that it could not charge back when
it received the returned check and could have
charged back if no negligence had occurred,
and must first attempt to collect from its cus
tomer. (See Marcoux v. Van Wyk, 572 F.2d
651 (8th Cir. 1978); Appliance Buyers Credit
Corp. v. Prospect Nat’l Bank, 708 F.2d 290
(7th Cir. 1983).) Generally, a paying or re
turning bank’s liability would not be reduced
because the depositary bank did not place a
hold on its customer’s deposit before it
learned of nonpayment of the check.
This paragraph also states that it does not
§ 229.38
affect a paying bank’s liability to its customer.
Under UCC section 4-402, for example, a
paying bank is liable to its customer for
wrongful dishonor, which is different from
failure to exercise ordinary care and has a dif
ferent measure of damages.
38(b) Paying Bank’s Failure to Make
Timely Return
Section 229.30(a) imposes requirements on the
paying bank for expeditious return of a check
and leaves in place the UCC deadlines (as
they may be modified by section 229.30(c)),
which may allow return at a different time.
This paragraph clarifies that the paying bank
could be liable for failure to meet either stan
dard, but not for failure to meet both. The
regulation intends to preserve the paying
bank’s “accountability” for missing its mid
night or other deadline under the UCC (e.g.,
sections 4-215 and 4-302), provisions that are
not incorporated in this regulation, but may be
useful in establishing the time of final pay
ment by the paying bank.
38(c) Comparative Negligence
This paragraph establishes a “pure” compara
tive-negligence standard for liability under
subpart C of this regulation. This compara
tive-negligence rule may have particular appli
cation where a paying or returning bank de
lays in returning a check because of difficulty
in identifying the depositary bank. Some ex
amples will illustrate liability in such cases. In
each example, it is assumed that the returned
check is received by the depositary bank after
it has made funds available to its customer,
that it may no longer recover the funds from
its customer, and that the inability to recover
the funds from the customer is due to a delay
in returning the check contrary to the stan
dards established by sections 229.30(a) or
229.31(a).
1. If a depositary bank fails to use the in
dorsement required by this regulation, and
this failure is caused by a failure to exer
cise ordinary care, and if a paying or re
turning bank is delayed in returning the
check because additional time is required
to identify the depositary bank or find its
routing number, the paying or returning
115
§ 229.38
bank’s liability to the depositary bank
would be reduced or eliminated.
2. If the depositary bank uses the standard in
dorsement, but that indorsement is ob
scured by a subsequent collecting bank’s
indorsement, and a paying or returning
bank is delayed in returning the check be
cause additional time was required to iden
tify the depositary bank or find its routing
number, the paying or returning bank may
not be liable to the depositary bank be
cause the delay was not due to its negli
gence. Nonetheless, the collecting bank
may be liable to the depositary bank to the
extent that its negligence in indorsing the
check caused the paying or returning
bank’s delay.
3. If a depositary bank accepts a check that
has printing, a carbon band, or other mate
rial on the back of the check that existed at
the time the check was issued, and the de
positary bank’s indorsement is obscured by
the printing, carbon band, or other material,
and a paying or returning bank is delayed
in returning the check because additional
time was required to identify the depositary
bank, the returning bank may not be liable
to the depositary bank because the delay
was not due to its negligence. Nonetheless,
the paying bank may be liable to the de
positary bank to the extent that the print
ing, carbon band, or other material caused
the delay.
38(d) Responsibility for Certain Aspects
of Checks
The indorsement standard in section 229.35 is
most effective if the back of the check re
mains clear of other matter that may obscure
bank indorsements. Because bank indorse
ments are usually applied by automated equip
ment, it is not possible to avoid pre-existing
matter on the back of the check. For example,
bank indorsements are not required to avoid a
carbon band or printed, stamped, or written
terms or notations on the back of the check.
Accordingly, this provision places responsibil
ity on the paying bank or depositary bank, as
appropriate, for keeping the back of the check
clear for bank indorsements during forward
collection and return.
The paying bank, or in the case of a check
116
Regulation CC Commentary
payable through the paying bank and payable
by another bank, the bank by which the check
is payable, is responsible for the condition of
the check when it is issued by it or its cus
tomer. (It would not be responsible for a
check issued by a person other than such a
bank or customer.) Thus, the paying bank
would be responsible for the adverse effect (if
any) of a carbon band or other material placed
on the back of a check before issuance. The
paying bank may contract with its customers
with respect to such responsibility.
The depositary bank is responsible for the
condition of the check arising after it is issued
and before it is accepted by the depositary
bank, as well as any condition of the check
arising during its handling of the check. The
depositary bank would be responsible for the
adverse effect (if any) of a stamp placed on
the check by its customer or a prior indorser.
The depositary bank may refuse to accept a
check whose back is unreasonably obscured or
contract with its customers with respect to
such responsibility.
Paragraph (d)(2) provides that the bank by
which a payable-through check is payable is
liable for damages under paragraph (a) of this
section to the extent that the check is not re
turned through the payable-through bank as
quickly as would have been necessary to meet
the requirements of section 229.30(a)(1) (the
two-day/four-day test) had the bank by which
it is payable received the check as paying
bank on the day the payable-through bank re
ceived it. The location of the bank by which a
check is payable for purposes of the two-day/
four-day test may be determined from the lo
cation or the first four digits of the routing
number of the bank by which the check is
payable. This information should be stated on
the check. (See section 229.36(e) and accom
panying commentary.) Responsibility under
paragraph (d)(2) does not include responsibil
ity for the time required for the forward col
lection of a check to the payable-through
bank.
Generally, liability under paragraph (d)(2)
will be limited in amount. Under section
229.33(a), a paying bank that returns a check
in the amount of $2,500 or more must provide
notice of nonpayment to the depositary bank
by 4:00 p.m. on the second business day fol
Regulation CC Commentary
lowing the banking day on which the check is
presented to the paying bank. Even if a pay
able-through check in the amount of $2,500 or
more is not returned through the payablethrough bank as quickly as would have been
required had the check been received by the
bank by which it is payable, the depositary
bank should not suffer damages unless it has
not received timely notice of nonpayment.
Thus, ordinarily the bank by which a payablethrough check is payable would be liable
under paragraph (a) only for checks in
amounts up to $2,500, and the paying bank
would be responsible for notice of nonpay
ment for checks in the amount of $2,500 or
more.
Responsibility under paragraphs (d)(1) and
(d)(2) is treated as negligence for comparative
negligence purposes, and the contribution to
damages under paragraphs (d)(1) and (d)(2) is
treated in the same way as the degree of neg
ligence under paragraph (c) of this section.
38(e) Timeliness of Action
This paragraph excuses certain delays. It
adopts the standard of UCC 4-109(b).
38(f) Exclusion
This paragraph provides that the civil-liability
and class-action provisions, particularly the
punitive-damage provisions of sections 611(a)
and (b), and the bona fide error provision of
611(c) of the act (12 USC 4010(a), (b), and
(c)) do not apply to regulatory provisions
adopted to improve the efficiency of the pay
ments mechanism. Allowing punitive damages
for delays in the return of checks where no
actual damages are incurred would only en
courage litigation and provide little or no ben
efit to the check-collection system. In view of
the provisions of paragraph (a), which incor
porate traditional bank collection standards
based on negligence, the provision on bona
fide error is not included in subpart C.
38(g) Jurisdiction
The act confers subject-matter jurisdiction on
courts of competent jurisdiction and provides
a time limit for civil actions for violations of
this subpart.
§ 229.38
38(h) Reliance on Board Rulings
This provision shields banks from civil liabil
ity if they act in good faith in reliance on any
rule, regulation, or interpretation of the Board,
even if it were subsequently determined to be
invalid. Banks may rely on the commentary to
this regulation, which is issued as an official
Board interpretation, as well as on the regula
tion itself.
§ 229.39
SECTION 229.39—Insolvency of Bank
(a) Duty o f receiver. A check or returned
check in, or coming into, the possession of a
paying, collecting, depositary, or returning
bank that suspends payment, and which is not
paid, shall be returned by the receiver, trustee,
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 depositary
bank. If a paying or depositary bank finally
pays a check or returned check and suspends
payment without making a settlement for the
check with the prior bank which is or be
comes final, the prior bank has a preferred
claim against the paying or depositary bank.
(c) Preference against collecting, paying, or
returning bank. If a collecting, paying, or re
turning bank receives settlement from a subse
quent bank for a check or returned check,
which settlement is or becomes final, and sus
pends payments without making a settlement
for the check with the prior bank, which is or
becomes final, the prior bank has a preferred
claim against the collecting or returning bank.
(d) Preference against presenting bank. If a
paying bank settles with a presenting bank for
one or more checks, and if the presenting
bank breaches a warranty specified in section
229.34(c)(1) or (3) of this part with respect to
those checks and suspends payments before
satisfying the paying bank’s warranty claim,
the paying bank has a preferred claim against
the presenting bank for the amount of the
warranty claim.
(e) Finality o f settlement. If a paying or de
positary bank gives, or a collecting, paying, or
returning bank gives or receives, a settlement
for a check or returned check and thereafter
suspends payment, the suspension does not
prevent or interfere with the settlement be
coming final if such finality occurs automati
cally upon the lapse of a certain time or the
happening of certain events.
118
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.39—Insolvency of Bank
These provisions cover situations where a
bank becomes insolvent during collection or
return, and are derived from UCC 4-216.
They are intended to apply to all banks.
39(a) Duty of Receiver
This paragraph requires a receiver of a closed
bank to return a check to the prior bank if it
does not pay for the check. This permits the
prior bank, as holder, to pursue its claims
against the closed bank or prior indorsers on
the check.
§ 229.39
cess of the value of the checks presented. This
preference is intended to have the effect of a
perfected security interest and is intended to
put the paying bank in the position of a se
cured creditor for purposes of the receivership
provisions of the Federal Deposit Insurance
Act and similar provisions of state law.
39(e) Finality of Settlement
This paragraph provides that insolvency does
not interfere with the finality of a settlement,
such as a settlement by a paying bank that
becomes final by expiration of the midnight
deadline.
39(b) Preference Against Paying or
Depositary Bank
This paragraph gives a bank a preferred claim
against a closed paying or depositary bank
that finally pays a check without settling for
it. If the bank with a preferred claim under
this paragraph recovers from a prior bank or
other party to the check, the prior bank or
other party to the check is subrogated to the
preferred claim.
39(c) Preference Against Paying,
Collecting, or Depositary Bank
This paragraph gives a bank a preferred claim
against a closed collecting, paying, or re
turning bank that receives settlement but does
not settle for a check. (See the commentary to
section 229.35(b) for discussion of prior and
subsequent banks.) As in the case of section
229.39(b), if the bank with a preferred claim
under this paragraph recovers from a prior
bank or other party to the check, the prior
bank or other party to the check is subrogated
to the preferred claim.
39(d) Preference Against Presenting
Bank
This paragraph gives a paying bank a pre
ferred claim against a closed presenting bank
in the event that the presenting bank breaches
an amount or encoding warranty as provided
in section 229.34(c)(1) or (3) and does not
reimburse the paying bank for adjustments for
a settlement made by the paying bank in ex
119
§ 229.40
SECTION 229.40—Effect of Merger
Transaction
For purposes of this subpart, two or more
banks that have engaged in a merger transac
tion may be considered to be separate banks
for a period of one year following the con
summation of the merger transaction.
120
Regulation CC
Regulation CC Commentary
§ 229.40
COMMENTARY
SECTION 229.40—Effect on Merger
Transaction
When banks merge, there is normally a period
of adjustment required before their operations
are consolidated. To allow for this adjustment
period, the regulation provides that the merged
banks may be treated as separate banks for a
period of up to one year after the consumma
tion of the transaction. The term “merger
transaction” is defined in section 229.2(t).
This rule affects the status of the combined
entity in a number of areas in this subpart, for
example:
1. The paying bank’s responsibility for expe
ditious return (§ 229.30).
2. The returning bank’s responsibility for ex
peditious return (§229.31).
3. Whether a returning bank is entitled to an
extra day to qualify a return that will be
delivered directly to a depositary bank that
has merged with the returning bank
(§ 229.31(a)).
4. Where the depositary bank must accept re
turned checks (§ 229.32(a)).
5. Where the depositary bank must accept no
tice of nonpayment (§ 229.33(c)).
6. Where a paying bank must accept present
ment of checks (§ 229.36(b)).
121
§ 229.41
SECTION 229.41— Relation to State
Law
The provisions of this subpart supersede any
inconsistent provisions of the UCC as adopted
in any state, or of any other state law, but
only to the extent of the inconsistency.
122
Regulation CC
Regulation CC Commentary
§ 229.41
COMMENTARY
SECTION 229.41— Relation to State
Law
This section specifies that state law relating to
the collection of checks is only preempted to
the extent that it is inconsistent with this regu
lation. Thus, this regulation is not a complete
replacement for state laws relating to the col
lection or return of checks.
123
§ 229.42
SECTION 229.42—Exclusions
The expeditious return (§§ 229.30(a) and
229.31(a)) and notice of nonpayment
(§ 229.33) requirements of this subpart do not
apply to a check drawn upon the United
States Treasury, to a U.S. Postal Service
money order, or to a check drawn on a state
or a unit of general local government that is
not payable through or at a bank.
124
Regulation CC
Regulation CC Commentary
§ 229.42
COMMENTARY
SECTION 229.42—Exclusions
Checks drawn on the United States Treasury,
U.S. Postal Service money orders, and checks
drawn on states and units of general local
government that are presented directly to the
state or unit of general local government and
that are not payable through or at a bank are
excluded from the coverage of the expedi
tious-return and notice-of-nonpayment require
ments of subpart C of this regulation. Other
provisions of this subpart continue to apply to
the checks. This exclusion does not apply to
checks drawn by the U.S. government on
banks.
125
Appendix A
Regulation CC
APPENDIX A—Routing Number Guide
to Next-Day-Availability Checks and
Local Checks
Each bank is assigned a routing number by
Rand McNally & Co., as agent for the Ameri
can Bankers Association. The routing number
takes two forms: a fractional form and a nine
digit form. A paying bank is generally identi
fied on the face of a check by its routing
number in both the fractional form (which
generally appears in the upper right-hand cor
ner of the check) and the nine-digit form
(which is printed in magnetic ink in a strip
along the bottom of the check). Where a
check is payable by one bank but payable
through another bank, the routing number ap
pearing on the check is that of the payablethrough bank, not the payor bank.
The first four digits of the nine-digit routing
number and the denominator of the fractional
routing number form the Federal Reserve
routing symbol, which identifies the Federal
Reserve District, the Federal Reserve office,
and the clearing arrangements used by the
paying bank.
First Federal Reserve District
(Federal Reserve Bank of Boston)
Head Office
Windsor Locks Office
Lewiston Office
0112
2112
Second Federal Reserve District
(Federal Reserve Bank of New York)
Buffalo Branch
0220
0223
2220
Cranford Office
0212
0270
2212
2223
Jericho Office
0210
0214
0215
0216
0219
0260
0280
2214
2215
2216
2219
2260
Utica Office
0213
2213
Third Federal Reserve District
(Federal Reserve Bank of Philadelphia)
0110
0111
0113
0114
0115
2110123
2113
2114
2115
0116
0117
0118
0119
021P
2111
2116
2117
2118
2119
Head Office
0310
0311
0312
0313
0319
0360
22113
Fourth Federal Reserve District
(Federal Reserve Bank of Cleveland)
'
1 The first two digits identify the Federal Reserve D is
trict. Thus 01 identifies the First Federal Reserve District
(B oston ), and 12 identifies the Tw elfth D istrict (San
Francisco).
2 Adding 2 to the first digit denotes a thrift institution.
Thus 21 identifies a thrift in the First District, and 32 de
notes a thrift in the Twelfth District.
3 Banks in Fairfield County, Connecticut, are members o f
the Federal Reserve Bank o f N ew 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 would
not be local checks for Second District depositary banks.
126
Head Office
0410
0412
2410
2412
2310
2311
2312
2313
2319
2360
Cincinnati Branch
0420
0421
0422
0423
2420
2421
2422
2423
Appendix A
Regulation CC
Pittsburgh Branch
0430
0432
0434
0433
2430
2432
2433
2434
-
Columbus Office
0440
0441
0442
2440
2441
2442
Fifth Federal Reserve District
(Federal Reserve Bank of Richmond)
Head Office
0510
0514
2510
2514
Charlotte Branch
0530
0531
2530
2531
Baltimore Branch
0520
0521
0522
0540
0550
0560
0570
2520
2521
2522
2540
2550
2560
2570
Columbia Office
0532
0539
2532
2539
Charleston Office
0515
0519
2515
2519
Sixth Federal Reserve District
(Federal Reserve Bank of Atlanta)
Head Office
0610
0611
0612
0613
2610
2611
2612
2613
Birmingham Branch
0620
0621
0622
2620
2621
2622
Jacksonville Branch
0630
0631
0632
2630
2631
2632
Nashville Branch
0640
0641
0642
2640
2641
2642
New Orleans Branch
0650
0651
0652
0653
0654
0655
2650
2651
2652
2653
2654
2655
Miami Branch
0660
0670
2660
2670
Seventh Federal Reserve District
(Federal Reserve Bank of Chicago)
Head Office
0710
0711
0712
0719
2710
2711
2712
2719
Detroit Branch
0720
0724
2720
2724
Des Moines Office
0730
0739
2730
2739
Indianapolis Office
0740
0749
2740
2749
Milwaukee Office
0750
0759
2750
2759
127
Appendix A
Regulation CC
Eighth Federal Reserve District
(Federal Reserve Bank of St. Louis)
Tenth Federal Reserve District
(Federal Reserve Bank of Kansas City)
Head Office
0810
0812
0815
0819
0865
2810
2812
2815
2819
2865
Little Rock Branch
0820
0829
2820
2829
Head Office
1010
1011
1012
1019
3010
3011
3012
3019
Louisville Branch
0813
0830
0839
0863
2813
2830
2839
2863
Memphis Branch
0840
0841
0842
0843
2840
2841
2842
2843
Oklahoma City
Branch
1030
1031
1039
3030
3031
3039
Ninth Federal Reserve District
(Federal Reserve Bank of Minneapolis)
Head Office
0910
0911
0912
0913
0914
0915
0918
0919
2910
2911
2912
0960
2913
2914
2915
2918
2919
2960
128
Helena Branch
0920
0921
0929
2920
2921
2929
Denver Branch
1020
1021
1022
1023
1070
3020
3021
3022
3023
3070
Omaha Branch
1040
1041
1049
3040
3041
3049
Eleventh Federal Reserve District
(Federal Reserve Bank of Dallas)
1113
1119
3110
3111
3113
3119
El Paso Branch
1120
1122
1123
1163
3120
3122
3123
3163
Houston Branch
1130
1131
3130
3131
San Antonio Branch
1140
1149
3140
3149
Head Office
1110
1111
Appendix A
Regulation CC
Twelfth Federal Reserve District
(Federal Reserve Bank of San Francisco)
U.S. Treasury Checks and Postal Money
Orders
Head Office
1210
1211
1212
1213
3210
3211
3212
oo
52 1i '1
5
Los Angeles Branch
1220
1221
1222
1223
1224
3220
3221
5222
5215
3224
U.S. Treasury Checks
0000 0050 5
0000 0051 8
Portland Branch
1230
1231
1232
1233
3230
3231
3232
3233
Salt Lake City Branch
1240
1241
1242
1243
3240
3241
3242
3243
Seattle Branch
1250
1251
1252
3250
3251
3252
Postal Money Orders
0000 0119 3
0000 0800 2
Federal Reserve Offices
0110
0111
0112
0210
0220
0212
0214
0213
0310
0410
0420
0430
0440
0510
0520
0530
0539
0519
0610
0620
0630
0640
0650
0660
0001
0048
0048
0120
0026
0400
0950
0500
0004
0001
0043
0030
0050
0003
0027
0020
0008
0002
0014
0019
0019
0010
0021
0010
5
1
8
8
6
5
9
1
0
4
7
0
3
3
8
6
9
3
6
0
9
1
0
9
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1230
1240
1250
0030
0029
0033
0020
0012
0004
0013
0059
0003
0008
0026
0004
0019
0024
0012
0003
0001
0004
0072
0037
0016
0001
0031
0001
1
0
8
1
9
5
8
3
9
0
7
8
9
0
6
8
1
9
1
4
6
3
3
1
0810
0820
0910
1010
1011
1020
1030
1040
1110
1119
1130
1210
1211
1222
1250
0091
0125
0091
0091
0194
0603
0362
0019
1083
1083
1750
0070
3994
4014
0050
9
0
2
2
7
8
9
7
7
0
8
1
4
6
3
Federal Home Loan Banks
0110
0212
0215
0260
0410
0420
0430
0530
0610
0640
0654
0710
0724
0730
0740
0053
0639
0212
0973
0291
0091
0143
1174
0876
0091
0348
0450
1338
0091
0101
6
1
1
9
5
6
5
5
6
0
0
1
2
4
9
129
Appendix B -l
Regulation CC
APPENDIX B - l—Reduction of
Schedules for Certain Nonlocal Checks
Under the Temporary Schedule
A depositary bank that is located in the fol
lowing check-processing territories shall make
funds deposited in an account by a nonlocal
check described below available for with
drawal not later than the number of business
days following the banking day on which
funds are deposited, as specified below.
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Boston
5 business days
Depositary banks (0110, 2110) to:
0210
0260
0280
0310
0360
0710
2260
2310
2360
2710
Windsor Locks
None
Lewiston
None
New York
Depositary banks (0210, 0260, 2260, 0215, 2215, 0216, 2216)
to:
0214
0219
0280
221 4
D epositary banks (0 2 1 0 , 0 2 60, 2 2 6 0 , 0 2 1 5 , 2 2 15, 0 2 1 6 , 2216)
to:
0110
0212
0 213
0220
0270
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
130
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
1250
2110
2212
221 3
2220
2 360
2410
2420
2430
2440
2510
2519
2520
2530
253 9
2610
2620
2630
2640
2 650
2 660
2710
2720
2730
2740
4 business days
2219
2 750
2 810
2 820
2 830
2840
291 0
292 0
296 0
3010
3020
3030
3040
3 110
3 120
3 130
3 140
3210
3220
3223
3 230
3 240
3250
5 business days
A p p en d ix B - l
R eg u la tio n CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
f u n d s a r e d e p o s it e d
F e d e r a l R e s e r v e O ffice
J e r ic h o
4 business days
Depositary banks (0214, 2214, 0219, 2219, 0280) to:
0210
0260
2260
Depositary banks (0214, 2214, 0219, 2219, 0280) to:
0110
0212
0213
0215
0216
0220
0270
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
1250
2110
2212
2213
2215
2216
2220
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
5 business days
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Cranford
Depositary banks (0212, 0270, 2212) to:
0210
0260
0280
4 business days
2260
Depositary banks (0212, 2212, 0270) to:
0110
0213
0214
0215
0216
0219
0220
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
132
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
1250
2110
2213
2214
2215
2216
2219
2220
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
5 business days
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Regulation
Appendix B -l
CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Buffalo
Depositary banks (0220, 2220, 0223, 2223) to:
0210
0212
0260
0270
0280
2212
4 business days
2260
Depositary banks (0220, 2220, 0223, 2223) to:
0110
0213
0214
0215
0216
0219
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
1250
2110
2213
2214
2215
2216
2219
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
5 business days
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
133
A p p en d ix B - l
R egu lation C C
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
U tic a
Depositary banks (0213, 2213) to:
0210
0212
0260
0270
4 business days
0280
2212
2260
2214
2215
2216
2219
2220
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Depositary banks (0213, 2213) to:
0110
0214
0215
0216
0219
0220
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
1250
2110
5 business days
P h ila d e lp h ia
Depositary banks (0310, 2310, 0360, 2360) to:
0110
0210
0220
0260
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0830
0840
0910
0960
1010
1020
1040
134
2110
2220
2260
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
5 business days
2650
2660
2710
2720
2730
2740
2750
2810
2830
2840
2910
2960
3010
3020
3040
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
f u n d s a r e d e p o s it e d
F e d e r a l R e s e r v e O ffice
Cleveland
Depositary banks (0410, 2410) to:
0110
0210
0220
0260
0280
0310
0360
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
1250
2110
5 business days
2220
2260
2310
2360
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
2110
2220
2260
2310
2360
2410
2430
2440
2441
2442
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2749
2750
2810
2813
2830
2839
2840
2863
2910
2960
3010
3020
3030
3040
3110
3130
3140
3210
3220
3223
3230
3240
3250
Cincinnati
5
Depositary banks (0420, 2420) to:
0110
0210
0220
0260
0280
0310
0360
0410
0430
0440
0441
0442
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0749
0750
0810
0813
0830
0839
0840
0863
0910
0960
1010
1020
1030
1040
1110
1130
1140
1210
1220
1223
1230
1240
1250
business days
135
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Columbus
Depositary banks (0440, 2440) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
1250
2110
2220
2260
2310
2360
2410
2420
2440
2510
2519
2520
2530
2539
2620
2610
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
P itts b u r g h
Depositary banks (0430, 2430) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
136
5 business days
Regulation CC
Appendix B -l
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Richmond
Depositary banks (0510, 2510) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0515
0519
0520
0521
0522
0530
0531
0539
0550
0560
0570
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0960
1010
1020
1030
1040
1110
1120
1130
5 business days
1140
2110
2220
2260
2310
2360
2410
2420
2430
2440
2515
2519
2520
2521
2522
2530
2531
2539
2550
2560
2570
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2960
3010
3020
3030
3040
3110
3120
3130
3140
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2830
2840
2910
2960
3010
3020
3040
3240
Baltimore
Depositary banks (0520, 2520) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0830
0840
0910
0960
1010
1020
1040
1240
5 business days
137
Regulation CC
Appendix B -l
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
f u n d s a r e d e p o s it e d
F e d e r a l R e s e r v e O ffice
Charlotte
Depositary banks (0530, 2530) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0520
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0960
1010
1020
1030
1040
1110
1120
1130
5 business days
1140
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2520
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2960
3010
3020
3030
3040
3110
3120
3130
3140
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2960
3010
3020
3030
3040
3110
3120
3130
3140
Columbia
Depositary banks (0539, 2539) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0960
1010
1020
1030
1040
1110
1120
1130
1140
138
5 business days
Regulation CC
Appendix B -l
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Charleston
Depositary banks (0519, 2519) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0830
0840
0910
0960
1010
1020
1040
5 business days
1240
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2830
2840
2910
2960
3010
3020
3040
3240
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3240
Atlanta
Depositary banks (0610, 2610) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1240
5 business days
139
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
f u n d s a r e d e p o s it e d
F e d e r a l R e s e r v e O ffice
Birmingham
Depositary banks (0620, 2620) to:
0651
4 business days
2651
Depositary banks (0620, 2620) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Jacksonville
Depositary banks (0630, 2630) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
140
5 business days
1140
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
R eg u la tio n CC
A p p en d ix B - l
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
M ia m i
Depositary banks (0660, 2660) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0610
0620
0630
0640
0650
0710
0729
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
5 business days
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2610
2620
2630
2640
2650
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
4 business days
N a s h v ille
0613
2613
Depositary banks (0640, 2640) to:
0530
0539
0610
0620
0630
0650
0660
0840
5 business days
2530
2539
2610
2620
2630
2650
2660
2840
141
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
f u n d s a r e d e p o s it e d
F e d e r a l R e s e r v e O ffice
New Orleans
Depositary banks (0650, 2650) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
1250
5 business days
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2439
2610
2620
2630
2640
2650
2660
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3223
3230
3240
3250
Chicago
Depositary banks (0710, 2710) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
142
-
5 business days
Regulation CC
Appendix B -l
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Detroit
Depositary banks (0720, 2720) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Des Moines
Depositary banks (0730, 2730) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
143
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Indianapolis
Depositary banks (0740, 2740) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Milwaukee
Depositary banks (0750, 2750) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1240
1250
144
5 business days
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
f u n d s a r e d e p o s it e d
F e d e r a l R e s e r v e O ffice
St. Louis
Depositary banks (0810, 2810) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0820
0830
0840
0910
0960
1010
1020
1030
1040
1110
1120
1130
1140
1220
1223
5 business days
1240
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2820
2830
2840
2910
2960
3010
3020
3030
3040
3110
3120
3130
3140
3220
3223
3240
Little Rock
Depositary banks (0820, 2820) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
145
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Louisville
Depositary banks (0830, 2830) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0840
0910
0960
1010
1020
1040
5 business days
1240
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2840
2910
2960
3010
3020
3040
3240
Memphis
Depositary banks (0840, 2840)
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0910
0960
1010
1020
1030
1040
1110
1120
1130
1140
1240
146
5 business days
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2910
2960
3010
3020
3030
3040
3110
3120
3130
3140
3240
Regulation CC
Appendix B -l
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Minneapolis
Depositary banks (0910, 2910, 0960, 2960) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
1010
1020
1030
1040
1110
1120
1130
1140
1240
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2520
2530
2539
2610
2620
2630
2640
2650
5 business days
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
3010
3020
3030
3040
3110
3120
3130
3140
3240
Helena
None
Kansas City
0865
4 business days
2865
Depositary banks (1010, 3010) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
5
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
business days
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3020
3030
3040
3110
3120
3130
3140
3210
' 3220
3223
3230
3240
3250
147
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
D en ver
Depositary banks (1020, 3020) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
O k la h o m a C ity
Depositary banks (1030, 3030) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
148
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Appendix B -l
Regulation CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
f u n d s a r e d e p o s it e d
F e d e r a l R e s e r v e O ffice
Omaha
Depositary banks (1040, 3040) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1110
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Dallas
Depositary banks (1110, 3110) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1120
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3120
3130
3140
3210
3220
3223
3230
3240
3250
149
Regulation CC
Appendix B -l
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
f u n d s a r e d e p o s it e d
F e d e r a l R e s e r v e O ffice
H o u s to n
Depositary banks (1130, 3130) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3140
3210
3220
3223
3230
3240
3250
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3210
3220
3223
3230
3240
3250
S a n A n to n io
5 business days
Depositary banks (1140, 3140) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1210
1220
1223
1230
1240
150
Regulation
Appendix B -l
CC
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
El Paso
Depositary banks (1120, 3120) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1130
1140
1210
1220
1223
1230
1240
5 business days
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3130
3140
3210
3220
3223
3230
3240
3250
1223
3220 3223
San Francisco
Depositary banks (1210, 3210) to:
1220
5 business days
L o s A n g e le s
Depositary banks (1220, 1223, 3220, 3223) to:
1210
5 business days
3210
Portland
Depositary banks (1230, 3220) to:
1250
5 business days
3250
Salt Lake City
None
Seattle
Depositary banks (1250, 3250) to:
1230
5 business days
3230
151
Appendix B-2
Regulation CC
APPENDIX B-2—Reduction of
Schedules for Certain Nonlocal Checks
Under the Permanent Schedule
A depositary bank that is located in the fol
lowing check-processing territories shall make
funds deposited in an account by a nonlocal
check described below available for with
drawal not later than the number of business
days following the banking day on which
funds are deposited, as specified below.
N u m b e r o f b u s in e s s d a y s
f o ll o w in g th e b a n k in g d a y
F e d e r a l R e s e r v e O ffice
f u n d s a r e d e p o s it e d
Cranford
3 business days
0210
0260
Utica
0210
0280
3 business days
2613
Kansas City
0865
2260
3 business days
Nashville
0613
0280
3 business days
2865
152
Regulation CC
APPENDIX C—Model Forms, Clauses,
and Notices
This appendix contains model disclosure
forms, clauses, and notices to facilitate compliance with the disclosure requirements of the
regulation. Although use of these forms,
clauses, and notices is not required, banks using them properly to make disclosures required by the regulation are deemed to be in
compliance.
Appendix C
M o d e l N o tic e s
C-13
C-13A
C-13B
C-13C
C-14
C-15
C-15A
M o d e l S p e c ific -P o lic y D is c lo s u r e F o rm s
C-l
C-2
C-3
C-4
C-5
C-6
C -l
Next-day availability
Next-day availability and section
229.13 exceptions
Next-day availability, case-by-case
holds to statutory limits, and section
229.13 exceptions (temporary
schedule)
Holds to statutory limits on all
deposits (temporary schedule)
Holds to statutory limits on all
deposits (temporary schedule,
includes chart)
Holds on all deposits, but for less
time than the statutory limits, and
case-by-case holds to the statutory
limits (temporary schedule)
Holds to statutory limits on all
deposits (permanent schedule)
M o d e l C la u s e s
C-8
C-8A
C-9
C-10
C-l 1
C-l 1A
C-11B
C-12
Holds on other funds (check
cashing)
Holds on other funds (other
account)
Appendix B availability (nonlocal
checks)
Automated teller machine deposits
(permanent schedule, extended hold)
Cash-withdrawal limitation
(temporary schedule)
Cash-withdrawal limitation
(temporary schedule, clearinghouse
member)
Cash-withdrawal limitation
(permanent schedule)
Credit union interest-payment policy
C-16
C-17
C-18
C-19
C-19A
Exception hold notice
Reasonable-cause hold notice
One-time notice for large-deposit
and redeposited-check exception
holds
One-time notice for repeatedoverdraft exception holds
Case-by-case hold notice
Notice at locations where
employees accept consumer deposits
Notice at locations where
employees accept consumer deposits
(case-by-case holds)
Notice at automated teller machines
Notice at automated teller machines
(delayed receipt)
Deposit-slip notice
Payable-through checks
Payable-through checks
C -l—Next-Day Availability
YOUR ABILITY TO WITHDRAW FUNDS
at [b a n k n a m e a n d l o c a t i o n ]
Our policy is to make funds from your deposits available to you on the first business day
after the day we receive your deposit. Electronic direct deposits will be available on the
day we receive the deposit. Once they are
available, you can withdraw the funds in cash
and we will use the funds to pay checks that
you have written.
For determining the availability of your de
posits, every day is a business day, except
Saturdays, Sundays, and federal holidays. If
you make a deposit before [ t i m e o f d a y ] on a
business day that we are open, we will consider that day to be the day of your deposit.
However, if you make a deposit after [ t i m e o f
d a y ] or on a day we are not open, we will
consider that the deposit was made on the
next business day we are open.
C-2—Next-Day Availability and Section
229.13 Exceptions
YOUR ABILITY TO WITHDRAW FUNDS
at [ b a n k n a m e a n d l o c a t i o n ]
Our policy is to make funds from your depos153
Regulation CC
Appendix C
its available to you on the first business day
after the day we receive your deposit. Elec
tronic direct deposits will be available on the
day we receive the deposit. Once they are
available, you can withdraw the funds in cash
and we will use the funds to pay checks that
you have written.
For determining the availability of your de
posits, every day is a business day, except
Saturdays, Sundays, and federal holidays. If
you make a deposit before [ t i m e o f d a y ] on a
business day that we are open, we will con
sider that day to be the day of your deposit.
However, if you make a deposit after [ t i m e o f
d a y ] or on a day we are not open, we will
consider that the deposit was made on the
next business day we are open.
Longer Delays May Apply
Funds you deposit by check may be delayed
for a longer period under the following
circumstances:
• We believe a check you deposit will not be
paid.
• You deposit checks totaling more than
$5,000 on any one day.
• You redeposit a check that has been re
turned unpaid.
• You have overdrawn your account repeat
edly in the last six months.
• There is an emergency, such as failure of
communications or computer equipment.
We will notify you if we delay your ability
to withdraw funds for any of these reasons,
and we will tell you when the funds will be
available. They will generally be available no
later than the [ n u m b e r ] business day after the
day of your deposit.
Special Rules for New Accounts
If you are a new customer, the following spe
cial rules will apply during the first 30 days
your account is open.
Funds from electronic direct deposits to
your account will be available on the day we
receive the deposit. Funds from deposits of
cash, wire transfers, and the first $5,000 of a
day’s total deposits of cashier’s, certified,
teller’s, traveler’s, and federal, state and local
government checks will be available on the
154
first business day after the day of your deposit
if the deposit meets certain conditions. For ex
ample, the checks must be payable to you
(and you may have to use a special deposit
slip). The excess over $5,000 will be available
on the ninth business day after the day of
your deposit. If your deposit of these checks
(other than a U.S. Treasury check) is not
made in person to one of our employees, the
first $5,000 will not be available until the sec
ond business day after the day of your
deposit.
Funds from all other check deposits will be
available on the [ n u m b e r ] business day after
the day of your deposit.
C-3—Next-Day Availability, Case-byCase Holds to Statutory Limits, and
Section 229.13 Exceptions (Permanent
Schedule)
YOUR ABILITY TO WITHDRAW FUNDS
at [ b a n k n a m e a n d l o c a t i o n ]
Our policy is to make funds from your depos
its available to you on the first business day
after the day we receive your deposit. Elec
tronic direct deposits will be available on the
day we receive the deposit. Once they are
available, you can withdraw the funds in cash
and we will use the funds to pay checks that
you have written.
For determining the availability of your de
posits, every day is a business day, except
Saturdays, Sundays, and federal holidays. If
you make a deposit before [ t i m e o f d a y ] on a
business day that we are open, we will con
sider that day to be the day of your deposit.
However, if you make a deposit after [ t i m e o f
d a y ] or on a day we are not open, we will
consider that the deposit was made on the
next business day we are open.
Longer Delays May Apply
In some cases, we will not make all of the
funds that you deposit by check available to
you on the first business day after the day of
your deposit. Depending on the type of check
that you deposit, funds may not be available
until the fifth business day after the day of
your deposit. However, the first $100 of your
Appendix C
Regulation CC
deposits will be available on the first business
day.
If we are not going to make all of the funds
from your deposit available on the first busi
ness day, we will notify you at the time you
make your deposit. We will also tell you
when the funds will be available. If your de
posit is not made directly to one of our em
ployees, or if we decide to take this action
after you have left the premises, we will mail
you the notice by the day after we receive
your deposit.
If you will need the funds from a deposit
right away, you should ask us when the funds
will be available.
In addition, funds you deposit by check
may be delayed for a longer period under the
following circumstances:
• We believe a check you deposit will not be
paid.
• You deposit checks totaling more than
$5,000 on any one day.
• You redeposit a check that has been re
turned unpaid.
• You have overdrawn your account repeat
edly in the last six months.
• There is an emergency, such as failure of
communications or computer equipment.
We will notify you if we delay your ability
to withdraw funds for any of these reasons,
and we will tell you when the funds will be
available. They will generally be available no
later than the [number] business day after the
day of your deposit.
Special Rules for New Accounts
If you are a new customer, the following spe
cial rules will apply during the first 30 days
your account is open.
Funds from electronic direct deposits to
your account will be available on the day we
receive the deposit. Funds from deposits of
cash, wire transfers, and the first $5,000 of a
day’s total deposits of cashier’s, certified,
teller’s, traveler’s, and federal, state and local
government checks will be available on the
first business day after the day of your deposit
if the deposit meets certain conditions. For ex
ample, the checks must be payable to you
(and you may have to use a special deposit
slip). The excess over $5,000 will be available
on the ninth business day after the day of
your deposit. If your deposit of these checks
(other than a U.S. Treasury check) is not
made in person to one of our employees, the
first $5,000 will not be available until the sec
ond business day after the day of your
deposit.
Funds from all other check deposits will be
available on the [number] business day after
the day of your deposit.
C-4— Holds to Statutory Limits on All
Deposits (Temporary Schedule)
YOUR ABILITY TO WITHDRAW FUNDS
at [bank name and location]
Our policy is to delay the availability of funds
that you deposit in your account. During the
delay, you may not withdraw the funds in
cash and we will not use the funds to pay
checks that you have written.
Determining the Availability of a Deposit
The length of the delay is counted in business
days from the day of your deposit. Every day
is a business day except Saturdays, Sundays,
and federal holidays. If you make a deposit
before [time o f day] on a business day that we
are open, we will consider that day to be the
day of your deposit. However, if you make a
deposit after [time o f day] or on a day we are
not open, we will consider that the deposit
was made on the next business day we are
open.
The length of the delay varies depending on
the type of deposit and is explained below.
Same-Day Availability
Funds from electronic direct deposits to your
account will be available on the day we re
ceive the deposit.
Next-Day Availability
Funds from the following deposits are avail155
Appendix C
Regulation CC
able on the first business day after the day of
your deposit:
• U.S. Treasury checks that are payable to
you
• wire transfers
• checks drawn on [bank name] (unless [any
limitations related to branches in different
states or check-processing regions])
If you make the deposit in person to one of
our employees, funds from the following de
posits are also available on the first business
day after the day of your deposit:
• cash
• state and local government checks that are
payable to you (if you use a special deposit
slip available from [where deposit slip may
be obtained])
• cashier’s, certified, and teller’s checks that
are payable to you (if you use a special
deposit slip available from [where deposit
slip may be obtained])
• Federal Reserve Bank checks, Federal
Home Loan Bank checks, and postal mon
ey orders, if these items are payable to you
If you do not make your deposit in person to
one of our employees (for example, if you
mail the deposit), funds from these deposits
will be available on the second business day
after the day of your deposit.
The delay for other check deposits depends on
whether the check is a local or a nonlocal
check. To see whether a check is a local or a
nonlocal check, look at the routing number on
the check:
Personal Check
19
Pay to the
$
1 123456789 |
'--------
0000000000 000
J —1
1___ -R outing number
156
Name of Company
Address, City, State
IQ
Pay to the
s
(Bank Name
and Location)
000000000
1 123456789 1
0000000000 000
.Routing number
If the first four digits of the routing number
(1234 in the examples above) are [local num
bers], then the check is a local check. Other
wise, the check is a nonlocal check. Some
checks are marked “payable through” and
have a four- or nine-digit number nearby. For
these checks, use the four-digit number (or the
first four digits of the nine-digit number), not
the routing number on the bottom of the
check, to determine if these checks are local
or nonlocal. Our policy is to make funds from
local and nonlocal checks available as
follows.
1. Local checks. The first $100 from a deposit
of local checks will be available on the first
business day after the day of your deposit.
The remaining funds will be available on the
third business day after the day of your
deposit.
For example, if you deposit a local check
of $700 on a Monday, $100 of the deposit is
available on Tuesday. The remaining $600 is
available on Thursday.
Other Check Deposits
(Bank Name
and Location)
Business Check
2. Nonlocal checks. The first $100 from a de
posit of nonlocal checks will be available on
the first business day after the day of your
deposit. The remaining funds will be available
on the seventh business day after the day of
your deposit.
For example, if you deposit a $700 nonlo
cal check on a Monday, $100 of the deposit is
available on Tuesday. The remaining $600 is
available on Wednesday of the following
week. If you deposit both categories of
checks, $100 from the checks will be avail
able on the first business day after the day of
your deposit, not $100 from each category of
check.
Appendix C
Regulation CC
Longer Delays May Apply
Funds you deposit by check may be delayed
for a longer period under the following
circumstances:
• We believe a check you deposit will not be
paid.
• You deposit checks totaling more than
$5,000 on any one day.
• You redeposit a check that has been re
turned unpaid.
• You have overdrawn your account repeat
edly in the last six months.
• There is an emergency, such as failure of
communications or computer equipment.
We will notify you if we delay your ability
to withdraw funds for any of these reasons,
and we will tell you when the funds will be
available. They will generally be available no
later than the [n u m b e r ] business day after the
day of your deposit.
Special Rules for New Accounts
If you are a new customer, the following spe
cial rules will apply during the first 30 days
your account is open.
Funds from electronic direct deposits to
your account will be available on the day we
receive the deposit. Funds from deposits of
cash, wire transfers, and the first $5,000 of a
day’s total deposits of cashier’s, certified,
teller’s, traveler’s, and federal, state and local
government checks will be available on the
first business day after the day of your deposit
if the deposit meets certain conditions. For ex
ample, the checks must be payable to you
(and you may have to use a special deposit
slip). The excess over $5,000 will be available
on the ninth business day after the day of
your deposit. If your deposit of these checks
(other than a U.S. Treasury check) is not
made in person to one of our employees, the
first $5,000 will not be available until the sec
ond business day after the day of your
deposit.
Funds from all other check deposits will be
available on the [n u m b e r ] business day after
the day of your deposit.
C-5—Holds to Statutory Limits on All
Deposits (Permanent Schedule, Includes
Chart)
YOUR ABILITY TO WITHDRAW FUNDS
at [ b a n k n a m e a n d l o c a t i o n ]
Our policy is to delay the availability of funds
that you deposit in your account. During the
delay, you may not withdraw the funds in
cash and we will not use the funds to pay
checks that you have written.
Determining the Availability of a Deposit
The length of the delay is counted in business
days from the day of your deposit. Every day
is a business day except Saturdays, Sundays,
and federal holidays. If you make a deposit
before [ t i m e o f d a y ] on a business day that we
are open, we will consider that day to be the
day of your deposit. However, if you make a
deposit after [ t i m e o f d a y ] or on a day we are
not open, we will consider that the deposit
was made on the next business day we are
open.
The length of the delay varies depending on
the type of deposit and is explained below.
Same-Day Availability
Funds from electronic direct deposits to your
account will be available on the day we re
ceive the deposit.
Next-Day Availability
Funds from the following deposits are avail
able on the first business day after the day of
your deposit:
• U.S. Treasury checks that are payable to
you
• wire transfers
• checks drawn on [ b a n k n a m e ] (unless [ a n y
lim ita tio n s r e la te d to
b r a n c h e s in d i f f e r e n t
s ta te s o r c h e c k - p r o c e s s in g
r e g i o n s ])
If you make the deposit in person to one of
our employees, funds from the following de
posits are also available on the first business
day after the day of your deposit:
• cash
• state and local government checks that are
payable to you ( i f you use a special deposit
157
Appendix C
Regulation CC
slip available from
[w h e re d e p o s it s lip m a y
b e o b t a i n e d ])
• cashier’s, certified, and teller’s checks that
are payable to you (i f you use a special
deposit slip available from [ w h e r e d e p o s i t
from the check will be available. If you de
posit both categories of checks, $100 from the
checks will be available on the first business
day after the day of your deposit, not $100
from each category of check.
s l i p m a y b e o b t a i n e d ])
• Federal Reserve Bank checks, Federal
Home Loan Bank checks, and postal mon
ey orders, if these items are payable to you
If you do not make your deposit in person to
one of our employees (for example, if you
mail the deposit), funds from these deposits
will be available on the second business day
after the day of your deposit.
Other Check Deposits
To find out when funds from other check de
posits will be available, look at the first four
digits of the routing number on the check:
P erso n a l C h eck
19____
Pay to the
order of
$
(Bank Name
and Location)
1 123456789 1
I
Funds you deposit by check may be delayed
for a longer period under the following
circumstances:
• We believe a check you deposit will not be
paid.
• You deposit checks totaling more than
$5,000 on any one day.
• You redeposit a check that has been re
turned unpaid.
• You have overdrawn your account repeat
edly in the last six months.
• There is an emergency, such as failure of
communications or computer equipment.
We will notify you if we delay your ability
to withdraw funds for any of these reasons,
and we will tell you when the funds will be
available. They will generally be available no
later than the [ n u m b e r ] business day after the
day of your deposit.
0000000000 000
Special Rules for New Accounts
1_______ Routing number
B u s in e s s C h e c k
Name of Company
Address, City, State
19
Pay to the
1$
(Bank Name
and Location)
000000000
Longer Delays May Apply
I 123456789 I
0000000000 000
_______Routing number
Some checks are marked “ payable
through” and have a four- or nine-digit num
ber nearby. For these checks, use this four
digit number (or the first four digits of the
nine-digit number), not the routing number on
the bottom of the check, to determine if these
checks are local or nonlocal. Once you have
determined the first four digits of the routing
number (1234 in the examples above), the
chart below will show you when the funds
158
If you are a new customer, the following spe
cial rules will apply during the first 30 days
your account is open.
Funds from electronic direct deposits to
your account will be available on the day we
receive the deposit. Funds from deposits of
cash, wire transfers, and the first $5,000 of a
day’s total deposits of cashier’s, certified,
teller’s, traveler’s, and federal, state and local
government checks will be available on the
first business day after the day of your deposit
if the deposit meets certain conditions. For ex
ample, the checks must be payable to you
(and you may have to use a special deposit
slip). The excess over $5,000 will be available
on the ninth business day after the day of
your deposit. If your deposit of these checks
(other than a U.S. Treasury check) is not
made in person to one of our employees, the
first $5,000 will not be available until the sec
ond business day after the day of your
deposit.
Regulation CC
Appendix C
W hen f u n d s a r e
a v a ila b le i f a
F ir s t f o u r d ig its
d e p o s it is m a d e
from r o u tin g n u m b e r
W hen f u n d s a r e a v a ila b le
on a M o n d a y
[local numbers]
$100 on the first business day after the day of
your deposit.
Tuesday
Remaining funds on the second business day after
the day o f your deposit.
Wednesday
$100 on the first business day after the day of
your deposit.
Tuesday
Remaining funds on the fifth business day after
the day o f your deposit.
Monday of the
following week
All other numbers
Funds from all other check deposits will be
ivailable on the [number] business day after
he day of your deposit.
2-6— Holds on All Deposits, but for
^ess Time Than the Statutory Limits,
ind Case-by-Case Holds to the Statutory
limits (Temporary Schedule)
YOUR ABILITY TO WITHDRAW FUNDS
at [bank name and location]
Dur policy is to delay the availability of funds
hat you deposit in your account. During the
ielay, you may not withdraw the funds in
:ash and we will not use the funds to pay
:hecks that you have written.
determining the Availability of a Deposit
The length of the delay is counted in business
lays from the day of your deposit. Every day
s a business day except Saturdays, Sundays,
ind federal holidays. If you make a deposit
tefore [time o f day] on a business day that we
ire open, we will consider that day to be the
lay of your deposit. However, if you make a
leposit after [time o f day] or on a day we are
lot open, we will consider that the deposit
vas made on the next business day we are
•pen.
The length of the delay varies depending on
he type of deposit and is explained below.
Same-Day Availability
Funds from electronic direct deposits to your
account will be available on the day we re
ceive the deposit.
Next-Day Availability
Funds from the following deposits are avail
able on the first business day after the day of
your deposit:
• U.S. Treasury checks that are payable to
you
• wire transfers
• checks drawn on [bank name] (unless [any
limitations related to branches in different
states or check-processing regions])
If you make the deposit in person to one of
our employees, funds from the following de
posits are also available on the first business
day after the day of your deposit:
• cash
• state and local government checks that are
payable to you (if you use a special deposit
slip available from [where deposit slip may
be obtained])
• cashier’s, certified, and teller’s checks that
are payable to you (if you use a special
deposit slip available from [where deposit
slip may be obtained])
• Federal Reserve Bank checks, Federal
Home Loan Bank checks, and postal mon
ey orders, if these items are payable to you
159
Appendix C
Regulation CC
If you do not make your deposit in person to
one of our employees (for example, if you
mail the deposit), funds from these deposits
will be available on the second business day
after the day of your deposit.
Other Check Deposits
The delay for other check deposits depends on
whether the check is a local or a nonlocal
check. To see whether a check is a local or a
nonlocal check, look at the routing number on
the check:
P erso n a l C heck
__________ 19_____
Pay to the
order o f _______________________________
$ ________
------------------------------------------------------------------ dollars
(Bank Name
and Location)
_________________
I
123456789 |
0000000000 000
= P ----- ---------
The remaining funds will be available on the
[ n u m b e r ] business day after the day of your
deposit.
For example, if you deposit a local check
of $700 on a Monday, $100 of the deposit is
available on Tuesday. The remaining $600 is
available on [ d a y ] .
2. N o n l o c a l c h e c k s . The first $100 from a de
posit of nonlocal checks will be available on
the first business day after the day of your
deposit. The remaining funds will be available
on the [ n u m b e r ] business day after the day of
your deposit.
For example, if you deposit a $700 nonlo
cal check on a Monday, $100 of the deposit is
available on Tuesday. The remaining $600 is
available on [ d a y ] .
If you deposit both categories of checks,
$100 from the checks will be available on the
first business day after the day of your de
posit, not $100 from each category of check.
I_______ Routing number
Longer Delays May Apply
B u s in e s s C h e c k
Name of Company
Address, City, State
19
Pay to the
s
(Bank Name
and Location)
000000000
I 123456789 1
0000000000 000
.Routing number
If the first four digits of the routing number
(1234 in the examples above) are [ l o c a l n u m
b e r s ] , then the check is a local check. Other
wise, the check is a nonlocal check. Some
checks are marked “payable through” and
have a four- or nine-digit number nearby. For
these checks, use the four-digit number (or the
first four digits of the nine-digit number), not
the routing number on the bottom of the
check, to determine if these checks are local
or nonlocal. Our policy is to make funds from
local and nonlocal checks available as
follows.
In some cases, we will not make all of the
funds that you deposit by check available at
the times shown above. Depending on the
type of check that you deposit, funds may not
be available until the seventh business day af
ter the day of your deposit. However, the first
$100 of your deposits will be available on the
first business day after the day of your
deposit.
If we are not going to make all funds from
your deposit available at the times shown
above, we will notify you at the time you
make your deposit. We will also tell you
when the funds will be available. If your de
posit is not made directly to a bank employee,
or if we decide to take this action after you
have left the premises, we will mail you the
notice by the day after we receive your
deposit.
If you will need the funds from a deposit
right away, you should ask us when the funds
will be available.
In addition, funds you deposit by check
may be delayed for a longer period under the
following circumstances:
1. L o c a l c h e c k s . The first $100 from a deposit
of local checks will be available on the first • We believe a check you deposit will not be
paid.
business day after the day of your deposit.
160
Appendix C
Regulation CC
• You deposit checks totaling more than
$5,000 on any one day.
• You redeposit a check that has been re
turned unpaid.
• You have overdrawn your account repeat
edly in the last six months.
• There is an emergency, such as failure of
communications or computer equipment.
We will notify you if we delay your ability
to withdraw funds for any of these reasons,
and we will tell you when the funds will be
available. They will generally be available no
later than the [n u m b e r ] business day after the
day of your deposit.
Special Rules for New Accounts
If you are a new customer, the following spe
cial rules will apply during the first 30 days
your account is open.
Funds from electronic direct deposits to
your account will be available on the day we
receive the deposit. Funds from deposits of
cash, wire transfers, and the first $5,000 of a
day’s total deposits of cashier’s, certified,
teller’s, traveler’s, and federal, state and local
government checks will be available on the
first business day after the day of your deposit
if the deposit meets certain conditions. For ex
ample, the checks must be payable to you
(and you may have to use a special deposit
slip). The excess over $5,000 will be available
on the ninth business day after the day of
your deposit. If your deposit of these checks
(other than a U.S. Treasury check) is not
made in person to one of our employees, the
first $5,000 will not be available until the sec
ond business day after the day of your
deposit.
Funds from all other check deposits will be
available on the [n u m b e r ] business day after
the day of your deposit.
C-7—Holds to Statutory Limits on All
Deposits (Permanent Schedule)
YOUR ABILITY TO WITHDRAW FUNDS
at [ b a n k n a m e a n d l o c a t i o n ]
Our policy is to delay the availability of funds
that you deposit in your account. During the
delay, you may not withdraw the funds in
cash and we will not use the funds to pay
checks that you have written.
Determining the Availability of a Deposit
The length of the delay is counted in business
days from the day of your deposit. Every day
is a business day except Saturdays, Sundays,
and federal holidays. If you make a deposit
before [ t i m e o f d a y ] on a business day that we
are open, we will consider that day to be the
day of your deposit. However, if you make a
deposit after [ t i m e o f d a y ] or on a day we are
not open, we will consider that the deposit
was made on the next business day we are
open.
The length of the delay varies depending on
the type of deposit and is explained below.
Same-Day Availability
Funds from electronic direct deposits to your
account will be available on the day we re
ceive the deposit.
Next-Day Availability
Funds from the following deposits are avail
able on the first business day after the day of
your deposit:
• U.S. Treasury checks that are payable to
you
• wire transfers
• checks drawn on [ b a n k n a m e ] (unless [ a n y
l i m i t a t i o n s r e l a t e d t o b r a n c h e s in d i f f e r e n t
s ta te s o r c h e c k - p r o c e s s in g r e g io n s ] )
If you make the deposit in person to one of
our employees, funds from the following de
posits are also available on the first business
day after the day of your deposit:
• cash
• state and local government checks that are
payable to you { i f you use a special deposit
slip available from [ w h e r e d e p o s i t s l i p m a y
b e o b t a i n e d ])
• cashier’s, certified, and teller’s checks that
are payable to you { i f you use a special
deposit slip available from [ w h e r e d e p o s i t
s lip m a y b e o b ta in e d ] )
• Federal Reserve Bank checks, Federal
Home Loan Bank checks, and postal mon
ey orders, if these items are payable to you
161
Regulation CC
Appendix C
If you do not make your deposit in person to
one of our employees (for example, if you
mail the deposit), funds from these deposits
will be available on the second business day
after the day of your deposit.
Other Check Deposits
The delay for other check deposits depends on
whether the check is a local or a nonlocal
check. To see whether a check is a local or a
nonlocal check, look at the routing number on
the check:
P erso n a l C heck
Pay to the
order o f __
------------------------------------------------------------------ dollars
(Bank Name
and Location)
_________________
I 123456789 |
0000000000 000
The remaining funds will be available on the
second business day after the day of your
deposit.
For example, if you deposit a local check
of $700 on a Monday, $100 of the deposit is
available on Tuesday. The remaining $600 is
available on Wednesday.
2. N o n l o c a l c h e c k s . The first $100 from a de
posit of nonlocal checks will be available on
the first business day after the day of your
deposit. The remaining funds will be available
on the fifth business day after the day of your
deposit.
For example, if you deposit a $700 nonlo
cal check on a Monday, $100 of the deposit is
available on Tuesday. The remaining $600 is
available on Monday of the following week.
If you deposit both categories of checks, $100
from the checks will be available on the first
business day after the day of your deposit, not
$100 from each category of check.
.Routing number
Longer Delays May Apply
B u s in e s s C h e c k
Funds you deposit by check may be delayed
for a longer period under the following
circumstances:
Name of Company
Addresi, City, State
Pay to the
---------
(Bank Name
and Location)
000000000 I 123456789 1
17*’
0000000000 000
1____ —Routing number
If the first four digits of the routing number
(1234 in the examples above) are [ l o c a l n u m
b e r s ] , then the check is a local check. Other
wise, the check is a nonlocal check. Some
checks are marked “ payable through” and
have a four- or nine-digit number nearby. For
these checks, use the four-digit number (or the
first four digits of the nine-digit number), not
the routing number on the bottom of the
check, to determine if these checks are local
or nonlocal. Our policy is to make funds from
local and nonlocal checks available as
follows.
1. L o c a l c h e c k s . The first $100 from a deposit
of local checks will be available on the first
business day after the day of your deposit.
162
• We believe a check you deposit will not be
paid.
• You deposit checks totaling more than
$5,000 on any one day.
• You redeposit a check that has been re
turned unpaid.
• You have overdrawn your account repeat
edly in the last six months.
• There is an emergency, such as failure of
communications or computer equipment.
We will notify you if we delay your ability
to withdraw funds for any of these reasons,
and we will tell you when the funds will be
available. They will generally be available no
later than the [ n u m b e r ] business day after the
day of your deposit.
Special Rules for New Accounts
If you are a new customer, the following spe
cial rules will apply during the first 30 days
your account is open.
Funds from electronic direct deposits to
your account will be available on the day we
Appendix C
Regulation CC
receive the deposit. Funds from deposits of
cash, wire transfers, and the first $5,000 of a
day’s total deposits of cashier’s, certified,
teller’s, traveler’s, and federal, state and local
government checks will be available on the
first business day after the day of your deposit
if the deposit meets certain conditions. For ex
ample, the checks must be payable to you
(and you may have to use a special deposit
slip). The excess over $5,000 will be available
on the ninth business day after the day of
your deposit. If your deposit of these checks
(other than a U.S. Treasury check) is not
made in person to one of our employees, the
first $5,000 will not be available until the sec
ond business day after the day of your
deposit.
Funds from all other check deposits will be
available on the [number] business day after
the day of your deposit.
C-8—Holds on Other Funds (Check
Cashing)
If we cash a check for you that is drawn on
another bank, we may withhold the availabil
ity of a corresponding amount of funds that
are already in your account. Those funds will
be available at the time funds from the check
we cashed would have been available if you
had deposited it.
certain areas faster than usual. Therefore,
funds from deposits of checks drawn on insti
tutions in those areas will be available to you
more quickly. Call us if you would like a list
of the routing numbers for these institutions.
C-10— Automated Teller Machine
Deposits (Permanent Schedule, Extended
Hold)
DEPOSITS AT AUTOMATED
TELLER MACHINES
Funds from any deposits (cash or checks)
made at automated teller machines (ATMs) we
do not own or operate will not be available
until the fifth business day after the day of
your deposit. This rule does not apply at
ATMs that we own or operate.
[A list of our ATMs is enclosed.]
or
[A list of ATMs where you can make de
posits but that are not owned or operated by
us is enclosed.]
or
[All ATMs that we own or operate are
identified as our machines.]
C-8A—Holds on Other Funds (Other
Account)
C -ll—Cash-Withdrawal Limitation
(Temporary Schedule)
If we accept for deposit a check that is drawn
on another bank, we may make funds from
the deposit available for withdrawal immedi
ately but delay your availability to withdraw a
corresponding amount of funds that you have
on deposit in another account with us. The
funds in the other account would then not be
available for withdrawal until the time periods
that are described elsewhere in this disclosure
for the type of check that you deposited.
1. Local checks. The first $100 from a deposit
of local checks will be available on the first
business day after the day of your deposit to
pay checks you have written to others. All of
the remaining funds will be available on the
third business day after the day of your de
posit to pay checks you have written to
others.
The first $100 will also be available for
withdrawal in cash on the first business day
after the day of your deposit. An additional
$400 of the deposit may be withdrawn in cash
at or after [time no later than 5:00 p.m.] on
the third business day after the day of your
deposit. All of the remaining funds will be
available for cash withdrawal on the fourth
business day after the day of your deposit.
C-9—Appendix B Availability (Nonlocal
Checks)
3. Certain other checks. We can process non
local checks drawn on financial institutions in
163
Appendix C
For example, if you deposit a local check
of $700 on a Monday, $100 of the deposit is
available on Tuesday to pay checks to others
and to withdraw in cash. The rest is available
to pay checks on Thursday. At or after [time
no later than 5:00 p.m.] on Thursday you
may withdraw another $400 of the deposit in
cash, and you may withdraw the rest in cash
on Friday.
2. Nonlocal checks. The first $100 from a de
posit of nonlocal checks will be available on
the first business day after the day of your
deposit for cash withdrawal and to pay checks
you have written to others. The remainder will
be available on the seventh business day after
the day of your deposit for both of these
purposes.
For example, if you deposit a nonlocal
check on a Monday, $100 of the deposit is
available on Tuesday to pay checks to others
and to withdraw in cash. The remaining funds
from the deposit are available on Wednesday
of the following week for cash withdrawal
and to pay checks written to others.
C-11A—Cash-Withdrawal Limitation
(Temporary Schedule, Clearinghouse
Member)
1. Local checks. The first $100 from a deposit
of local checks will be available on the first
business day after the day of your deposit for
cash withdrawal and to pay checks you have
written to others. The remainder generally will
be available on the third business day after
the day of your deposit for both of these
purposes.
For example, if you deposit a local check
of $700 on a Monday, $100 of the deposit is
available on Tuesday to pay checks to others
and to withdraw in cash. The remaining $600
is available on Thursday for cash withdrawal
and to pay checks you have written to others.
In some cases, however, depending on the
bank on which the check is drawn, special
limitations apply to withdrawals in cash. The
first $100 will be available for cash with
drawal on the first business day after the day
of your deposit. An additional $400 of the de
posit may be withdrawn in cash at or after
[time no later than 5:00 p.m.] on the third
164
Regulation CC
business day after the day of your deposit. All
of the remaining funds will be available for
cash withdrawal on the fourth business day
after the day of your deposit.
In these cases, for example, if you deposit a
local check of $700 on a Monday, $100 of
the deposit is available on Tuesday to pay
checks to others and to withdraw in cash. The
rest is available to pay checks on Thursday.
At or after [time no later than 5:00 p.m.] on
Thursday you may withdraw another $400 of
the deposit in cash, and you may withdraw
the rest in cash on Friday.
2. Nonlocal checks. The first $100 from a de
posit of nonlocal checks will be available on
the first business day after the day of your
deposit for cash withdrawal and to pay checks
you have written to others. The remainder will
be available on the seventh business day after
the day of your deposit for both of these
purposes.
For example, if you deposit a nonlocal
check on a Monday, $100 of the deposit is
available on Tuesday to pay checks to others
and to withdraw in cash. The remaining funds
from the deposit are available on Wednesday
of the following week for cash withdrawal
and to pay checks written to others.
C-11B—Cash-Withdrawal Limitation
(Permanent Schedule)
1. Local checks. The first $100 from a deposit
of local checks will be available on the first
business day after the day of your deposit to
pay checks you have written to others. All of
the remaining funds will be available on the
second business day after the day of your de
posit to pay checks you have written to
others.
The first $100 will also be available for
withdrawal in cash on the first business day
after the day of your deposit. An additional
$400 of the deposit may be withdrawn in cash
at or after [time no later than 5:00 p.m.] on
the second business day after the day of your
deposit. All of the remaining funds will be
available for cash withdrawal on the third bus
iness day after the day of your deposit.
For example, if you deposit a local check
of $700 on a Monday, $100 of the deposit is
Regulation CC
available on Tuesday to pay checks to others
and to withdraw in cash. The rest is available
to pay checks on Wednesday. At or after [time
no later than 5:00 p.m.] on Wednesday you
may withdraw another $400 of the deposit in
cash, and you may withdraw the rest in cash
on Thursday.
2. Nonlocal checks. The first $100 from a de
posit of nonlocal checks will be available on
the first business day after the day of your
deposit to pay checks you have written to
others. All of the remaining funds will be
available on the fifth business day after the
day of your deposit to pay checks you have
written to others.
The first $100 will also be available for
withdrawal in cash on the first business day
after the day of your deposit. An additional
$400 of the deposit may be withdrawn in cash
at or after [time no later than 5:00 p.m.] on
the fifth business day after the day of your
deposit. All of the remaining funds will be
available for cash withdrawal on the sixth
business day after the day of your deposit.
For example, if you deposit a nonlocal
check of $700 on a Monday, $100 of the de
posit is available on Tuesday to pay checks to
others and to withdraw in cash. The rest is
available to pay checks on Monday of the fol
lowing week. At or after [time no later than
5:00 p.m.] on that Monday, you may with
draw another $400 of the deposit in cash. The
rest may be withdrawn in cash on Tuesday of
that following week.
C-12—Credit-Union Interest-Payment
Policy
INTEREST-PAYMENT POLICY
If we receive a deposit to your account on or
before the tenth of the month, you begin earn
ing interest on the deposit (whether it was a
deposit of cash or checks) as of the first day
3f that month. If we receive the deposit after
the tenth of the month, you begin earning in
terest on the deposit as of the first of the fol
lowing month. For example, a deposit made
Dn June 7 earns interest from June 1, while a
deposit made on June 17 earns interest from
luly 1.
Appendix C
C-13—Exception Hold Notice
NOTICE OF HOLD
Account number:
[number]
Amount of deposit:
[amount]
Date of deposit:
[date]
We are delaying the availability of
$[amount being held] from this deposit. These
funds will be available on the [number] busi
ness day after the day of your deposit.
We are taking this action because:
____ A check you deposited was previously
returned unpaid.
____ You have overdrawn your account re
peatedly in the last six months.
____ The checks you deposited on this day
exceed $5,000.
____ An emergency, such as failure of com
munications or computer equipment,
has occurred.
__ We believe a check you deposited will
not be paid for the following reasons:
(If you did not receive this notice at the time
you made the deposit and the check you de
posited is paid, we will refund to you any fees
for overdrafts or returned checks that result
solely from the additional delay that we are
imposing. To obtain a refund of such fees,
[description o f procedure fo r obtaining
refund].)
C-13A—Reasonable-Cause Hold Notice
NOTICE OF HOLD
Account number:
[number]
Amount of deposit:
[amount]
Date of deposit:
[date]
We are delaying the availability of the
funds you deposited by the following check:
[description of check, such as amount and
drawer]
These funds will be available on the [number]
business day after the day of your deposit.
The reason for the delay is explained below:
165
Appendix C
Regulation CC
We received notice that the check is
being returned unpaid.
We have confidential information that
indicates that the check may not be
paid.
The check is drawn on an account with
repeated overdrafts.
We are unable to verify the indorse
ment of a joint payee.
Some information on the check is not
consistent with other information on
the check.
There are erasures or other apparent al
terations on the check.
The routing number of the paying bank
is not a current routing number.
The check is postdated or has a stale
date.
Information from the paying bank indi
cates that the check may not be paid.
We have been notified that the check
has been lost or damaged in collection.
Other:___________________________
(If you did not receive this notice at the
time you made the deposit and the check you
deposited is paid, we will refund to you any
fees for overdrafts or returned checks that re
sult solely from the additional delay that we
are imposing. To obtain a refund of such fees,
[description o f procedure fo r obtaining
refund].)
C-13B—One-Time Notice for LargeDeposit and Redeposited-Check
Exception Holds
NOTICE OF HOLD
If you deposit into your account:
• Checks totaling more than $5,000 on any
one day, the first $5,000 deposited on any
one banking day will be available to you
according to our general policy. The
amount in excess of $5,000 will generally
be available on the [number] business day
for checks drawn on [ bank], the [number ]
business day for local checks and [number]
business day for nonlocal checks after the
day of your deposit. If checks (not drawn
on us) that otherwise would receive next166
day availability exceed $5,000, the excess
will be treated as either local or nonlocal
checks depending on the location of the
paying bank. If your check deposit, exceed
ing $5,000 on any one day, is a mix of
local checks, nonlocal checks, checks
drawn on [bank], or checks that generally
receive next-day availability, the excess
will be calculated by first adding together
the [ ], then the [ ], then the [ ], then
the [ ].
A check that has been returned unpaid, the
funds will generally be available on the
[number] business day for checks drawn on
[bank], the [number] business day for local
checks and the [number] business day for
nonlocal checks after the day of your de
posit. Checks (not drawn on us) that other
wise would receive next-day availability
will be treated as either local or nonlocal
checks depending on the location of the
paying bank.
C-13C—One-Time Notice for RepeatedOverdraft Exception Hold
NOTICE OF HOLD
Account number:
[number]
Date of deposit:
[date]
We are delaying the availability of checks
deposited into your account due to repeated
overdrafts of your account. For the next six
months, deposits will generally be available
on the [number] business day for checks
drawn on [bank], the [number] business day
for local checks, the [number] business day
for nonlocal checks after the day of your de
posit. Checks (not drawn on us) that otherwise
would have received next-day availability will
be treated as either local or nonlocal checks
depending on the location of the paying bank.
C-14—Case-by-Case Hold Notice
NOTICE OF HOLD
Account number:
[number]
Amount of deposit:
[amount]
Date of deposit:
[date]
egulation CC
Appendix C
We are delaying the availability of
[amount being held] from this deposit. These
inds will be available on the [number] busi
e s day after the day of your deposit.
(If you did not receive this notice at the
me you made the deposit and the check you
aposited is paid, we will refund to you any
;es for overdrafts or returned checks that re
lit solely from the additional delay that we
e imposing. To obtain a refund of such fees,
iescription o f procedure fo r obtaining
’fund].)
-15—Notice at Locations Where
mployees Accept Consumer Deposits
’ermanent Schedule)
FUNDS-AVAILABILITY POLICY
e sc r ip tio n o f D e p o s it
irect deposits
ish; wire transfers;
shier’s, certified,
ler’s, or government
ecks; checks on
a n k n a m e ] (unless
W hen F u n d s C a n B e
W ith d ra w n b y C a sh o r
C h e ck
The day we receive
the deposit
The first business day
after the day of
deposit
wilocal checks
C-16—Notice at Automated Teller
Machines
AVAILABILITY OF DEPOSITS
Funds from deposits may not be available for
immediate withdrawal. Please refer to your in
stitution’s rules governing funds availability
for details.
C-17—Notice at Automated Teller
Machines (Delayed Receipt)
NOTICE
Deposits at this ATM between [day] and [day]
will not be considered received until [day].
The availability of funds from the deposit
may be delayed as a result.
C-18—Deposit-Slip Notice
ny lim ita tio n r e la te d
b r a n c h e s in d iffe r e n t
e c k - p r o c e s s in g
%ions]), and the first
00 of a day’s
posits of other
ecks
•cal checks
your ability to withdraw funds beyond the
[number] business day. Then, the funds will
generally be available by the fifth business
day after the day of deposit.
Deposits may not be available for immediate
withdrawal.
The second business
day after the day of
deposit
The fifth business day
after the day of
deposit
-15A—Notice at Locations Where
nployees Accept Consumer Deposits
’ase-by-Case Holds) (Permanent
:hedule)
FUNDS-AVAILABILITY POLICY
lr general policy is to allow you to withaw funds deposited in your account on the
umber] business day after the day we re
ive your deposit. Funds from electronic de
sits will be available on the day we receive
j deposit. In some cases, we may delay
167
Appendix C
Regulation CC Commentar
COMMENTARY
regulation only if its disclosures correspond t<
the bank’s availability policy.
APPENDIX C
Models C-l Through C-7 Generally
Appendix C contains model forms and clauses
that may be used by banks to meet their dis
closure responsibilities under the regulation.
Banks using the model forms and clauses
properly will be in compliance with the dis
closure requirements of the regulation.
Certain information that must be inserted by
a bank using the forms is within brackets in
the text of the forms. Some forms contain al
ternative clauses, and these are set forth in
brackets and separated by the word “or.”
Banks may make certain changes in the for
mat or content of the model forms and delete
material that is inapplicable without losing the
act’s protection from liability for banks that
use the forms properly. For example, if a
bank does not take advantage of the section
229.13 exceptions, it may delete the material
relating to those exceptions. The rearrange
ment of the model forms may not be so ex
tensive, however, as to affect the substance,
clarity, or meaningful sequence of the forms.
Acceptable changes include, for example—
These forms are models for the specific avail
ability-policy disclosure described in sectioi
229.16 of the regulation. The forms accommo
date a variety of availability policies, ranginj
from policies of next-day availability to hold
on a blanket basis up to the maximum tirm
allowed in the regulation. Models C-3 am
C-6 reflect the additional disclosures discusser
in section 229.16(b) and (c) for banks tha
have a policy of extending availability time
on a case-by-case basis.
As already noted, there are several places i:
the forms where information must be insertec
This information includes the bank’s nam
and cut-off times, limitations relating to next
day availability, and the first four digits o
routing numbers for local banks. In disclosin,
when funds will be available for withdrawal
the bank must insert the ordinal number (sue
as first, second, etc.) of the business day th
funds will become available.
Models C-l through C-7 generally do nc
reflect any optional provisions of the regula
tion, or those that apply only to certain banks
Instead, disclosures for these provisions ar
included in the model clauses (models Cthrough C-12). A bank using one of the modt
forms should also consider whether it must ir
corporate one or more of the model clauses.
While section 229.10(b) of the regulatio
requires next-day availability for electroni
payments, Treasury regulations (31 CFR 21(
and ACH association rules require tha
preauthorized credits (“direct deposits” ) b
made available on the day the bank receive
the funds. Model Forms C-l through C-7 n
fleet these rules. Wire transfers, however, at
not governed by Treasury or ACH rules, bi
banks generally make funds from wire tran:
fers available on the day received or on th
business day following receipt. Banks shoul
ensure that their disclosures reflect the avail:
bility given in most cases for wire transfers
Banks that have used earlier versions of th
model forms or clauses (such as those forn
that gave Social Security benefits and payro
payments as examples of preauthorized credi
available the day after deposit) are protecte
• using “customer” and “bank” instead of
pronouns
• not using bold type for headings
• incorporating certain state-law plainEnglish requirements
Shorter time periods for availability may al
ways be substituted for time periods used in
the model forms.
Banks may also add information related to
their availability policies. For example, a bank
might indicate that although funds have been
made available to a customer and the cus
tomer has withdrawn them, the customer is
still responsible for problems with the deposit,
such as checks that were deposited being re
turned unpaid. Or a bank could provide in its
disclosure a telephone number to be used if a
customer has an inquiry regarding a deposit.
Banks are cautioned against using the forms
without reviewing their own policies and prac
tices, as well as state and federal laws regard
ing the time periods for availability of specific
types of checks. A bank using a model form
will be in compliance with the act and the
168
Regulation CC Commentary
from civil liability under section 229.21(e).
Banks are encouraged, however, to use current
versions of the forms when reordering or re
printing supplies of forms.
Appendix C
only difference between model C-7 and model
C-5 is that in the latter a chart showing the
bank’s availability policy for local and nonlo
cal checks is substituted for the narrative
description in the former.
Model C-l
A bank may use this form when its policy is
to make funds from all deposits available on
the first business day after a deposit is made.
This form may also be used by banks that
provide immediate availability by substituting
the word “immediately” in place of “on the
first business day after the day we receive
your deposit.”
Model C-2
A bank may use this form when its policy is
to make funds from all deposits available to
its customers on the first business day after
the deposit is made, and to reserve the right
to invoke the new account and other excep
tions in section 229.13 of the regulation.
Model C-3
A bank may use this form when its policy, in
most cases, is to make funds from all types of
deposits available the day after the deposit is
made, but to delay availability on some de
posits on a case-by-case basis up to the maxi
mum time periods allowed under the regula
tion. A bank using this form also reserves the
right to invoke the exceptions listed in section
229.13 of the regulation. A bank reserving the
right to impose the cash-withdrawal limitation
in section 229.12(d) should disclose that funds
may not be available until the sixth (rather
than fifth) business day in the first paragraph
under the heading “ Longer Delays May
Apply.”
Model C-4
A bank may use this form when its policy is
to impose delays to the full extent allowed
under the temporary schedule in section
229.11 and to reserve the right to invoke the
section 229.13 exceptions.
Model C-5
A bank may use this form when its policy is
the same as that outlined in model C-7. The
Model C-6
A bank may use this form when its policy is
to delay availability based on the deposit cate
gories (next-day availability items and local
and nonlocal checks) in the regulation, but to
make funds available more quickly than is re
quired by the regulation. A bank using this
form would also reserve the right to place
holds on a case-by-case basis up to the statu
tory limits and to invoke the section 229.13
exceptions.
Model C-7
A bank may use this form when its policy is
to impose delays to the full extent allowed by
the permanent schedule in section 229.12 and
to reserve the right to invoke the section
229.13 exceptions.
Models C-8 Through C -l2 Generally
These model clauses must be incorporated
into a bank’s specific availability-policy dis
closure under certain circumstances. The com
mentary to each clause indicates when the
clause is required.
Model C-8
This clause must be incorporated in the spe
cific availability-policy disclosure by banks
that reserve the right to place a hold on funds
already on deposit when they cash a check for
the customer, as discussed under section
229.19(e).
Model C-8A
This clause must be incorporated in the spe
cific availability-policy disclosure by banks
that reserve the right to place a hold on funds
in an account of the customer other than the
account into which the deposit is made, as
discussed in section 229.19(e).
169
Appendix C
Model C-9
This clause must be incorporated in the spe
cific availability-policy disclosure by banks in
check-processing regions where the availabil
ity schedules for certain nonlocal checks have
been reduced, as described in appendix B of
the regulation. Banks using model C-4, C-6,
or C-7 may insert this clause at the conclusion
of the discussion titled “Nonlocal Checks.”
Model C-10
This clause must be incorporated in the spe
cific availability-policy disclosure by banks
that reserve the right to delay availability of
deposits at nonproprietary ATMs until the fifth
business day following the day of deposit, as
permitted by section 229.12(f)(1). A bank
must choose among the alternative language
based on how it chooses to differentiate be
tween proprietary and nonproprietary ATMs,
as required under section 229.16(b)(5).
Model C -ll
This clause must be incorporated in the spe
cific availability-policy disclosure by banks
that are not members of a local clearinghouse
and that choose to limit their customers’ abil
ity to withdraw cash on the third business day
following the deposit of a local check, as al
lowed during the temporary schedule under
section 229.11. Banks using model C-4 or C-6
may substitute this clause for the sections ti
tled “Local Checks” and “Nonlocal Checks.”
Model C -ll A
This clause serves the same purpose as model
C -ll except that it reflects the section 229.11
rule for banks that are members of local clear
inghouses. Banks using models C-4 or C-6
may substitute this clause for the sections ti
tled “Local Checks” and “Nonlocal Checks.”
Model C -llB
This clause may be used to disclose cashwithdrawal limitations under the permanent
schedule in section 229.12. Banks using
model C-7 to disclose availability under the
permanent schedule may substitute this clause
for the sections titled “Local Checks” and
“Nonlocal Checks.” This clause should not be
170
Regulation CC Commentary
used in making disclosures under the tempo
rary schedule in section 229.11.
Model C-12
This clause must be incorporated in the spe
cific availability-policy disclosure by credit
unions seeking to satisfy the notice require
ment of section 229.14(b). This model clause
is only an example of a hypothetical policy.
Credit unions may follow any policy for ac
crual provided the method of accruing interest
is the same for cash and check deposits.
Models C-13 Through C-18 Generally
These forms are models for various notices
required by the regulation.
Model C-13
This form satisfies the written notice required
under section 229.13(g) of the regulation
when a bank places a hold based on a section
229.13 exception. If a hold is being placed on
more than one check in a deposit, each check
need not be described, but if different reasons
apply, each reason must be indicated. A bank
may use the actual date when funds will be
available for withdrawal rather than the num
ber of the business day following the day of
deposit. The bank must incorporate in the no
tice the material set out in brackets if it im
poses overdraft fees after invoking a section
229.13 exception.
Model C-13A
This form satisfies the same requirements as
model C-13, and the same instructions apply,
except that model C-13A is for use by a bank
that invokes the reasonable-cause exception in
section 229.13. The form provides the bank
with a list of specific reasons that may be
given for invoking the exception. If a hold is
being placed on more than one check in a
deposit, each check must be described sepa
rately, and if different reasons apply, each rea
son must be indicated. Banks may disclose of
the reason for their doubting collectibility by
checking the appropriate reason on the form.
If the “Other” category is checked, the reason
must be given.
Regulation CC Commentary
Appendix C
Model C-13B
Model C-18
This form satisfies the notice requirements of
section 229.13(g)(2).
This form satisfies the notice requirements of
section 229.18(a) for deposit slips.
Model C-13C
This form satisfies the notice requirements of
section 229.13(g)(3).
Model C-14
This form satisfies the notice required under
section 229.16(b)(2) when a bank with a caseby-case hold policy imposes a delay on a de
posit. This notice does not require a statement
of the specific reason for the hold, as is the
case when a section 229.13 exception hold is
placed. A bank may specify the actual date
when funds will be available for withdrawal
rather than the number of the business day
following the day of deposit when funds will
be available. The bank must incorporate in the
notice the material set out in brackets if it
imposes overdraft fees after invoking a caseby-case hold.
Model C-15 and C-15A
Either of these forms satisfies the notice re
quirements of section 229.18(b) (notice at lo
cations where employees accept consumer de
posits). Model C-15 is based on an
availability policy that is the same as the per
manent schedule in the regulation and the pol
icy reflected in models C-5 and C-7. Model
C-15A may be used by a bank with a caseby-case availability policy.
Model C-16
This form satisfies the ATM notice require
ment of section 229.18(c)(1).
Model C-17
This form satisfies the ATM notice require
ment of section 229.18(c)(2) when receipt of
deposits at off-premises ATMs is delayed
under section 229.19(a)(4). It is based on col
lection of deposits once a week. If collections
occur more or less frequently, the description
of when deposits are received must be ad
justed accordingly.
171
Appendix D
APPENDIX D—Indorsement Standards
1. The depositary bank shall indorse a check
according to the following specifications:
• The indorsement shall contain—
—the bank’s nine-digit routing number, set
off by arrows at each end of the number
and pointing toward the number;
—the bank’s name/location; and
—the indorsement date.
• The indorsement may also contain—
—an optional branch identification;
—an optional trace/sequence number;
—an optional telephone number for receipt
of notification of large-dollar returned
checks; and
—other optional information provided that
the inclusion of such information does
not interfere with the readability of the
indorsement.
• The indorsement shall be written in dark
purple or black ink.
• The indorsement shall be placed on the
back of the check so that the routing num
ber is wholly contained in the area 3.0
inches from the leading edge of the check
to 1.5 inches from the trailing edge of the
check.1
2. Each subsequent collecting bank indorser
shall protect the identifiability and legibility of
the depositary bank indorsement by:
• including only its nine-digit routing number
(without arrows), the indorsement date, and
an optional trace/sequence number;
• using an ink color other than purple; and
• indorsing in the area on the back of the
check from 0.0 inches to 3.0 inches from
the leading edge of the check.
3. Each returning bank indorser shall protect
the identifiability and legibility of the deposi
tary bank indorsement by:
• using an ink color other than purple;
1 The leading edge is defined as the right side o f the
check looking at it from the front. The trailing edge is
defined as the left side o f the check looking at it from the
front. See American National Standards Committee on Fi
nancial Services S pecifica tio n f o r th e P la c e m e n t a n d L o c a
tion o f M IC R P rin ting, X 9.13.
172
Regulation CC
• staying clear of the area on the back of the
check from 3.0 inches from the leading
edge of the check to the trailing edge of
the check.
Appendix F
Regulation CC
APPENDIX F—Preemption
Determinations
Uniform Commercial Code, Section 4-213(5)
Section 4-213(5) of the Uniform Commercial
Code (UCC) provides that money deposited in
a bank is available for withdrawal as of right
at the opening of business of the banking day
after deposit. Although the language “depos
ited in a bank” is unclear, arguably it is
broader than the language “made in person to
an employee of the depositary bank,” which
conditions the next-day availability of cash
under Regulation CC (§ 229.10(a)(1)). Under
Regulation CC, deposits of cash that are not
made in person to an employee of the deposi
tary bank must be made available by the sec
ond business day after the banking day of de
posit (§ 229.10(a)(2)). Therefore, this
provision of the UCC may call for the availa
bility of certain cash deposits in a shorter time
than provided in Regulation CC.
This provision of the UCC, however, is
subject to section 4-103(1), which provides, in
part, that “the effect of the provisions of this
Article may be varied by agreement . . . . ”
(The Regulation CC funds-availability require
ments may not be varied by agreement.) UCC
section 4-213(5) supersedes the Regulation
CC provision in section 229.10(a)(2), but a
depositary bank may not agree with its cus
tomer under section 4-103(1) of the code to
extend availability beyond the time periods
provided in section 229.10(a) of Regulation
CC.
California
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe
dited Funds Availability Act (“the act” ) and
subpart B (and in connection therewith, sub
part A) of Regulation CC preempt the provi
sions of California law concerning availability
of funds. This preemption determination speci
fies those provisions of the California fundsavailability law that supersede the act and
Regulation CC. (See also the Board’s preemp
tion determination regarding the Uniform
Commercial Code, section 4-213(5), pertain
ing to availability of cash deposits (above).)
California has four separate sets of regula
tions establishing maximum availability sched
ules. The regulations applicable to commercial
banks and branches of foreign banks located
in California (Cal. Admin. Code tit. 10,
§§ 10.190401-10.190402) were promulgated
by the superintendent of banks. The regula
tions applicable to savings banks and savings
and loan associations (Cal. Admin. Code tit.
10, §§ 106.200-106.202) were adopted by the
savings and loan commissioner. The regula
tions applicable to credit unions (Cal. Admin.
Code tit. 10, §901) and to industrial loan
companies (Cal. Admin. Code tit. 10, § 1101)
were adopted by the Commissioner of
Corporations.
All the regulations were adopted pursuant
to California Financial Code section 866.5 and
California Commercial Code section 4213(4)(a), under which the appropriate state
regulatory agency for each depository institu
tion must issue administrative regulations to
define a reasonable time for permitting cus
tomers to draw on items received for deposit
in the customer’s account. California Financial
Code section 867 also establishes availability
periods for funds deposited by cashier’s
check, certified check, teller’s check, or de
pository check under certain circumstances.
Finally, California Financial Code section
866.2 establishes disclosure requirements.
The Board’s determination with respect to
these California laws and regulations gov
erning the funds-availability requirements ap
plicable to depository institutions in California
are as follows.
Commercial Banks and Branches of Foreign
Banks
Coverage
The California State Banking Department reg
ulations, which apply to California state com
mercial banks, California national banks, and
California branch offices of foreign banks,
provide that a depositary bank shall make
funds deposited into a deposit account avail
able for withdrawal as provided in Regulation
CC with certain exceptions. The funds-availa173
Appendix F
bility schedules in Regulation CC apply only
to “accounts” as defined in Regulation CC,
which generally consist of transaction ac
counts. The California funds-availability law
and regulations apply to accounts as defined
by Regulation CC as well as savings accounts
(other than time accounts), as defined in the
Board’s Regulation D (12 CFR 204.2(d)).
(Note, however, that under section 229.19(e)
of Regulation CC, “Holds on other funds,”
the federal availability schedules may apply to
savings, time, and other accounts not defined
as “accounts” under Regulation CC in certain
circumstances.)
Availability Schedules
Temporary schedule. Regulation CC provides
that, until September 1, 1990, nonlocal checks
must be made available for withdrawal by the
seventh business day after the banking day of
deposit, except for certain nonlocal checks
listed in appendix B-l, which must be made
available within a shorter time (by the fifth
business day following deposit for those Cali
fornia checks listed). Under the temporary
schedule in the California regulations, a de
positary bank with a four-digit routing symbol
of 1210 (“ 1210 bank”) or of 1220 (“ 1220
bank” ) that receives for deposit a check
drawn on a nonlocal, in-state commercial
bank or foreign bank branch1 must make the
funds available for withdrawal by the fourth
business day after the day of deposit. The
California regulations provide that 1210 and
1220 banks must make deposited checks
drawn on nonlocal in-state thrifts (defined as
savings and loan associations, savings banks,
and credit unions) available by the fifth busi
ness day after deposit. In addition, California
law provides that all other depositary banks
must make deposited checks drawn on a non
local in-state commercial bank or foreign bank
branch available by the fifth business day after
1 The California regulation uses the term “paying bank”
when describing the institution on which these checks are
drawn, but does not define “paying bank” or “bank.” Reg
ulation CC’s definitions o f “paying bank” and “bank” in
clude savings institutions and credit unions as w ell as com
mercial banks and branches o f foreign banks. However,
because the California regulation makes separate provisions
for checks drawn on savings institutions and credit unions,
the Board concludes that the term “paying bank,” as used
in the California regulation, includes only commercial
banks and foreign bank branches.
1 74
Regulation CC
deposit and checks drawn on nonlocal in-state
thrifts available by the sixth business day after
deposit. To the extent that these schedules
provide for shorter holds than Regulation CC
and its appendix B-l, the state schedules su
persede the federal schedules.2 For example,
the California four-day schedule that applies
to checks drawn on in-state nonlocal commer
cial banks or foreign bank branches and de
posited in a 1210 or 1220 bank would be
shorter than and would supersede the federal
schedules.
The California regulations do not specify
whether the state schedules apply to deposits
of checks at nonproprietary ATMs. Under the
temporary schedules in Regulation CC, depos
its at nonproprietary ATMs must be made
available for withdrawal by the seventh busi
ness day following deposit. To the extent that
the California schedules provide for shorter
availability for deposits at nonproprietary
ATMs, they would supersede the temporary
schedule in Regulation CC for deposits at
nonproprietary ATMs specified in section
229.11(d).
Permanent schedule. Regulation CC provides
that, as of September 1, 1990, nonlocal checks
must be made available for withdrawal by the
fifth business day after the banking day of de
posit. Under the permanent schedule in the
California regulations, a depositary bank with
a four-digit routing symbol of 1210 or of
1220 that receives for deposit a check drawn
on a nonlocal, in-state commercial bank or
foreign bank branch must make the funds
available for withdrawal by the fourth busi
ness day after the day of deposit. These state
schedules provide for shorter hold periods
than and thus supersede the federal schedules.
Second-day availability. Section 867 of the
California Financial Code requires depository
institutions to make funds deposited by cash
ier’s check, teller’s check, certified check, or
depository check available for withdrawal on
2 Appendix B -l o f Regulation CC provides that the fed
eral schedules will be the same as the California schedules
(five days) in the following cases: a depositary bank bear
ing a 1210 routing number receiving for-deposit checks
bearing a 3220 or a 3223 routing number, and a depositary
bank bearing a 1220 routing number receiving for-deposit
checks bearing a 3210 routing number. In the cases where
federal and state law are the same, the state law is not
preempted by, nor does it supersede, the federal law.
Appendix F
Regulation CC
the second business day following deposit, if
certain conditions are met. The Regulation CC
next-day availability requirement for cashier’s
checks and teller’s checks applies only to
those checks issued to a customer of the bank
or acquired from the bank for remittance pur
poses. To the extent that the state second-day
availability requirement applies to cashier’s
and teller’s checks issued to a noncustomer of
the bank for other than remittance purposes,
the state two-day requirement supersedes the
federal local and nonlocal schedules.
Availability at start o f day. The California
regulations do not specify when during the
day funds must be made available for with
drawal. Section 229.19(b) of Regulation CC
provides that funds must be made available at
the start of the business day. In those cases
where federal and state law provide for holds
for the same number of days, to the extent
that the California regulations allow funds to
be made available later in the day than does
Regulation CC, the federal law would preempt
state law.
Exceptions to the availability schedules. Under
the state preemption standards of Regulation
CC (see section 229.20(c) and accompanying
commentary), for deposits subject to the state
availability schedules, a state exception may
be used to extend the state availability sched
ule up to the federal availability schedule.
Once the deposit is held up to the federal
availability schedule limit under a state excep
tion, the depositary bank may further extend
the hold under any federal exception that can
be applied to the deposit. If no state excep
tions exist, then no exception holds may be
placed on deposits covered by state schedules.
Thus, to the extent that California law pro
vides for exceptions to the California sched
ules that supersede Regulation CC, those ex
ceptions may be applied in order to extend the
state availability schedules up to the federal
availability schedules or such later time as is
permitted by a federal exception.
ing any deposit account. The law also requires
that preprinted deposit slips and ATM deposit
envelopes contain a conspicuous summary of
the general policy. Finally, the law requires
depository institutions to provide specific no
tice of the time the customer may withdraw
funds deposited by check or similar instru
ment into a deposit account if the funds are
not available for immediate withdrawal.
Section 229.20(c)(2) of Regulation CC pro
vides that inconsistency may exist when a
state law provides for disclosures or notices
concerning funds availability relating to ac
counts. California Financial Code section
866.2 requires disclosures that differ from
those required by Regulation CC and, there
fore, is preempted to the extent that it applies
to “accounts” as defined in Regulation CC.
The state law continues to apply to savings
accounts and other accounts not governed by
Regulation CC disclosure requirements.
Savings Institutions
Coverage
The California Department of Savings and
Loan regulations, which apply to California
savings and loan associations and California
savings banks, provide that a depositary bank
shall make funds deposited into a transaction
or non-transaction account available for with
drawal as provided in Regulation CC. The
funds-availability schedules in Regulation CC
apply only to “accounts” as defined in Regu
lation CC, which generally consist of transac
tion accounts. The California funds-availabil
ity law and regulations apply to accounts as
defined by Regulation CC as well as savings
accounts as defined in the Board’s Regulation
D (12 CFR 204.2(d)). (Note, however, that
under section 229.19(e) of Regulation CC,
“Holds on other funds,” the federal availabil
ity schedules may apply to savings, time, and
other accounts not defined as “ accounts”
under
Regulation
CC
in
certain
circumstances.)
Disclosures
California law (Cal. Fin. Code § 866.2) re
quires depository institutions to provide writ
ten disclosures of their general availability
policies to potential customers prior to open
Availability Schedules
Second-day availability. Section 867 of the
California Financial Code requires depository
institutions to make funds deposited by cash175
Appendix F
Regulation CC
ier’s check, teller’s check, certified check, or
depository check available for withdrawal on
the second business day following deposit, if
certain conditions are met. The Regulation CC
next-day availability requirement for cashier’s
checks and teller’s checks applies only to
those checks issued to a customer of the bank
or acquired from the bank for remittance pur
poses. To the extent that the state second-day
availability requirement applies to cashier’s
and teller’s checks issued to a noncustomer of
the bank for other than remittance purposes,
the state two-day requirement supersedes the
federal local and nonlocal schedules.
eral law, disclosures in accordance with Regu
lation CC will be deemed to comply with the
state-law disclosure requirements. To the ex
tent that the Department of Savings and Loan
regulations permit reliance on Regulation CC
disclosures for transaction accounts and to the
extent the state regulations survive the pre
emption of California Financial Code section
866.2, they are not preempted by, nor do they
supersede, the federal law. The state law con
tinues to apply to savings accounts and other
non-transaction accounts not governed by
Regulation CC disclosure requirements.
Temporary and permanent schedules. Other
than the provisions of section 867 discussed
above, California law incorporates the Regula
tion CC availability requirements with respect
to deposits to accounts covered by Regulation
CC. Because the state requirements are con
sistent with the federal requirements, the Cali
fornia regulation is not preempted by, nor
does it supersede, the federal law.
Credit Unions and Industrial Loan
Companies
Each credit union and federally insured indus
trial loan company that maintains an office in
California for the acceptance of deposits must
make funds deposited by check available for
withdrawal in accordance with the following
table:
A v a ila b ility
Disclosures
California law (Cal. Fin. Code § 866.2) re
quires depository institutions to provide writ
ten disclosures of their general availability
policies to potential customers prior to open
ing any deposit account. The law also requires
that preprinted deposit slips and ATM deposit
envelopes contain a conspicuous summary of
the general policy. Finally, the law requires
depository institutions to provide specific no
tice of the time the customer may withdraw
funds deposited by check or similar instru
ment into a deposit account if the funds are
not available for immediate withdrawal. Sec
tion 229.20(c)(2) of Regulation CC provides
that inconsistency may exist when a state law
provides for disclosures or notices concerning
funds availability relating to accounts. To the
extent that California Financial Code section
866.2 requires disclosures that differ from
those required by Regulation CC and apply to
“accounts” as defined in Regulation CC (gen
erally, transaction accounts), the California
law is preempted by Regulation CC.
The Department of Savings and Loan regu
lations provide that for those non-transaction
accounts covered by state law but not by fed176
$100 or less
checks; U.S.
Treasury
checks; state/
local
government
checks
On-us, cashier’s,
certified, teller’s
depository
checks
In-state checks
Out-of-state
checks
C r e d it U n io n
I n d u s tr ia l
Loan C om pany
1st day
1st day
2nd day
6th day
2nd day
6th day
10th day
12th day
Note. These time periods are stated in terms o f availa
bility for withdrawal not later than the Xth business day
following the banking day o f deposit to facilitate compari
son with Regulation CC. State regulations are stated in
terms o f availability at the start o f the business day subse
quent to the number o f days specified in the regulation.
Coverage
The California law and regulations govern the
availability of funds to “demand deposits, ne
gotiable order of withdrawal draft accounts,
savings deposits subject to automatic transfers,
share draft accounts, and all savings deposits
and share accounts, other than time deposits”
Regulation CC
(California Financial Code § 886(b)). The fed
eral preemption of state funds-availability
laws only applies to “accounts” subject to
Regulation CC, which generally includes
transaction accounts. Thus, the California
funds-availability regulations continue to ap
ply to deposits in savings and other accounts
(such as accounts in which the account holder
is another bank) that are not “ accounts”
under Regulation CC. (Note, however, that
under section 229.19(e) of Regulation CC,
“Holds on Other Funds,” the federal availa
bility schedules may apply to savings, time,
and other accounts not defined as “accounts”
under Regulation CC in certain circumstances.
The California law applies to any “item”
(California Financial Code § 866.5 and Cali
fornia Commercial Code § 4213(4)(a)). The
California Commercial Code defines “item”
to mean “any instrument for the payment of
money even though it is not negotiable . . . ”
(Cal. Com. Code § 4104(g)). This term is
broader in scope than the definition of
“check” in the act and Regulation CC. The
commissioner’s regulations, however, define
the term “item” to include checks, negotiable
orders of withdrawal, share drafts, warrants,
and money orders. As limited by the state reg
ulations, the state law applies only to instru
ments that are also “checks” as defined in
section 229.2(k) of Regulation CC.
Availability Schedules
Temporary schedule. The California regula
tions provide that in-state nonlocal checks
must be made available for withdrawal not
later than the sixth business day following de
posit. This time period is shorter than the sev
enth-business-day availability required for
nonlocal checks under section 229.11(c) of
Regulation CC, although it is not shorter than
the schedules for nonlocal checks set forth in
section 229.11(c)(2) and appendix B-l of
Regulation CC. Thus, the state schedules for
in-state nonlocal checks supersede the federal
schedule to the extent that they apply to an
item payable by a California institution that is
defined as a nonlocal check under Regulation
CC, and is not subject to reduced schedules
under section 229.11(c)(2) and appendix B-l.
Under the California regulations, credit un
ions and industrial loan companies must pro
Appendix F
vide next-day availability to first-indorsed
items issued by any federally insured institu
tion. This regulatory requirement, however,
has been superseded by section 867 of the
California Financial Code, which requires de
pository institutions to make funds deposited
by cashier’s check, teller’s check, certified
checks, or depository check available for
withdrawal on the second business day fol
lowing deposit, if certain conditions are met.
This requirement became effective January 1,
1988.
The Regulation CC next-day-availability re
quirement for cashier’s checks and teller’s
checks applies only to those checks issued for
remittance purposes. To the extent that the
state second-business-day-availability require
ment applies to cashier’s and teller’s checks
issued for other than remittance purposes, the
state two-day requirement supersedes the fed
eral local and nonlocal schedules.
The California regulations do not specify
whether they apply to deposits of checks at
nonproprietary ATMs. Under the temporary
schedule in Regulation CC, deposits at non
proprietary ATMs must be made available for
withdrawal at the start of the seventh business
day after deposit. To the extent that the Cali
fornia schedules provide for shorter availabil
ity for deposits at nonproprietary ATMs, they
would supersede the temporary schedule in
Regulation CC for deposits at nonproprietary
ATMs specified in section 229.11(d).
Permanent schedule. Under the California reg
ulations, credit unions and industrial loan
companies must provide next-day availability
to first-indorsed items issued by any federally
insured institution. This regulatory require
ment, however, has been superseded by sec
tion 867 of the California Financial Code,
which requires depository institutions to make
funds deposited by cashier’s check, teller’s
check, certified check, or depository check
available for withdrawal on the second busi
ness day following deposit, if certain condi
tions are met. This requirement became effec
tive January 1, 1988.
The Regulation CC next-day-availability re
quirement for cashier’s and teller’s checks ap
plies only to those checks issued for remit
tance purposes. To the extent that the state
second-business-day-availability requirement
177
Appendix F
applies to cashier’s and teller’s checks issued
for other than remittance purposes, the state
two-day requirement supersedes the federal lo
cal and nonlocal schedules.
Next-day availability. Credit unions and indus
trial loan companies in California are required
to give next-day availability to items drawn
by the state of California or any of its depart
ments, agencies, or political subdivisions. Cal
ifornia law supersedes the federal law in that
the state law does not condition next-day
availability on receipt at a staffed teller station
or use of a special deposit slip.
California credit unions and industrial loan
companies must provide second-business-day
availability to checks drawn on the depositary
bank. Regulation CC requires next-day availa
bility for checks deposited in a branch of the
depositary bank and drawn on the same or
another branch of the same bank if both
branches are located in the same state or the
same check-processing region. Thus, gener
ally, the Regulation CC rule for availability of
on-us checks preempts the California regula
tions. To the extent, however, that an on-us
check is (1) drawn on an out-of-state branch
of the depositary bank that is not in the same
check-processing region as the branch in
which it was deposited or (2) deposited at an
off-premises ATM or another facility of the
depositary bank that is not considered a
branch under federal law, the state regulation
supersedes the Regulation CC availability
requirements.
Exceptions to the availability schedules. Cali
fornia law provides exceptions to the state
availability schedules for large deposits, new
accounts, repeated overdrafters, doubtful col
lectibility, foreign items, and emergency con
ditions. In all cases where the federal availa
bility schedule preempts the state schedule,
only the federal exceptions will apply. For de
posits that are covered by the state availability
schedule (e.g., in-state nonlocal checks under
the temporary schedule; cashier’s or teller’s
checks that are not deposited with a special
deposit slip or at a staff teller station), the
state exceptions may be used to extend the
state availability schedule up to the federal
availability schedule. Once the deposit is held
up to the federal availability limit under a
178
Regulation CC
state exception, the depositary bank may fur
ther extend the hold under any federal excep
tion that can be applied to the deposit. Any
time a depositary bank invokes an exception
to extend a hold beyond the time periods oth
erwise permitted by law, it must give notice
of the extended hold to its customer in accor
dance with section 229.13(g) of Regulation
CC.
Business day/banking day. The definitions of
“business day” and “banking day” in the
California regulations are preempted by the
Regulation CC definition of those terms. Thus,
for determining the permissible hold under the
California schedules that supersede the Regu
lation CC schedule, deposits are considered
made on the specified number of “business
days” following the “ banking day” of
deposit.
Disclosures
California law (Cal. Fin. Code § 866.2) re
quires depository institutions to provide writ
ten disclosures of their general availability
policies to potential customers prior to open
ing any deposit account. The law also requires
that preprinted deposit slips and ATM deposit
envelopes contain a conspicuous summary of
the general policy. Finally, the law requires a
depository institution to provide specific notiqe of the time the customer may withdraw
funds deposited by check or similar instru
ment into a deposit account if the funds are
not available for immediate withdrawal.
Section 229.20(c)(2) of Regulation CC pro
vides that inconsistency may exist when a
state law provides for disclosures or notices
concerning funds availability relating to ac
counts. California Financial Code section
866.2 requires disclosures that differ from
those required by Regulation CC, and there
fore is preempted to the extent that it applies
to “accounts” as defined in Regulation CC.
The state law continues to apply to savings
accounts not governed by Regulation CC dis
closure requirements.
Connecticut
Background
The Board has been requested, in accordance
Regulation CC
Appendix F
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe
dited Funds Availability Act (“the act” ) and
subpart B (and in connection therewith, sub
part A) of Regulation CC, preempt provisions
of Connecticut law relating to the availability
of funds. This preemption determination speci
fies those provisions of the Connecticut fundsavailability law that supersede the act and
Regulation CC. (See also the Board’s preemp
tion determination regarding the Uniform
Commercial Code, section 4-213(5), pertain
ing to availability of cash deposits (page
173).)
In 1987, Connecticut amended its statute
governing funds availability (Conn. Gen. Stat.
§ 36-9v), which requires Connecticut deposi
tory institutions to make funds deposited in a
checking, time, interest, or savings account
available for withdrawal within specified
periods.
Generally, the Connecticut statute, as
amended, provides that items deposited in a
checking, time, interest, or savings account at
a depository institution must be available for
withdrawal in accordance with the following
table:
A v a ila b ility
On-us checks
2nd day
In-state checks
4th day
Out-of-state checks
6th day
Exceptions to the schedules are provided for
items received for deposit for the purpose of
opening an account and for items that the de
positary bank has reason to believe will not
clear. The Connecticut statute also requires
availability-policy disclosures to depositors in
the form of written notices and notices posted
conspicuously at each branch.
Coverage
The Connecticut statute governs the availabil
ity of funds deposited in savings and time ac
counts, as well as “accounts” as defined in
section 229.2(a) of Regulation CC. The fed
eral preemption of state funds-availability re
quirements only applies to “accounts” subject
to Regulation CC, which generally consist of
transaction accounts. Regulation CC does not
affect the Connecticut statute to the extent that
the state law applies to deposits in savings
and other accounts (including transaction ac
counts where the account holder is a bank,
foreign bank, or the U.S. Treasury) that are
not “accounts” under Regulation CC. (Note,
however, that under section 229.19(e) of Reg
ulation CC, “Holds on Other Funds,” the fed
eral availability schedules may apply to sav
ings, time, and other accounts not defined as
“accounts” under Regulation CC, in certain
circumstances.)
The Connecticut statute applies to “items”
deposited in accounts. This term encompasses
instruments that are not defined as “checks”
in Regulation CC (§ 229.2(k)), such as nonnegotiable instruments, and are therefore not
subject to Regulation CC’s provisions gov
erning funds availability. Those items that are
subject to Connecticut law but are not subject
to Regulation CC will continue to be covered
by the state availability schedules and
exceptions.
Availability Schedules
Temporary schedule. Connecticut law provides
that certain checks that are nonlocal under
Regulation CC must be available in a shorter
time (sixth business day after deposit for
checks payable by depository institutions not
located in Connecticut) than under the federal
regulation (seventh business day after deposit
under the temporary schedule for nonlocal
checks). Accordingly, the Connecticut law su
persedes Regulation CC with respect to nonlo
cal checks (other than checks covered by ap
pendix B-l) deposited in “accounts” until the
federal permanent availability schedules take
effect on September 1, 1990.
The Connecticut statute does not specify
whether it applies to deposits of checks at
nonproprietary ATMs. Under the temporary
schedule in Regulation CC, deposits at non
proprietary ATMs must be made available for
withdrawal at the start of the seventh business
day after deposit. To the extent that the Con
necticut schedules provide for shorter availa
bility for deposits at nonproprietary ATMs,
they would supersede the temporary schedule
in Regulation CC for deposits at nonproprie
tary ATMs specified in section 229.11(d).
179
Appendix F
Exceptions to the availability schedule. The
Connecticut law provides exceptions for items
received for deposit for the purpose of open
ing new accounts and for items that the de
positary bank has reason to believe will not
clear. In all cases where the federal availabil
ity schedule preempts the state schedule, only
the federal exceptions will apply. For deposits
that are. covered by the state availability
schedule (e.g., nonlocal out-of-state checks
under the temporary schedule), the state ex
ceptions may be used to extend the state
availability schedule (of six business days) to
meet the federal availability schedule (of
seven business days). Once the deposit is held
up to the federal availability schedule limit
under a state exception, the depositary bank
may further extend the hold under any federal
exception that can be applied to the deposit.
Any time a depositary bank invokes an excep
tion to extend a hold beyond the time periods
otherwise permitted by law, it must give no
tice of the extended hold to its customer, in
accordance with section 229.13(g) of Regula
tion CC.
Regulation CC
dited Funds Availability Act and subpart B,
and, in connection therewith, subpart A, of
Regulation CC, preempt provisions of Illinois
law relating to the availability of funds. Sec
tion 4-213(5) of the Uniform Commercial
Code as adopted in Illinois (Illinois Revised
Statutes chapter 26, paragraph 4-213(5), en
acted July 26, 1988) provides that—
Time periods after which deposits must be avail
able for withdrawal shall be determined by the pro
visions of the federal Expedited Funds Availability
Act (Title VI o f the Competitive Equality Banking
Act o f 1987) and the regulations promulgated by
the Federal Reserve Board for the implementation
of that Act.
Section 4-213(5) of the Illinois law does not
supersede Regulation CC; and, because this
provision of Illinois law does not permit funds
to be made available for withdrawal in a
longer period of time than required under the
act and regulation, it is not preempted by
Regulation CC.
Maine
Background
Disclosures
The Connecticut statute (Conn. Gen. Stat.
§ 36-9v(b)) requires written notice to deposi
tors of an institution’s check-hold policy and
requires a notice of the policy to be posted in
each branch.
Regulation CC preempts state disclosure re
quirements concerning funds availability that
relate to “accounts” that are inconsistent with
the federal requirements. The state require
ments are different from, and therefore incon
sistent with, the federal disclosure rules
(§ 229.20(c)(2)). Thus, the Connecticut statute
is preempted by Regulation CC to the extent
that these disclosure provisions apply to “ac
counts” as defined by Regulation CC. The
Connecticut disclosure rules would continue to
apply to accounts, such as savings and time
accounts, not governed by the Regulation CC
disclosure requirements.
Illinois
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe180
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe
dited Funds Availability Act (“the act” ) and
subpart B (and in connection therewith, sub
part A) of Regulation CC, preempt the provi
sions of Maine law concerning the availability
of funds. This preemption determination ad
dresses the relation of the act and Regulation
CC to the Maine funds-availability law. (See
also the Board’s preemption determination re
garding the Uniform Commercial Code, sec
tion 4-213(5), pertaining to availability of
cash deposits (page 173).)
In 1985, Maine adopted a statute governing
funds availability (title 9-B MRS A § 241(5)),
which requires Maine financial institutions to
make funds deposited in a transaction account,
savings account, or time account available for
withdrawal within a reasonable period. The
Maine statute gives the superintendent of
banking for the state of Maine the authority to
promulgate rules setting forth time limitations
and disclosure requirements governing funds
availability.
The superintendent of banking issued regu
Regulation CC
lations implementing the Maine funds-availability statute, effective July 1, 1987 (Regula
tion 18(IV)), and adopted amendments to this
regulation, effective September 1, 1988. Under
the revised regulation, funds deposited to any
deposit account in a Maine financial institu
tion must be made available for withdrawal in
accordance with the act and Regulation CC
(Regulation 18-IV(A)(1)). The state regulation
provides that an institution’s funds-availability
policies for accounts subject to Regulation CC
be disclosed in a manner consistent with the
Regulation CC requirements. Funds-availabil
ity policies for accounts not subject to Regu
lation CC must be disclosed in accordance
with the state regulation (Regulation 18IV(A)(2)).
Coverage
The Maine law and regulation govern the
availability of funds to any deposit account, as
defined in the Board’s Regulation D (12 CFR
204.2(a)). This coverage is broader than the
“accounts” covered in Regulation CC. The
Maine law continues to apply to all deposit
accounts, including those that are not accounts
under Regulation CC. (Note, however, that
under section 229.19(e) of Regulation CC,
“Holds on Other Funds,” the federal availa
bility schedules may apply to savings, time,
and other accounts not defined as “accounts”
under
Regulation
CC,
in
certain
circumstances.
Availability Schedules and Disclosures
The Maine regulation incorporates the Regula
tion CC availability and disclosure require
ments with respect to deposits to accounts
covered by Regulation CC. Because the state
requirements are consistent with the federal
requirements, the Maine regulation is not pre
empted by, nor does it supersede, the federal
law.
Appendix F
subpart B (and in connection therewith, sub
part A) of Regulation CC, preempt provisions
of Massachusetts law relating to the availabil
ity of funds. This preemption determination
addresses the relationship of the act and Regu
lation CC to the Massachusetts funds-availa
bility law. (See also the Board’s preemption
determination regarding the Uniform Commer
cial Code, section 4-213(5), pertaining to
availability of cash deposits (page 173).)
In 1988, Massachusetts amended its statute
governing funds availability (Mass. Gen. L.
ch. 167D, § 35), to require Massachusetts
banking institutions to make funds available
for withdrawal and disclose their availability
policies in accordance with the act and Regu
lation CC. The Massachusetts law, however,
provides that “local originating depository in
stitution” is to be defined as any originating
depository institution located in the
commonwealth.
Coverage
The Massachusetts statute governs the availa
bility of funds deposited in “any demand de
posit, negotiable order of withdrawal account,
savings deposit, share account or other asset
account.” Regulation CC applies only to “ac
counts” as defined in section 229.2(a). Regu
lation CC does not affect the Massachusetts
statute to the extent that the state law applies
to deposits in savings and other accounts (in
cluding transaction accounts where the ac
count holder is a bank, foreign bank, or the
U.S. Treasury) that are not “accounts” under
Regulation CC. (Note, however, that under
section 229.19(e) of Regulation CC, “Holds
on Other Funds,” the federal availability
schedules may apply to savings, time, and
other accounts not defined as “ accounts”
under
Regulation
CC,
in
certain
circumstances.
Availability Schedules
Massachusetts
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe
dited Funds Availability Act (“the act” ) and
The Massachusetts definition of “ local
originating depository institution” (local pay
ing bank in Regulation CC terminology) re
quires that in-state checks that are nonlocal
checks under Regulation CC be made avail
able in accordance with the Regulation CC lo
cal schedule. The Massachusetts law super181
Regulation CC
Appendix F
sedes Regulation CC under the temporary and
permanent schedule with respect to nonlocal
checks payable by banks located in Massachu
setts and deposited into “accounts.” Regula
tion CC preempts the Massachusetts law,
however, to the extent the state law does not
define banks located outside of Massachusetts,
but in the same check-processing region as the
paying bank, as “local originating depository
institutions.”
Disclosures
The Massachusetts regulation incorporates the
Regulation CC disclosure requirements with
respect to both accounts covered by Regula
tion CC and savings and other accounts not
governed by the federal regulation. Because
the state requirements are consistent with the
federal requirements, the Massachusetts regu
lation is not preempted by, nor does it super
sede, the federal law. The Massachusetts dis
closure rules would continue to apply to
accounts not governed by the Regulation CC
disclosure requirements.
chartered commercial bank, savings bank, or
savings and loan association) to provide writ
ten disclosure to all holders of and applicants
for deposit accounts which describes the insti
tution’s funds-availability policy. Institutions
must also disclose to their customers any sig
nificant changes to their availability policy.
Regulation CC preempts state disclosure re
quirements concerning funds availability that
relate to “accounts” that are inconsistent with
the federal requirements. The state require
ments are different from, and therefore incon
sistent with, the federal disclosure rules
(§ 229.20(c)(2)). Thus, the New Jersey statute
(N.J.A.C. §§ 3:1-15.1 et seq.) is preempted by
Regulation CC to the extent that these disclo
sure provisions apply to “accounts” as de
fined by Regulation CC. The New Jersey dis
closure rules would continue to apply to other
“deposit accounts,” as defined by New Jersey
law, including money market accounts and
savings accounts established by a natural per
son for personal or family purposes, which are
not governed by the Regulation CC disclosure
requirements.
New Jersey
New Mexico
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe
dited Funds Availability Act (“the act” ) and
subpart B (and in connection therewith, sub
part A) of Regulation CC preempt the provi
sions of New Jersey law concerning disclosure
of a bank’s funds-availability policy. (See also
the Board’s preemption determination regard
ing the Uniform Commercial Code, section
4-213(5), pertaining to availability of cash de
posits (page 173).)
New Jersey does not have a law or regula
tion establishing the maximum time periods
within which funds deposited by check or
electronic payment must be made available for
withdrawal. New Jersey does, however, have
regulations concerning the disclosure of a
banking institution’s availability policy
(N.J.A.C. §§3:1-15.1 et seq.).
Disclosures
New Jersey law requires every banking insti
tution (defined as any state or federally
182
Background
The Board has been requested in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe
dited Funds Availability Act (“the act”) and
subpart B (and in connection therewith, sub
part A) of Regulation CC, preempt provisions
of New Mexico law relating to the availability
of funds. This preemption determination spec
ifies those provisions in the New Mexico
funds-availability law that supersede the act
and Regulation CC. (See also the Board’s pre
emption determination regarding the Uniform
Commercial Code, section 4-213(5), pertain
ing to availability of cash deposits (page
173).)
In 1987, New Mexico adopted a statute
governing funds availability (N.M. Stat. Ann.
§ 58-3-4 (1978, Supp. 1987)), which requires
New Mexico financial institutions to make
funds deposited into retail accounts available
for withdrawal after a reasonable period of
time. Section 4A of the New Mexico statute
establishes the time frames within which fi-
Appendix F
Regulation CC
nancial institutions must make funds deposited
by checks or share drafts available for with
drawal if the checks or share drafts are drawn
and payable on demand at other financial in
stitutions located in the continental United
States. Section 4B of the statute defines terms
and specifies availability for checks deposited
in branch offices of certain financial institu
tions, section 4C specifies exceptions to the
availability schedules, and section 4D specifies
damages recoverable for a violation of this
statute.
Generally, the New Mexico law provides
that checks and share drafts, other than on-us
checks, drawn and payable on demand at a
financial institution and deposited into an indi
vidual or household account must be made
available for withdrawal at the beginning of
the third business day after deposit for checks
or share drafts drawn and payable on demand
at financial institutions located within the
same municipality as the depositary bank, and
for checks or share drafts deposited in a
branch office of a financial institution if the
main office of that financial institution is lo
cated in the same municipality as the deposi
tary bank. Other in-state checks or share
drafts must be made available at the opening
of the fifth business day after deposit. Checks
or share drafts drawn and payable on demand
at any other financial institution located within
continental United States must be made avail
able at the beginning of the seventh business
day after deposit.
Exceptions to the schedules are provided
for documentary drafts, accounts which have
been open less than 60 days, checks or share
drafts with two-party indorsements, checks or
share drafts in an amount greater than the av
erage balance in the account over the last 12
months or the average balance since the ac
count was opened, whichever is less, and
checks or share drafts deposited in an account
on which six or more nonsufficient fund
checks or share drafts were presented in the
prior six-month period.
as that term is defined in Regulation CC that
is not held by an individual or household.
Regulation CC does not affect the New Mex
ico statute to the extent that the state law ap
plies to time, savings, and other deposits that
are not defined as “accounts” under Regula
tion CC. (Note, however, that under section
229.19(e) of Regulation CC, “Holds on Other
Funds,” the federal availability schedules may
apply to savings, time, and other accounts not
defined as “accounts” under Regulation CC,
in certain circumstances.)
The New Mexico statute is limited to
checks and share drafts payable by financial
institutions. The term “financial institution”
corresponds generally to the term “bank” in
Regulation CC. The terms “ check” and
“ share draft” are narrower than the term
“check” in Regulation CC because they do
not appear to apply to Treasury checks,
checks payable by state or local governments
(i.e., warrants), checks payable by Federal Re
serve Banks or Federal Home Loan Banks, or
U.S. Postal Service money orders. No portion
of the New Mexico statute supersedes Regula
tion CC with respect to these instruments.
Availability Schedules
Temporary schedules. The New Mexico stat
ute requires checks and share drafts drawn
and payable on demand at an office of a fi
nancial institution located in the same munici
pality as the depositary bank and checks and
share drafts drawn and payable on demand at
offices of financial institutions located in New
Mexico whose main office is located in the
same municipality as the depositary bank to
be made available at the opening of the third
business day after deposit. (N.M. Stat. Ann.
§ 58-3-4A(l)).' New Mexico is served by two
Federal Reserve check-processing regions,
and, therefore, while most checks and share
drafts subject to this schedule will be local
under Regulation CC, some checks and share
drafts covered by this schedule may be nonlo-1
Coverage
The New Mexico statute is limited to retail
accounts and does not apply to business ac
counts. No portion of the New Mexico statute
supersedes Regulation CC for any “account”
1 It is not clear from the N ew M exico statute whether
days stated in the schedule include the day o f deposit. For
the purposes o f this interpretation, it is assumed that the
stated days do include the day o f deposit. References to
days included in the N ew M exico schedules have also been
revised to reflect Regulation CC terminology.
183
Appendix F
cal under Regulation CC. Under the tempo
rary schedule in Regulation CC, the proceeds
of local checks must be available for with
drawal at the start of the third business day
after deposit, but Regulation CC permits a
time-period adjustment for withdrawals by
cash and similar means that permits a deposi
tary bank to delay the time it must make
funds available for deposits of local checks
cleared outside a check-clearinghouse arrange
ment. Under the temporary schedule in Regu
lation CC, the proceeds of nonlocal checks
must be made available for withdrawal at the
opening of the seventh business day following
deposit. No time-period adjustment is pro
vided. New Mexico law supersedes this timeperiod adjustment for local checks under the
temporary schedule and for nonlocal checks
coming within the portion of the New Mexico
schedule calling for availability on the third
banking day after deposit.
The New Mexico statute calls for the pro
ceeds of checks and share drafts to be made
available at the opening of the fifth day after
deposit for checks and share drafts drawn and
payable on demand at other offices of finan
cial institutions located in New Mexico (N.M.
Stat. Ann. § 58-3-4A(2)). To the extent that
this schedule applies to nonlocal checks as de
fined by Regulation CC, it supersedes the
temporary schedules in Regulation CC. The
New Mexico statute also provides for availa
bility of checks and share drafts drawn and
payable on demand at financial institutions lo
cated in the continental United States, exclud
ing Alaska, Hawaii, Puerto Rico, and the U.S.
Virgin Islands, at the opening of the seventh
banking day after deposit (N.M. Stat. Ann.
§ 58-3-4A(3)). This schedule is the same as
Regulation CC with respect to nonlocal
checks.
The New Mexico statute does not specify
whether it applies to deposits of checks at
nonproprietary ATMs. Under the temporary
schedule in Regulation CC, deposits at non
proprietary ATMs must be made available for
withdrawal at the opening of the seventh busi
ness day after deposit. To the extent that the
New Mexico schedules described above pro
vide for shorter availability for deposits at
nonproprietary ATMs, they would supersede
the temporary schedule in Regulation CC for
184
Regulation CC
deposits at nonproprietary ATMs specified in
section 229.11(d).
Permanent schedules. Under the permanent
schedule in Regulation CC, the proceeds of
checks must be made available at the opening
of the second business day after deposit for
local checks and the fifth business day after
deposit for nonlocal checks. Both of these
schedules are subject to time-period adjust
ments for withdrawal by cash or similar
means. The New Mexico statute supersedes
the permanent schedules in Regulation CC for
nonlocal checks subject to the third-day-with
drawal requirement (N.M. Stat. Ann. § 58-34A( 1)) and the time-period adjustment for
nonlocal checks subject to the fifth-day-withdrawal requirement (N.M. Stat. Ann. § 58-34A(2)) of the New Mexico statute.
Exceptions to availability schedules. The New
Mexico statute provides for exceptions to the
state schedules for (1) documentary drafts; (2)
accounts opened less than 60 days; (3) checks
or share drafts with two-party indorsements;
(4) a check or share draft in a face amount
greater than the average balance of the deposi
tor’s account for the prior 12 months or the
average balance since the account was
opened, whichever is less; and (5) a check or
share draft deposited in an account on which
six or more insufficient-fund checks or share
drafts were presented for payment in the prior
six-month period.
The state exceptions will continue to apply
when the state schedules are not preempted by
Regulation CC, but holds may be placed
under the state schedules only up to the limits
permitted by the Regulation CC schedules.
Where the Regulation CC schedules are sub
ject to exceptions, holds placed on checks
under the state schedules that would also be
permissible under Regulation CC may be con
tinued up to the limit on holds under Regula
tion CC. Notice of holds as required by Regu
lation CC (§ 229.13(g)) must be given
whenever a hold is placed so that availability
is extended beyond the applicable state or fed
eral schedule.
Business day/banking day. Under New Mexico
law a bank is authorized to establish its own
banking days except that it must observe cer
tain holidays (N.M. Stat. Ann. §§ 58-5-6 and
Regulation CC
58-5-7). This definition is preempted by the
Regulation CC definitions of “business day”
and “banking day.” Thus, for determining the
permissible hold under the New Mexico
schedules that supersede the Regulation CC
schedule, deposits are considered made on the
specified number of “business days” follow
ing the “banking day” of deposit.
Disclosures
The New Mexico law does not contain fundsavailability disclosure requirements applicable
to accounts subject to Regulation CC.
New York
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe
dited Funds Availability Act (“the act” ) and
subpart B (and in connection therewith, sub
part A) of Regulation CC, preempt the provi
sions of New York law concerning the availa
bility of funds. This preemption determination
addresses the relation of the act and Regula
tion CC to the New York funds-availability
law. (See also the Board’s preemption deter
m ination regarding the Uniform Commercial
Code, section 4-213(5), pertaining to availabil
ity of cash deposits (page 173).)
In 1983, the New York State Banking De
partment, pursuant to section 14-d of the New
York Banking Law, issued regulations requir
ing that funds deposited in an account be
made available for withdrawal within specified
time periods, and provided certain exceptions
to those availability schedules. Part 34 of the
New York State Banking Department’s gen
eral regulations established time frames within
which commercial banks, trust companies, and
branches of foreign banks (“banks” ); and sav
ings banks, savings and loan associations, and
credit unions (“savings institutions” ) must
make funds deposited in customer accounts
available for withdrawal.
The Banking Department amended part 34,
effective September 1, 1988, generally to ex
clude accounts covered by Regulation CC
from the scope of the state regulation. Part
34.4(a)(2) and (b)(2) of the revised New York
Appendix F
rules, however, continue to apply to checks
deposited to accounts, as defined in Regula
tion CC. These provisions require that the
proceeds of nonlocal checks payable by a
New York institution be made available for
withdrawal not later than the start of the
fourth business day following deposit, if de
posited in a bank, or the fifth business day
following deposit, if deposited in a savings in
stitution. The revised regulation also provides
that, with respect to savings accounts and time
deposits, New York institutions could elect to
comply with either the state or federal availa
bility and disclosure requirements.
This preemption determination supersedes
the determination issued by the Board on Au
gust 18, 1988 (53 Fed. Reg. 32357 (August
24, 1988)).
Coverage
The New York law and regulation govern the
availability of funds in savings accounts and
time deposits, as well as “accounts” as de
fined in section 229.2(a) of Regulation CC.
The New York law continues to apply to de
posits to savings accounts and time deposits
that are not accounts under Regulation CC.
(Note, however, that under section 229.19(e)
of Regulation CC, “Holds on Other Funds,”
the fed eral availab ility sch e d u les m ay apply to
savings, time, and other accounts not defined
as “accounts” under Regulation CC, in cer
tain circumstances.)
The New York law and regulation apply to
“items” deposited to accounts. Part 34.3(e)
defines “item” as “a check, negotiable order
of withdrawal or money order deposited into
an account.” The Board interprets the defini
tion of “item” in New York law to be consis
tent with the definition of “check” in Regula
tion CC (§ 229.2(k)).
Availability Schedules
The provisions of New York law governing
the availability of in-state nonlocal items pro
vide for a shorter hold than is provided under
Regulation CC, and supersede the federal
availability requirements. With the exception
of these provisions, the New York regulation
does not apply to deposits to accounts covered
by Regulation CC.
185
Appendix F
Temporary schedule. The time periods for the
availability of in-state nonlocal checks, con
tained in part 34.4(a)(2) and (b)(2), are shorter
than the seventh-business-day availability re
quired for nonlocal checks under section
229.11(c) of Regulation CC, although they are
not necessarily shorter than the schedules for
nonlocal checks set forth in section
229.11(c)(2) and appendix B-l of Regulation
CC. Thus, these state schedules supersede the
federal schedule to the extent that they apply
to an item payable by a New York bank or
savings institution that is defined as a nonlo
cal check under Regulation CC and the appli
cable state schedule is less than the applicable
schedule specified in section 229.11(c) and
appendix B-l.
Permanent schedule. The New York schedule
for banks supersedes the Regulation CC re
quirement in the permanent schedule, effective
September 1, 1990, that nonlocal checks be
made available for withdrawal by the start of
the fifth business day following deposit, to the
extent that the in-state checks are defined as
nonlocal under Regulation CC, and the Regu
lation CC schedule for nonlocal checks is not
shortened under section 229.12(c)(2) and ap
pendix B-2 of Regulation CC. In addition, the
New York schedule for savings institutions su
persedes the Regulation CC time-period ad
justment for withdrawal by cash or similar
means in the permanent schedule, to the ex
tent that the in-state checks are defined as
nonlocal under Regulation CC, and the Regu
lation CC schedule for nonlocal checks is not
shortened under section 229.12(c)(2) and ap
pendix B-2.
Exceptions to the availability schedules. New
York law provides exceptions to the state
availability schedules for large deposits, new
accounts, repeated overdrafters, doubtful col
lectibility, foreign items, and emergency con
ditions (part 34.4). The state exceptions apply
only with respect to deposits of in-state nonlo
cal checks that are subject to the state availa
bility schedule. For these deposits, the deposi
tary bank may invoke a state exception and
place a hold on the deposit up to the federal
availability-schedule limit for that type of de
posit. Once the federal availability-schedule
limit is reached, the depositary bank may fur186
Regulation CC
ther extend the hold under any of the federal
exceptions that apply to that deposit. Any
time a depositary bank invokes an exception
to extend a hold beyond the time periods oth
erwise permitted by law, it must give notice
of the extended hold to its customer in accor
dance with section 229.13(g) of Regulation
CC.
Disclosures
The revised New York regulation does not
contain funds-availability disclosure require
ments applicable to accounts subject to Regu
lation CC.
Rhode Island
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expe
dited Funds Availability Act (“the act” ) and
subpart B (and in connection therewith, sub
part A) of Regulation CC, supersede provi
sions of Rhode Island law relating to theavailability of funds. This preemption
determination specifies those provisions in the
Rhode Island funds-availability law that super
sede the act and Regulation CC. (See also the
Board’s preemption determination regarding
the Uniform Commercial Code, section 4213(5), pertaining to availability of cash de
posits (page 173).)
In 1986, Rhode Island adopted a statute
governing funds availability (R.I. Gen. Laws
tit. 6A, §§ 4-601 through 4-608), which re
quires Rhode Island depository institutions to
make checks deposited in a personal transac
tion account available for withdrawal within
certain specific periods. Commercial banks
and thrift institutions (mutual savings banks,
savings banks, savings and loan institutions,
and credit unions) must make funds available
for withdrawal in accordance with the follow
ing table:
Treasury checks,
Rhode Island gov
ernment checks,
first-indorsed
C o m m e r c ia l
B anks
T h rift
I n s titu tio n s
2nd
2nd
Appendix F
Regulation CC
Availability Schedules
ing the day of the deposit. This is the same
time period contained in Regulation CC for
local checks payable by a bank that is a mem
ber of the same local clearinghouse as the de
positary bank. (The Board views the definition
of “the same in-state clearing facility” as
having the same meaning as the term “the
same check clearinghouse association” in the
federal law’s provision that allows banks to
limit the customer’s ability to withdraw cash
on the third business day if the local check
being deposited is payable by a bank that is
not a member of the same local clearinghouse
as the depositary bank.) Since the Rhode Is
land law and the federal law both require the
funds to be made available no later than the
third business day, the state law is not pre
empted by the federal law.
The Rhode Island law also requires com
mercial banks and savings institutions to make
checks payable by a depository institution lo
cated in the First or Second Federal Reserve
District (outside of Rhode Island) available on
the seventh business day following deposit. To
the extent that this provision applies to checks
payable by institutions located outside the
Boston check processing region, it provides
for availability in the same time as required
for nonlocal checks under the temporary fed
eral schedule, and thus is not preempted by
the federal law.
The Rhode Island statute does not specify
whether it applies to deposits of checks at
nonproprietary ATMs. Under the temporary
schedule in Regulation CC, deposits at non
proprietary ATMs must be made available for
withdrawal at the opening of the seventh busi
ness day after deposit. To the extent that the
Rhode Island schedules provide for shorter
availability for deposits at nonproprietary
ATMs, they would supersede the temporary
schedule.
Temporary schedule. Rhode Island law re
quires availability for certain checks in the
same time as does Regulation CC. Thus, in
these instances, the federal law does not pre
empt the state law. Rhode Island law requires
commercial banks (but not thrift institutions)
to make checks payable by a depository insti
tution that uses the same in-state clearing fa
cility as the depositary bank available for
withdrawal on the third business day follow
Exceptions to the availability schedules. The
Rhode Island law contains exceptions for rea
son to doubt collectibility or ability of the de
positor to reimburse the depositary bank, for
new accounts, for large checks, and for for
eign checks. In all cases where the federa
availability schedule preempts the state sched
ule, only the federal exceptions will apply
For deposits that are covered by the state
availability schedule, the state exceptions maj
C o m m e r c ia l
B anks
T h rift
I n stitu tio n s
In-state, cashier’s
checks less than
$2,500
2nd
2nd
On-us checks
2nd
3rd
In-state clearinghouse
checks
3rd
4th
In-state nonclearing
house checks
5th
6th
1st or 2nd Federal
Reserve District
checks (out-ofstate)
7th
7th
Other checks
9th
10th
Note. These time periods are stated in terms o f availa
bility for withdrawal not later than the Xth business day
follow ing the banking day o f deposit to facilitate compari
son with Regulation CC. State regulations are stated in
terms o f availability at the start o f the business day subse
quent to the number o f days specified in the regulation.
The Rhode Island statute also provides re
strictions and exceptions to the schedules and
requires institutions to make certain disclo
sures to their customers.
Coverage
The Rhode Island statute governs the availa
bility of funds deposited in “personal transac
tion accounts,” a term not defined in the stat
ute. The federal law would continue to apply
to “accounts,” as defined in section 229.2(a),
that are not “personal transaction accounts.”
The Rhode Island statute applies to
“items,” defined as checks, negotiable orders
of withdrawal, or money orders. The Board
interprets the definition of “item” to be con
sistent with the definition of “check” in Reg
ulation CC (§ 229.2(k)).
18'
Regulation CC
Appendix F
be used to extend the state availability sched
ule to meet the federal availability schedule.
Once the deposit is held up to the federal
availability-schedule limit under a state excep
tion, the depositary bank may further extend
the hold under any federal exception that can
be applied to the deposit. Thus, if the state
and federal availability schedules are the same
for a particular deposit, both a state and a fed
eral exception must be applicable to that de
posit in order to extend the hold beyond the
schedule. Any time a depositary bank invokes
an exception to extend a hold beyond the time
periods otherwise permitted by law, it must
give notice of the extended hold to its cus
tomer, in accordance with section 229.13(g) of
Regulation CC.
Business day/banking day. The Rhode Island
statute defines “business day” as excluding
Saturday, Sunday, and legal holidays. This
definition is preempted by the Regulation CC
definitions of “business day” and “banking
day.” Thus, for determining the permissible
hold under the Rhode Island schedules that
supersede the Regulation CC schedule, depos
its are considered made on the specified num
ber of “business days” following the “bank
ing day” of deposit.
Disclosures
The Rhode Island statute requires written no
tice to depositors of an institution’s checkhold
policy and requires a notice on deposit slips.
Regulation CC preempts state disclosure re
quirements concerning funds availability that
relate to accounts that are inconsistent with
:he federal requirements. The state require
ments are different from, and therefore incon
sistent with, the federal rules (§ 229.20(c)(2)).
Thus, Regulation CC preempts the Rhode Isand disclosure requirements concerning funds
ivailability.
Wisconsin
Background
The Board has been requested, in accordance
vith section 229.20(d) of Regulation CC (12
ZFR 229), to determine whether the Expeiited Funds Availability Act (the act) and sub
mit B (and in connection therewith, subpart
\) of Regulation CC preempt the provisions
188
of Wisconsin law concerning availability of
funds. This preemption determination specifies
those provisions of the Wisconsin funds-availability law that are not preempted by the act
and Regulation CC. (See also the Board’s pre
emption determination regarding the Uniform
Commercial Code, section 4-213(5), pertain
ing to availability of cash deposits (page
173).)
Wisconsin Statutes sections 404.213(4m),
215.136, and 186.117 require Wisconsin
banks, savings and loan associations, and
credit unions, respectively, to make funds de
posited in accounts available for withdrawal
within specified time frames. Generally,
checks drawn on the U.S. Treasury, the state
of Wisconsin, or on a local government lo
cated in Wisconsin must be made available
for withdrawal by the second day following
deposit. (The law governing commercial banks
determines availability based on banking day;
the laws governing savings and loan associa
tions and credit unions determine availability
based on business days.) In-state and out-ofstate checks must be made available for with
drawal within five days and eight days follow
ing deposit, respectively. Exceptions are
provided for new accounts and reason to
doubt collectibility. In addition, Wisconsin
Statutes section 404.103 permits commercial
banks to vary these availability requirements
by agreement.
Coverage
Wisconsin law defines “account,” with re
spect to the rules governing commercial
banks, as “any account with a bank and in
cludes a checking, time, interest or savings ac
count”
(Wisconsin
Statutes
section
404.104(1 )(a)). The statutes relating to the
funds-availability requirements applicable to
savings and loan associations and credit un
ions do not define the term “account.” The
federal preemption of state funds-availability
requirements applies only to “accounts” sub
ject to Regulation CC, which generally consist
of transaction accounts. Regulation CC does
not affect the Wisconsin law to the extent that
the state law applies to deposits in savings,
time, and other accounts (including transaction
accounts where the account holder is a bank,
foreign bank, or the U.S. Treasury) that are
Regulation CC
not “accounts” under Regulation CC. (Note,
however, that under section 229.19(e) of Reg
ulation CC, “Holds on Other Funds,” the fed
eral availability schedules may apply to sav
ings, time, and other accounts not defined as
“accounts” under Regulation CC in certain
circumstances.)
The Wisconsin statute applies to “items”
deposited in accounts. This term encompasses
instruments that are not defined as “checks”
in Regulation CC (§ 229.2(k)), such as nonnegotiable instruments, and are therefore not
subject to Regulation CC’s provisions gov
erning funds availability. Those items that are
subject to Wisconsin law but are not subject
to Regulation CC will continue to be covered
by the state availability schedules and
exceptions.
Availability Schedules
Temporary schedule. The Wisconsin statute re
quires that in-state nonlocal checks be made
available for withdrawal not later than the
fifth day following deposit (Wisconsin Stat
utes §§ 404.213(4m)(b)(2); 215.136(2)(b);
186.117(2)(b)). This time period is shorter
than the seventh-business-day availability re
quired for nonlocal checks under section
229.11(c) of Regulation CC, although it is not
shorter than the schedules for nonlocal checks
set forth in section 229.11(c)(2) and appendix
B-l of Regulation CC. Thus, the state sched
ule for in-state nonlocal checks supersedes the
federal schedule to the extent that it applies to
an item payable by a Wisconsin bank that is
defined as a nonlocal check under Regulation
CC and is not subject to reduced schedules
under section 229.11(c)(2) and appendix B-l.
Permanent schedule. Under the federal perma
nent availability schedule, nonlocal checks
must be made available for withdrawal not
later than the fifth business day following de
posit. The fifth-day availability requirement
for in-state items in the Wisconsin statute su
persedes the Regulation CC time-period ad
justment for withdrawal by cash or similar
means in the permanent schedule, to the ex
tent that the in-state checks are defined as
nonlocal under Regulation CC.
Next-day availability. Under the Wisconsin
statute, the proceeds of state and local govern
Appendix F
ment checks must be made available for with
drawal by the second day following deposit, if
the check is indorsed only by the person to
whom it was issued (Wisconsin Statutes
§§ 404.213(4m)(b)(l); 215.136(2)(b); and
186.117(2)(a)). Regulation CC requires nextday availability for these checks if they are
(1) deposited in an account of a payee of the
check, (2) deposited in a depositary bank lo
cated in the same state as the state or local
government that issued the check, (3) depos
ited in person to an employee of the deposi
tary bank, and (4) deposited with a special
deposit slip, if the depositary bank informed
its customers that use of such a slip is a con
dition to next-day availability. Under the fed
eral law, if a state or local government check
is not deposited in person to an employee of
the depositary bank, but meets the other con
ditions set forth in section 229.10(c)( 1)(iv),
the funds must be made available for with
drawal not later than the second business day
following deposit. The Wisconsin statute su
persedes Regulation CC to the extent that the
state law does not permit the use of a special
deposit slip as a condition to receipt of sec
ond-day availability.
Exceptions to the schedules. Wisconsin law
provides exceptions to the state availability
schedules for new accounts (those opened less
than 90 days) and reason to doubt collec
tibility (Wisconsin Statutes §§ 404.213(4m)(b);
215.136(2); and 186.117(2)). The state availa
bility law also permits commercial banks to
vary the funds-availability requirements by
agreement (Wisconsin Statute §404.103 (1)).
In all cases where the federal schedule
preempts the state schedule, only the federal
exceptions apply. For deposits that are cov
ered by the state availability schedule (e.g.,
in-state nonlocal checks), a state exception
must apply in order to extend the state availa
bility schedule up to the federal availability
schedule. Once the deposit is held up to the
federal availability limit under a state excep
tion, the depositary bank may further extend
the hold only if a federal exception can be
applied to the deposit. Any time a depositary
bank invokes an exception to extend a hold
beyond the time periods otherwise permitted
by law, it must give notice of the extended
189
Appendix F
hold to its customer in accordance with
§ 229.13(g) of Regulation CC.
Business day/banking day. The definitions of
“business day” and “banking day” in the
Wisconsin statutes are preempted by the Reg
ulation CC definition of those terms. For de
termining the permissible hold under the Wis
consin schedules that supersede the Regulation
CC schedule, deposits are considered available
for withdrawal on the specified number of
“business days” following the “banking day”
of deposit.
Wisconsin law considers funds to be depos
ited, for the purpose of determining when they
must be made available for withdrawal, when
an item is “received at the proof and transit
facility of the depository.” For the purposes
of this preemption determination, funds are
considered deposited under Wisconsin law in
accordance with the rules set forth in section
229.19(a) of Regulation CC.
Disclosures
The Wisconsin statute does not require disclo
sure of a bank’s funds-availability policy. The
state law does require, however, that a bank
give notice to its customer if it extends the
time within which funds will be available for
withdrawal due to the bank’s doubt as to
the collectibility of the item (Wisconsin Stat
utes §§ 404.213(4m)(b); 215.136(2); and
186.117(2)).
Regulation CC preempts state disclosure re
quirements concerning funds availability that
relate to “accounts” that are inconsistent with
the federal requirements. The state require
ment is different from, and therefore inconsis
tent with, the federal disclosure rules
(§ 229.20(c)(2)). Thus, the Wisconsin statute
is preempted by Regulation CC to the extent
that the state notice requirement applies to
“accounts” as defined by Regulation CC. The
Wisconsin requirement would continue to ap
ply to accounts, such as savings and time ac
counts, not governed by the Regulation CC
disclosure requirements.
190
Regulation CC
Expedited Funds Availability Act
12
USC 4001 et seq.; 101 Stat. 635; Pub. L. 100-86 (August 10, 1987)
Competitive Equality Banking Act,
Title VI
Section
601
Short title
602
Definitions
603
Expedited funds availability
schedules
604
Safeguard exceptions
605
Disclosure of funds availability
policies
606
Payment of interest
607
Miscellaneous provisions
608
Effect on state law
609
Regulations and reports by Board
610
Administrative enforcement
611
Civil liability
612
Parity in clearing
613
Effective dates
SECTION 601— Short Title
This title may be cited as the “Expedited
Funds Availability Act” .
[12 USC 4001 note.]
SECTION 602—Definitions
For purposes of this title—
(1) The term “account” means a demand
deposit account or other similar transaction
account at a depository institution.
(2) The term “Board” means the Board of
Governors of the Federal Reserve System.
(3) The term “business day” means any
day other than a Saturday, Sunday, or legal
holiday.
(4) The term “cash” means United States
coins and currency, including Federal Re
serve notes.
(5) The term “cashier’s check” means any
check which—
(A) is drawn on a depository institution;
(B) is signed by an officer or employee
of such depository institution; and
(C) is a direct obligation of such deposi
tory institution.
(6) The term “certified check” means any
check with respect to which a depository
institution certifies that—
(A) the signature on the check is genu
ine; and
(B) such depository institution has set
aside funds which—
(i) are equal to the amount of the
check; and
(ii) will be used only to pay such
check.
(7) The term “check” means any negotia
ble demand draft drawn on or payable
through an office of a depository institution
located in the United States. Such term
does not include noncash items.
(8) The term “check clearinghouse associa
tion” means any arrangement by which par
ticipant depository institutions exchange de
posited checks on a local basis, including
an entire metropolitan area, without using
the check processing facilities of the Fed
eral Reserve System.
(9) The term “check processing region”
means the geographical area served by a
Federal Reserve bank check processing
center or such larger area as the Board may
prescribe by regulations.
(10) The term “consumer account” means
any account used primarily for personal,
family, or household purposes.
(11) The term “depository check” means
any cashier’s check, certified check, teller’s
check, and any other functionally equivalent
instrument as determined by the Board.
(12) The term “depository institution” has
the meaning given such term in clauses (i)
through (vi) of section 19(b)(1)(A) of the
Federal Reserve Act. Such term also in
cludes an office, branch, or agency of a for
eign bank located in the United States.
(13) The term “local originating depository
institution” means any originating deposi
tory institution which is located in the same
check processing region as the receiving de
pository institution.
(14) The term “noncash item” means—
(A) a check or other demand item to
191
Expedited Funds Availability Act
§ 602
which a passbook, certificate, or other
document is attached;
(B) a check or other demand item which
is accompanied by special instructions,
such as a request for special advise of
payment or dishonor; or
(C) any similar item which is otherwise
classified as a noncash item in regula
tions of the Board.
(15) The term “nonlocal originating deposi
tory institution” means any originating de
pository institution which is not a local de
pository institution.
(16) The term “proprietary ATM” means
an automated teller machine which is—
(A) located—
(i) at or adjacent to a branch of the
receiving depository institution; or
(ii) in close proximity, as defined by
the Board, to a branch of the receiving
depository institution; or
(B) owned by, operated exclusively for,
or operated by the receiving depository
institution.
(17) The term “originating depository insti
tution” means the branch of a depository
institution on which a check is drawn.
(18) The term “ nonproprietary ATM”
means an automated teller machine which is
not a proprietary ATM.
(19) The term “participant” means a de
pository institution which—
(A) is located in the same geographic
area as that served by a check clearing
house association; and
(B) exchanges checks through the check
clearinghouse association, either directly
or through an intermediary.
(20) The term “receiving depository institu
tion” means the branch of a depository in
stitution or the proprietary ATM in which a
check is first deposited.
(21) The term “State” means any State, the
District of Columbia, the Commonwealth of
Puerto Rico, or the Virgin Islands.
(22) The term “teller’s check” means any
check issued by a depository institution and
drawn on another depository institution.
(23) The term “United States” means the
several States, the District of Columbia, the
Commonwealth of Puerto Rico, and the
Virgin Islands.
192
(24) The term “unit of general local gov
ernment” means any city, county, town,
township, parish, village, or other general
purpose political subdivision of a State.
(25) The term “wire transfer” has such
meaning as the Board shall prescribe by
regulations.
[12 USC 4001.]
SECTION 603—Expedited Funds
Availability Schedules
(a) Next business day availability for certain
deposits.
(1) Except as provided in subsection (e)
and in section 604, in any case in which—
(A) any cash is deposited in an account
at a receiving depository institution
staffed by individuals employed by such
institution, or
(B) funds are received by a depository
institution by wire transfer for deposit in
an account at such institution,
such cash or funds shall be available for
withdrawal not later than the business day
after the business day on which such cash
is deposited or such funds are received for
deposit.
(2) Funds deposited in an account at a de
pository institution by check shall be avail
able for withdrawal not later than the busi
ness day after the business day on which
such funds are deposited in the case of—
(A) a check which—
(i) is drawn on the Treasury of the
United States; and
(ii) is endorsed only by the person to
whom it was issued;
(B) a check which—
(i) is drawn by a State;
(ii) is deposited in a receiving deposi
tory institution which is located in
such State and is staffed by individuals
employed by such institution;
(iii) is deposited with a special deposit
slip which indicates it is a check
drawn by a State; and
(iv) is endorsed only by the person to
whom it was issued;
(C) a check which—
Expedited Funds Availability Act
(i) is drawn by a unit of general local
government;
(ii) is deposited in a receiving deposi
tory institution which is located in the
same State as such unit of general lo
cal government and is staffed by indi
viduals employed by such institution;
(iii) is deposited with a special deposit
slip which indicates it is a check
drawn by a unit of general local gov
ernment; and
(iv) is endorsed only by the person to
whom it was issued;
(D) the first $100 deposited by check or
checks on any one business day;
(E) a check deposited in a branch of a
depository institution and drawn on the
same or another branch of the same de
pository institution if both such branches
are located in the same State or the same
check processing region;
(F) a cashier’s check, certified check,
teller’s check, or depository check
which—
(i) is deposited in a receiving deposi
tory institution which is staffed by in
dividuals employed by such institution;
(ii) is deposited with a special deposit
slip which indicates it is a cashier’s
check, certified check, teller’s check,
or depository check, as the case may
be; and
(iii) is endorsed only by the person to
whom it was issued.
(b) Permanent schedule.
(1) Subject to paragraph (3) of this subsec
tion, subsections (a)(2), (d), and (e) of this
section, and section 604, not more than 1
business day shall intervene between the
business day on which funds are deposited
in an account at a depository institution by
a check drawn on a local originating depos
itory institution and the business day on
which the funds involved are available for
withdrawal.
(2) Subject to paragraph (3) of this subsec
tion, subsections (a)(2), (d), and (e) of this
section, and section 604, not more than 4
business days shall intervene between the
business day on which funds are deposited
in an account at a depository institution by
a check drawn on a nonlocal originating de
§ 603
pository institution and the business day on
which such funds are available for
withdrawal.
(3) (A) Except as provided in subparagraph
(B), funds deposited in an account in a
depository institution by check (other
than a check described in subsection
(a)(2)) shall be available for cash with
drawal not later than the business day af
ter the business day on which such funds
otherwise are available under paragraph
(1) or (2).
(B) Not more than $400 (or the maxi
mum amount allowable in the case of a
withdrawal from an automated teller ma
chine but not more than $400) of funds
deposited by one or more checks to
which this paragraph applies shall be
available for cash withdrawal not later
than 5 o’clock post meridian of the busi
ness day on which such funds are avail
able under paragraph (1) or (2). If funds
deposited by checks described in both
paragraph (1) and paragraph (2) become
available for cash withdrawal under this
paragraph on the same business day, the
limitation contained in this subparagraph
shall apply to the aggregate amount of
such funds.
(C) Any amount available for withdrawal
under this paragraph shall be in addition
to the amount available under subsection
(a)(2)(D).
(4) This subsection shall apply with respect
to funds deposited by check in an account
at a depository institution on or after Sep
tember 1, 1990, except that the Board may,
by regulation, make this subsection or any
part of this subsection applicable earlier
than September 1, 1990.
(c) Temporary schedule.
(1) (A) Subject to subparagraph (B) of this
paragraph, subsections (a)(2), (d), and (e)
of this section, and section 604, not more
than 2 business days shall intervene be
tween the business day on which funds
are deposited in an account at a deposi
tory institution by a check drawn on a
local originating depository institution
and the business day on which such
funds are available for withdrawal.
(B) (i) Except as provided in clause (ii),
193
§ 603
funds deposited in an account in a de
pository institution by check drawn on
a local depository institution that is not
a participant in the same check
clearinghouse association as the receiv
ing depository institution (other than a
check described in subsection (a)(2))
shall be available for cash withdrawal
not later than the business day after the
business day on which such funds oth
erwise are available under subpara
graph (A).
(ii) Not more than $400 (or the maxi
mum amount allowable in the case of
a withdrawal from an automated teller
machine but not more than $400) of
funds deposited by one or more checks
to which this subparagraph applies
shall be available for cash withdrawal
not later than 5 o’clock post meridian
of the business day on which such
funds are available under subparagraph
(A).
(iii) Any amount available for with
drawal under this subparagraph shall
be in addition to the amount available
under subsection (a)(2)(D).
(2) Subject to subsections (a)(2), (d), and
(e) of this section and section 604, not
more than 6 business days shall intervene
between the business day on which funds
are deposited in an account at a depository
institution by a check drawn on a nonlocal
originating depository institution and the
business day on which such funds are avail
able for withdrawal.
(3) This subsection shall apply with respect
to funds deposited by check in an account
at a depository institution after August 31,
1988, and before September 1, 1990, except
as may be otherwise provided under subsec
tion (b)(4).
(d) Time period adjustments.
(1) Notwithstanding any other provision of
law, the Board shall, by regulation, reduce
the time periods established under subsec
tions (b), (c), and (e) to as short a time as
possible and equal to the period of time
achievable under the improved check clear
ing system for a receiving depository insti
tution to reasonably expect to learn of the
194
Expedited Funds Availability Act
nonpayment of most items for each cate
gory of checks.
(2) Notwithstanding any other provision of
law, any time period established under sub
section (b), (c), or (e) shall be extended by
1 business day in the case of any deposit
which is both—
(A) deposited in an account at a deposi
tory institution which is located in
Alaska, Hawaii, Puerto Rico, or the Vir
gin Islands; and
(B) deposited by a check drawn on an
originating depository institution which is
not located in the same State, common
wealth, or territory as the receiving de
pository institution.
(e) Deposits at an ATM.
(1) (A) Not more than 4 business days shall
intervene between the business day a de
posit described in subparagraph (B) is
made at a nonproprietary automated teller
machine (for deposit in an account at a
depository institution) and the business
day on which funds from such deposit
are available for withdrawal.
(B) A deposit is described in this subpar
agraph if it is—
(i) a cash deposit;
(ii) a deposit made by a check de
scribed in subsection (a)(2);
(iii) a deposit made by a check drawn
on a local originating depository insti
tution (other than a check described in
subsection (a)(2)); or
(iv) a deposit made by a check drawn
on a nonlocal originating depository
institution (other than a check de
scribed in subsection (a)(2)).
(2) The provisions of subsections (a), (b),
and (c) shall apply with respect to any
funds deposited at a proprietary automated
teller machine for deposit in an account at a
depository institution.
(3) The Board shall, either directly or
through the Consumer Advisory Council,
establish and maintain a dialogue with de
pository institutions and their suppliers on
the computer software and hardware avail
able for use by automated teller machines,
and shall, not later than September 1 of
each of the first 3 calendar years beginning
after the date of the enactment of this title,
Expedited Funds Availability Act
report to the Congress regarding such
software and hardware and regarding the
potential for improving the processing of
automated teller machine deposits.
(f) Check return; notice o f nonpayment. No
provision of this section shall be construed as
requiring that, with respect to all checks de
posited in a receiving depository institution—
(1) such checks be physically returned to
such depository institution; or
(2) any notice of nonpayment of any such
check be given to such depository institu
tion within the times set forth in subsection
(a), (b), (c), or (e) or in the regulations is
sued under any such subsection.
[12 USC 4002. As amended by acts o f Nov. 28, 1990 (104
Stat. 4424) and Dec. 19, 1991 (105 Stat. 2307).]
SECTION 604— Safeguard Exceptions
(a) New accounts. Notwithstanding section
603, in the case of any account established at
a depository institution by a new depositor,
the following provisions shall apply with re
spect to any deposit in such account during
the 30-day period (or such shorter period as
the Board may establish) beginning on the
date such account is established—
(1) Except as provided in paragraph (3), in
the case of—
(A) any cash deposited in such account;
(B) any funds received by such deposi
tory institution by wire transfer for de
posit in such account;
(C) any funds deposited in such account
by cashier’s check, certified check,
teller’s check, depository check, or trav
eler’s check; and
(D) any funds deposited by a govern
ment check which is described in subpar
agraph (A), (B), or (C) of section
603(a)(2),
such cash or funds shall be available for
withdrawal on the business day after the
business day on which such cash or funds
are deposited or, in the case of a wire
transfer, on the business day after the busi
ness day on which such funds are received
for deposit.
(2) In the case of any funds deposited in
such account by a check (other than a
§ 604
check described in subparagraph (C) or (D)
of paragraph (1)), the availability for with
drawal of such funds shall not be subject to
the provisions of section 603(b), 603(c), or
paragraph (1) of section 603(e).
(3) In the case of funds deposited in such
account during such period by checks de
scribed in subparagraph (C) or (D) of para
graph (1) the aggregate amount of which
exceeds $5,000—
(A) paragraph (1) shall apply only with
respect to the first $5,000 of such aggre
gate amount; and
(B) not more than 8 business days shall
intervene between the business day on
which any such funds are deposited and
the business day on which such excess
amount shall be available for withdrawal.
(b) Large or redeposited checks; repeated
overdrafts. The Board may, by regulation, es
tablish reasonable exceptions to any time limi
tation established under subsection (a)(2), (b),
(c) , or (e) of section 603 for—
(1) the amount of deposits by one or more
checks that exceeds the amount of $5,000
in any one day;
(2) checks that have been returned unpaid
and redeposited; and
(3) deposit accounts which have been over
drawn repeatedly.
(c) Reasonable cause exception.
(1) In accordance with regulations which
the Board shall prescribe, subsections
(a)(2), (b), (c), and (e) of section 603 shall
not apply with respect to any check depos
ited in an account at a depository institution
if the receiving depository institution has
reasonable cause to believe that the check is
uncollectible from the originating deposi
tory institution. For purposes of the preced
ing sentence, reasonable cause to believe
requires the existence of facts which would
cause a well-grounded belief in the mind of
a reasonable person. Such reasons shall be
included in the notice required under sub
section (f).
(2) No determination under this subsection
may be based on any class of checks or
persons.
(3) If the receiving depository institution
determines that a check deposited in an ac-
195
Expedited Funds Availability Act
§ 604
count is a check described in paragraph (1),
the receiving depository institution shall not
assess any fee for any subsequent overdraft
with respect to such account, if—
(A) the depositor was not provided with
the written notice required under subsec
tion (f) (with respect to such determina
tion) at the time the deposit was made;
(B) the overdraft would not have oc
curred but for the fact that the funds so
deposited are not available; and
(C) the amount of the check is collected
from the originating depository
institution.
(4) Each agency referred to in section
610(a) shall monitor compliance with the
requirements of this subsection in each reg
ular examination of a depository institution
and shall describe in each report to the
Congress the extent to which this subsec
tion is being complied with. For the pur
pose of this paragraph, each depository in
stitution shall retain a record of each notice
provided under subsection (f) as a result of
the application of this subsection.
(d) E m e r g e n c y c o n d i t i o n s . Subject to such
regulations as the Board may prescribe, sub
sections (a)(2), (b), (c), and (e) of section 603
shall not apply to funds deposited by check in
any receiving depository institution in the case
of—
(1) any interruption of communication
facilities;
(2) suspension of payments by another de
pository institution;
(3) any war; or
(4) any emergency condition beyond the
control of the receiving depository
institution,
if the receiving depository institution exercises
such diligence as the circumstances require.
(e) P r e v e n t i o n o f f r a u d l o s s e s .
(1) The Board may, by regulation or order,
suspend the applicability of this title, or any
portion thereof, to any classification of
checks if the Board determines that—
(A) depository institutions are experienc
ing an unacceptable level of losses due to
check-related fraud, and
(B) suspension of this title, or such por
tion of this title, with regard to the classi
196
fication of checks involved in such fraud
is necessary to diminish the volume of
such fraud.
(2) No regulation prescribed or order issued
under paragraph (1) shall remain in effect
for more than 45 days (excluding Satur
days, Sundays, legal holidays, or any day
either House of Congress is not in session).
(3) (A) Within 10 days of prescribing any
regulation or issuing any order under
paragraph (1), the Board shall transmit a
report of such action to the Committee
on Banking, Finance and Urban Affairs
of the House of Representatives and the
Committee on Banking, Housing, and Ur
ban Affairs of the Senate.
(B) Each report under subparagraph (A)
shall contain—
(i) the specific reason for prescribing
the regulation or issuing the order;
(ii) evidence considered by the Board
in making the determination under
paragraph (1) with respect to such reg
ulation or order; and
(iii) specific examples of the checkrelated fraud giving rise to such regu
lation or order.
(f)
N o tic e
o f e x c e p tio n ;
a v a ila b ility
w ith in
r e a s o n a b l e tim e .
(1) If any exception contained in this sec
tion (other than subsection (a)) applies with
respect to funds deposited in an account at
a depository institution—
(A) the depository institution shall pro
vide notice in the manner provided in
paragraph (2) of—
(i) the time period within which the
funds shall be made available for with
drawal; and
(ii) the reason the exception was in
voked; and
(B) except where other time periods are
specifically provided in this title, the
availability of the funds deposited shall
be governed by the policy of the receiv
ing depository institution, but shall not
exceed a reasonable period of time as de
termined by the Board.
(2) The notice required under paragraph
(1)(A) with respect to a deposit to which an
exception contained in this section applies
Expedited Funds Availability Act
shall be made by the time provided in the
following subparagraphs:
(A) In the case of a deposit made in per
son by the depositor at the receiving de
pository institution, the depository institu
tion shall immediately provide such
notice in writing to the depositor.
(B) In the case of any other deposit
(other than a deposit described in subpar
agraph (C)), the receiving depository in
stitution shall mail the notice to the de
positor not later than the close of the
next business day following the business
day on which the deposit is received.
(C) In the case of a deposit to which
subsection (d) or (e) applies, notice shall
be provided by the depository institution
in accordance with regulations of the
Board.
(D) In the case of a deposit to which
subsection (b)(1) or (b)(2) applies, the
depository institution may, for noncon
sumer accounts and other classes of ac
counts, as defined by the Board, that gen
erally have a large number of such
deposits, provide notice at or before the
time it first determines that the subsection
applies.
(E) In the case of a deposit to which
subsection (b)(3) applies, the depository
institution may, subject to regulations of
the Board, provide notice at the begin
ning of each time period it determines
that the subsection applies. In addition to
the requirements contained in paragraph
(1)(A), the notice shall specify the time
period for which the exception will
apply.
(3) If the facts upon which the determina
tion of the applicability of an exception
contained in subsection (b) or (c) to any
deposit only become known to the receiving
depository institution after the time notice is
required under paragraph (2) with respect to
such deposit, the depository institution shall
mail such notice to the depositor as soon as
practicable, but not later than the first busi
ness day following the day such facts be
come known to the depository institution.
[12 USC 4003. As amended by act o f Dec. 19, 1991 (105
Stat. 2307).]
§ 605
SECTION 605— Disclosure of Funds
Availability Policies
(a) N o t i c e f o r n e w a c c o u n t s . Before an ac
count is opened at a depository institution, the
depository institution shall provide written no
tice to the potential customer of the specific
policy of such depository institution with re
spect to when a customer may withdraw funds
deposited into the customer’s account.
(b) P r e p r i n t e d d e p o s i t s l i p s . All preprinted
deposit slips that a depository institution fur
nishes to its customers shall contain a sum
mary notice, as prescribed by the Board in
regulations, that deposited items may not be
available for immediate withdrawal.
(c) M a i l i n g o f n o t i c e .
(1) In the first regularly scheduled mailing
to customers occurring after the effective
date of this section, but not more than 60
days after such effective date, each deposi
tory institution shall send a written notice
containing the specific policy of such de
pository institution with respect to when a
customer may withdraw funds deposited
into such customer’s account, unless the de
pository institution has provided a disclo
sure which meets the requirements of this
section before such effective date.
(2) A depository institution shall send a
written notice to customers at least 30 days
before implementing any change to the de
pository institution’s policy with respect to
when customers may withdraw funds de
posited into consumer accounts, except that
any change which expedites the availability
of such funds shall be disclosed not later
than 30 days after implementation.
(3) Upon the request of any person, a de
pository institution shall provide or send
such person a written notice containing the
specific policy of such depository institution
with respect to when a customer may with
draw funds deposited into a customer’s
account.
(d) P o s t i n g o f n o t i c e .
(1) Each depository institution shall post, in
a conspicuous place in each location where
deposits are accepted by individuals em
ployed by such depository institution, a spe
cific notice which describes the time peri197
Expedited Funds Availability Act
§ 605
ods applicable to the availability of funds
deposited in a consumer account.
(2) In the case of any automated teller ma
chine at which any funds are received for
deposit in an account at any depository in
stitution, the Board shall prescribe, by regu
lations, that the owner or operator of such
automated teller machine shall post or pro
vide a general notice that funds deposited in
such machine may not be immediately
available for withdrawal.
(e) Notice o f interest payment policy. If a de
pository institution described in section 606(b)
begins the accrual of interest or dividends at a
later date than the date described in section
606(a) with respect to all funds, including
cash, deposited in an interest-bearing account
at such depository institution, any notice re
quired to be provided under subsections (a)
and (c) shall contain a written description of
the time at which such depository institution
begins to accrue interest or dividends on such
funds.
(f) Model disclosure forms.
(1) The Board shall publish model disclo
sure forms and clauses for common transac
tions to facilitate compliance with the dis
closure requirements of this section and to
aid customers by utilizing readily under
standable language.
(2) A depository institution shall be
deemed to be in compliance with the re
quirements of this section if such
institution—
(A) uses any appropriate model form or
clause as published by the Board, or
(B) uses any such model form or clause
and changes such form or clause by—
(i) deleting any information which is
not required by this title; or
(ii) rearranging the format.
(3) Nothing in this title requires the use of
any such model form or clause prescribed
by the Board under this subsection.
(4) Model disclosure forms and clauses
shall be adopted by the Board only after
notice duly given in the Federal Register
and an opportunity for public comment in
accordance with section 553 of title 5,
United States Code.
[12 USC 4004.]
198
SECTION 606— Payment of Interest
(a) In general. Except as provided in subsec
tion (b) or (c) and notwithstanding any other
provision of law, interest shall accrue on
funds deposited in an interest-bearing account
at a depository institution beginning not later
than the business day on which the depository
institution receives provisional credit for such
funds.
(b) Special rule for credit unions. Subsection
(a) shall not apply to an account at a deposi
tory institution described in section
19(b)(l)(A)(iv) of the Federal Reserve Act if
the depository institution—
(1) begins the accrual of interest or divi
dends at a later date than the date described
in subsection (a) with respect to all funds,
including cash, deposited in such account;
and
(2) provides notice of the interest payment
policy in the manner required under section
605(e).
(c) Exception for checks returned unpaid. No
provision of this title shall be construed as
requiring the payment of interest or dividends
on funds deposited by a check which is re
turned unpaid.
[12 USC 4005.]
SECTION 607—Miscellaneous
Provisions
(a) After-hours deposits. For purposes of this
title, any deposit which is made on a Satur
day, Sunday, legal holiday, or after the close
of business on any business day shall be
deemed to have been made on the next busi
ness day.
(b) Availability at start o f business day. Ex
cept as provided in subsections (b)(3) and
(c) (1)(B) of section 603, if any provision of
this title requires that funds be available for
withdrawal on any business day, such funds
shall be available for withdrawal at the start
of such business day.
(c) Effect on policies o f depository institu
tions. No provision of this title shall be con
strued as—
(1) prohibiting a depository institution from
§ 609
Expedited Funds Availability Act
making funds available for withdrawal in a
shorter period of time than the period of
time required by this title; or
(2) affecting a depository institution’s
right—
(A) to accept or reject a check for
deposit;
(B) to revoke any provisional settlement
made by the depository institution with
respect to a check accepted by such insti
tution for deposit;
(C) to charge back the depositor’s ac
count for the amount of such check; or
(D) to claim a refund of such provisional
credit.
(d)
(1) supersede the provisions of this title
and any regulations by the Board to the ex
tent such provisions relate to the time by
which funds deposited or received for de
posit in an account shall be available for
withdrawal; and
(2) apply to all federally insured depository
institutions located within such State.
(b) O v e r r i d e o f c e r t a i n s t a t e l a w s . Except as
provided in subsection (a), this title and regu
lations prescribed under this title shall super
sede any provision of the law of any State,
including the Uniform Commercial Code as in
effect in such State, which is inconsistent with
this title or such regulations.
P r o h i b i t i o n o n f r e e z i n g c e r t a i n f u n d s in a n
In any case in which a check is de
posited in an account at a depository institu
tion and the funds represented by such check
are not yet available for withdrawal pursuant
to this title, the depository institution may not
freeze any other funds in such account (which
are otherwise available for withdrawal pursu
ant to this title) solely because the funds so
deposited are not yet available for withdrawal.
[12 USC 4007.]
a c c o u n t.
(e)
E m p lo y e e
tr a in in g
on
and
w ith th e r e q u ir e m e n ts o f th is title .
c o m p lia n c e
Each depos
itory institution shall—
(1) take such actions as may be necessary
fully to inform each employee (who per
forms duties subject to the requirements of
this title) of the requirements of this title;
and
(2) establish and maintain procedures rea
sonably designed to assure and monitor em
ployee compliance with such requirements.
[12 USC 4006.]
SECTION 608—Effect on State Law
(a) I n g e n e r a l . Any law or regulation of any
State in effect on September 1, 1989, which
requires that funds deposited or received for
deposit in an account at a depository institu
tion chartered by such State be made available
for withdrawal in a shorter period of time
than the period of time provided in this title
or in regulations prescribed by the Board
under this title (as in effect on September 1,
1989) shall—
SECTION 609—Regulations and
Reports by Board
(a) I n g e n e r a l . After notice and opportunity to
submit comment in accordance with section
553(c) of title 5, United States Code, the
Board shall prescribe regulations—
(1) to carry out the provisions of this title;
(2) to prevent the circumvention or evasion
of such provisions; and
(3) to facilitate compliance with such
provisions.
(b)
R e g u la tio n
r e la tin g
to
im p r o v e m e n t
of
In order to improve
the check processing system, the Board shall
consider (among other proposals) requiring, by
regulation, that—
(1) depository institutions be charged based
upon notification that a check or similar in
strument will be presented for payment;
(2) the Federal Reserve banks and deposi
tory institutions provide for check
truncation;
(3) depository institutions be provided in
centives to return items promptly to the de
pository institution of first deposit;
(4) the Federal Reserve banks and deposi
tory institutions take such actions as are
necessary to automate the process of re
turning unpaid checks;
(5) each depository institution and Federal
Reserve bank—
(A) place its endorsement, and other noc h e c k p r o c e s s in g s y s te m .
199
§ 609
Expedited Funds Availability Act
tations specified in regulations of the
Board, on checks in the positions speci
fied in such regulations; and
(B) take such actions as are necessary
to—
(i) automate the process of reading en
dorsements; and
(ii) eliminate unnecessary endorse
ments;
(6) within one business day after an
originating depository institution is pre
sented a check (for more than such
minimum amount as the Board may
prescribe)—
(A) such originating depository institu
tion determines whether it will pay such
check; and
(B) if such originating depository institu
tion determines that it will not pay such
check, such originating depository institu
tion directly notify the receiving deposi
tory 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
(9) originating depository institutions be
permitted to return unpaid checks directly
to, and obtain reimbursement for such
checks directly from, the receiving deposi
tory institution.
(c)
R e g u la to r y
r e s p o n s ib ility
o f B o a rd fo r
p a y m e n t s y s te m .
(1) In order to carry out the provisions of
this title, the Board of Governors of the
Federal Reserve System shall have the re
sponsibility 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) The Board shall prescribe such regula
tions as it may determine to be appropriate
200
to carry out its responsibility under para
graph (1).
(d) R e p o r t s .
(1) (A) The Board shall transmit a report to
both Houses of the Congress not later
than 18, 30, and 48 months after the date
of the enactment of this title.
(B) Each such report shall describe—
(i) the actions taken and progress
made by the Board to implement the
schedules established in section 603,
and
(ii) the impact of this title on consum
ers and depository institutions.
(2) (A) The Board shall transmit a report to
both Houses of the Congress not later
than 2 years after the date of the enact
ment of this title regarding the effects the
temporary schedule established under
section 603(c) have had on depository in
stitutions and the public.
(B) Such report shall also assess the po
tential impact the implementation of the
schedule established in section 603(b)
will have on depository institutions and
the public, including an estimate of the
risks to and losses of depository institu
tions and the benefits to consumers. Such
report shall also contain such recommen
dations for legislative or administrative
action as the Board may determine to be
necessary.
(3) Not later than 6 months after section
603(b) takes effect, the Comptroller General
of the United States shall transmit a report
to the Congress evaluating the implementa
tion and administration of this title.
(e) C o n s u l t a t i o n . In prescribing regulations
under subsections (a) and (b), the Board shall
consult with the Comptroller of the Currency,
the Board of Directors of the Federal Deposit
Insurance Corporation, the Federal Home
Loan Bank Board, and the National Credit
Union Administration Board.
(f)
E le c tr o n ic c le a r in g h o u s e s tu d y .
(1) The Board shall study the feasibility of
modernizing and accelerating the check
payment system through the development of
an electronic clearinghouse process utilizing
existing telecommunications technology to
avoid the necessity of actual presentment of
Expedited Funds Availability Act
the paper instrument to a payor institution
before such institution is charged for the
item.
(2) In connection with the study required
under paragraph (1), the Board shall—
(A) consult with appropriate experts in
telecommunications technology; and
(B) consider all practical and legal im
pediments to the development of an elec
tronic clearinghouse process.
(3) The Board shall report its conclusions
to the Congress within 9 months of the date
of the enactment of this title.
[12 USC 4008.]
SECTION 610— Administrative
Enforcement
(a) Administrative enforcement. Compliance
with the requirements imposed under this title,
including regulations prescribed by and orders
issued by the Board of Governors of the Fed
eral Reserve System under this title, shall be
enforced under—
(1) section 8 of the Federal Deposit Insur
ance Act in the case of—
(A) national banks, and Federal branches
and Federal agencies of foreign banks, by
the Office of the Comptroller of the
Currency;
(B) member banks of the Federal Re
serve 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 of Gover
nors of the Federal Reserve System; and
(C) banks insured by the Federal Deposit
Insurance Corporation (other than mem
bers of the Federal Reserve System) and
insured State branches of foreign banks,
by the Board of Directors of the Federal
Deposit Insurance Corporation;
(2) section 8 of the Federal Deposit Insur
ance Act, by the Director of the Office of
Thrift Supervision in the case of savings as
sociations the deposits of which are insured
by the Federal Deposit Insurance Corpora
tion; and
m(3) the Federal Credit Union Act, by the
§ 610
National Credit Union Administration
Board with respect to any Federal credit
union or insured credit union.
The terms used in paragraph (1) that are not
defined in this title or otherwise defined in
section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the mean
ing given to them in section 1(b) of the Inter
national Banking Act of 1978 (12 U.S.C.
3101).
(b) Additional powers.
(1) For purposes of the exercise by any
agency referred to in subsection (a) of this
section of its powers under any Act referred
to in that subsection, a violation of any re
quirement imposed under this title shall be
deemed to be a violation of a requirement
imposed under that Act.
(2) In addition to its powers under any pro
vision of law specifically referred to in sub
section (a) of this section, each of the agen
cies referred to in such subsection may
exercise, for purposes of enforcing compli
ance with any requirement imposed under
this title, any other authority conferred on it
by law.
(c) Enforcement by the Board.
(1) Except to the extent that enforcement of
the requirements imposed under this title is
specifically committed to some other Gov
ernment agency under subsection (a) of this
section, the Board of Governors of the Fed
eral Reserve System shall enforce such
requirements.
(2) If the Board determines that—
(A) any depository institution which is
not a depository institution described in
subsection (a), or
(B) any other person subject to the au
thority of the Board under this title, in
cluding any person subject to the author
ity of the Board under section 605(d)(2)
or 609(c),
has failed to comply with any requirement
imposed by this title or by the Board under
this title, the Board may issue an order
prohibiting any depository institution, any
Federal Reserve bank, or any other person
subject to the authority of the Board from
engaging in any activity or transaction
which directly or indirectly involves such
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Expedited Funds Availability Act
§ 610
noncomplying depository institution or per
son (including any activity or transaction
involving the receipt, payment, collection,
and clearing of checks and any related
function of the payment system with respect
to checks).
(d) P r o c e d u r a l r u l e s . The authority of the
Board to prescribe regulations under this title
does not impair the authority of any other
agency designated in this section to make
rules regarding its own procedures in enforc
ing compliance with requirements imposed
under this title.
[12 USC 4009. As amended by acts o f Aug. 9, 1989 (103
Stat. 438) and Dec. 19, 1991 (105 Stat. 2303).]
SECTION 611—Civil Liability
(a) C i v i l l i a b i l i t y . Except as otherwise pro
vided in this section, any depository institu
tion which fails to comply with any require
ment imposed under this title or any
regulation prescribed under this title with re
spect to any person other than another deposi
tory institution is liable to such person in an
amount equal to the sum of—
(1) any actual damage sustained by such
person as a result of the failure;
(2) (A) in the case of an individual action,
such additional amount as the court may
allow, except that the liability under this
subparagraph shall not be less than $100
nor greater than $1,000; or
(B) in the case of a class action, such
amount as the court may allow, except
that—
(i) as to each member of the class, no
minimum recovery shall be applicable;
and
(ii) the total recovery under this subparagraph in any class action or series
of class actions arising out of the same
failure to comply by the same deposi
tory institution shall not be more than
the lesser of $500,000 or 1 percent of
the net worth of the depository institu
tion involved; and
(3) in the case of any successful action to
enforce the foregoing liability, the costs of
the action, together with a reasonable attor
ney’s fee as determined by the court.
202
(b) C l a s s a c t i o n a w a r d s . In determining the
amount of any award in any class action, the
court shall consider, among other relevant
factors—
(1) the amount of any actual damages
awarded;
(2) the frequency and persistence of fail
ures of compliance;
(3) the resources of the depository
institution;
(4) the number of persons adversely af
fected; and
(5) the extent to which the failure of com
pliance was intentional.
(c) B o n a f i d e e r r o r s .
(1) A depository institution may not be
held liable in any action brought under this
section for a violation of this title if the
depository institution demonstrates by a
preponderance of the evidence that the vio
lation was not intentional and resulted from
a bona fide error, notwithstanding the main
tenance of procedures reasonably adapted to
avoid any such error.
(2) Examples of a bona fide error include
clerical, calculation, computer malfunction
and programming, and printing errors, ex
cept that an error of legal judgment with
respect to a depository institution’s obliga
tion under this title is not a bona fide error.
(d) J u r i s d i c t i o n . Any action under this section
may be brought in any United States district
court, or in any other court of competent ju
risdiction, within one year after the date of the
occurrence of the violation involved.
(e) R e l i a n c e o n B o a r d r u l i n g s . No provision
of this section imposing any liability shall ap
ply to any act done or omitted in good faith
in conformity with any rule, regulation, or in
terpretation thereof by the Board of Governors
of the Federal Reserve System, notwithstand
ing the fact that after such act or omission has
occurred, such rule, regulation, or interpreta
tion is amended, rescinded, or determined by
judicial or other authority to be invalid for
any reason.
(f)
A u th o r ity
lo s s e s a n d
to
e s ta b lis h
lia b ility a m o n g
r u le s
r e g a r d in g
d e p o s ito r y
in s titu
The Board is authorized to impose on
or allocate among depository institutions the
tio n s .
Expedited Funds Availability Act
risks of loss and liability in connection with
any aspect of the payment system, including
the receipt, payment, collection, or clearing of
checks, and any related function of the pay
ment system with respect to checks. Liability
under this subsection shall not exceed the
amount of the check giving rise to the loss or
liability, and, where there is bad faith, other
damages, if any, suffered as a proximate con
sequence of any act or omission giving rise to
the loss or liability.
[12 USC 4010.]
§ 613
section 19(b)(1) (12 U.S.C. 461(b)(1)) from
other depository institutions, as defined in sec
tion 19(b)(1) (12 U.S.C. 461(b)(1)) or from
any office of any Federal Reserve bank with
out regard to any Federal or State law restrict
ing the number or the physical location or lo
cations of such depository institutions.” .
(b) Effective date. The amendment made by
subsection (a) shall take effect on the date of
enactment of this title.
[12 USC 248a note.]
SECTION 612—Parity in Clearing
SECTION 613—Effective Dates
(a) In general. Section 11A of the Federal
Reserve Act (12 U.S.C. 248a) is amended by
adding at the end thereof the following:
“(e) All depository institutions, as defined
in section 19(b)(1) (12 U.S.C. 461(b)(1)), may
receive for deposit and as deposits any evi
dences of transaction accounts, as defined by
(a) Except as provided in subsection (b), this
title shall take effect on the date of the enact
ment of this title.
(b) Sections 603, 604, 605, 606, 610, and 611
shall take effect on September 1, 1988.
[12 USC 4001 note.]
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@FedFRASER