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May 22, 1991
To All Depository Institutions in the Second
Federal Reserve District, and Others
Maintaining Sets of Board Regulations:
Enclosed is a copy of a revised Regulation CC pamphlet, "Availability of
Funds and Collection of Checks," effective February 1, 1991, of the Board of
Governors of the Federal Reserve System.
(Because of the size of the
pamphlet, and the placement of the type, we are unable to punch holes.)
Also enclosed is a revised pamphlet for Regulation J, "Collection of
Checks and Other Items and Wire Transfers of Funds by Federal Reserve Banks,"
effective January 1, 1991.
Both pamphlets supersede the previous printings of those regulations and
any subsequent amendments thereto.
Circulars Division
FEDERAL RESERVE BANK OF NEW YORK
Board of Governors of the Federal Reserve System
4 f -1 0 4 5 8
Regulation J
Collection of Checks
and Other Items
and Wire Transfers of Funds
by Federal Reserve Banks
12 CFR 210; as amended effective January 1, 1991
Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the
Federal Reserve District in which the inquiry arises.
March 1991
Contents
Page
Page
Subpart A—Collection of Checks and
Other Items by Federal Reserve
Banks
Section 210.1—Authority, purpose, and
scope....................................................
Section 210.2—Definitions.....................
Section 210.3—General provisions........
(a) G eneral......................................
(b) Binding effect.............................
(c) Government items .....................
(d) Government senders...................
(e) Foreign items .............................
Section 210.4—Sending items to Reserve
Banks ..................................................
Section 210.5—Sender’s agreement;
recovery of Reserve Bank...................
(a) Sender’s agreement.....................
(b) Recovery by Reserve Bank..........
(c) Methods of recovery...................
Section 210.6—Status, warranties, and
liability of Reserve Bank.....................
(a) Status and liability.....................
(b) Warranties and liability.............
(c) Time for commencing action
against Reserve B ank.................
Section 210.7—Presenting items for
payment..............................................
(a) Presenting or sending.................
(b) Place of presentment...................
(c) Presenting or sending direct........
(d) Item payable in another District .
Section 210.8—Presenting noncash items
for acceptance....................................
Section 210.9—Payment.........................
(a) Cash items..................................
(b) Noncash items.............................
(c) Nonbank payor...........................
(d) Handling of paym ent.................
(e) Liability of Reserve Bank............
Section 210.10—Time schedule and
availability of credits for cash items
and returned checks...........................
Section 210.11—Availability of proceeds
of noncash items; time schedule..........
(a) Availability of credit...................
(b) Time schedule.............................
1
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3
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5
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6
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6
6
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6
6
6
6
(c) Handling of paym ent..........
Section 210.12—Return of cash items
and handling of returned checks........
(a) Return of cash items.............
7
(b) Return of checks not handled by
Reserve Banks......................
7
(c) Paying bank’s and returning
bank’s agreement .......................
(d) Recovery by Reserve Bank.......
(e) Methods of recovery............
7
(f) Reserve Bank’s responsibility . . .
(g) Settlement............................
8
Section 210.13—Unpaid items.........
8
(a) Right of charge-back .................
(b) Suspension or closing of bank . . .
Section 210.14—Extension of time limits
Section 210.15—Direct presentment of
certain warrants...................................
7
7
7
8
8
8
8
8
Subpart B—Funds Transfers Through
Fedwire
Section 210.25—Authority, purpose, and
scope....................................................
(a) Authority and purpose...............
(b) Scope..........................................
(c) Operating circulars.....................
(d) Government senders, receiving
banks, and beneficiaries..............
Section 210.26—Definitions...................
Section 210.27—Reliance on identifying
number................................................
(a) Reliance by a Federal Reserve
Bank on number to identify any
intermediary bank or
beneficiary’s bank.......................
(b) Reliance by a Federal Reserve
Bank on number to identify
beneficiary...................................
Section 210.28—Agreement of sender . . .
(a) Payment of sender’s obligation to
a Federal Reserve B ank..............
(b) Overdrafts...................................
(c) Review of payment orders..........
Section 210.29—Agreement of receiving
b an k ....................................................
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10
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10
10
10
10
11
11
i
Contents
Page
(a) Payment............................... 11
(b) Off-line banks..................... 10
Section 210.30—Payment orders........
(a) Rejection............................. 11
(b) Selection of an intermediary bank
(c) Same-day execution............ 11
Section 210.31—Payment by a Federal
Reserve Bank to a receiving bank or
beneficiary..........................................
(a) Payment to a receiving bank . . . .
(b) Payment to a beneficiary........
ii
11
11
11
11
12
Page
Section 210.32—Federal Reserve Bank
liability; payment of interest...............
(a) Damages....................................
(b) Payment of interest.....................
(c) Nonwaiver of right of recovery ..
12
12
12
12
Appendix A to subpart B—Commentary
Appendix B to subpart B—UCC article
4A ........................................................
13
23
STATUTORY PROVISIONS...............
41
Regulation J
Collection of Checks and Other Items
by Federal Reserve Banks
and Funds Transfers Through Fedwire
12 CFR 210*; as amended effective January 1, 1991
SUBPART A—COLLECTION OF
CHECKS A N D OTHER ITEMS BY
FEDERAL RESERVE BANKS
SECTION 210.1—Authority, Purpose,
and Scope
The Board of Governors of the Federal Re
serve System (“Board”) has issued this sub
part pursuant to the Federal Reserve Act, sec
tion 13 (12 USC 342), section ll(i) (12 USC
248(i)), section 16 (12 USC 248(o), 360);
the Expedited Funds Availability Act (12
USC 4001 et seq.); and other laws. This sub
part governs the collection of checks and oth
er cash and noncash items and the handling of
returned checks by Federal Reserve Banks. Its
purpose is to provide rules for collecting and
returning items and settling balances.
SECTION 210.2—Definitions
As used in this subpart, unless the context
otherwise requires—
(a) “Actually and finally collected funds”
means cash or any other form of payment that
is, or has become, final and irrevocable.
(b) “Bank” includes a depository institution
as defined in section 19 of the Federal Reserve
Act (12 USC 461(b)).
(c) “Bank draft” means a check drawn by
one bank on another bank.
(d) “Banking day” means a day during
which a bank is open to the public for carry
ing on substantially all its banking functions.
(e) “Cash item” means—
(1) a check other than one classified as a
noncash item under this section; or
(2) any other item payable on demand and
* Code of Federal Regulations, title 12, chapter II, part
210.
collectible at par that the Reserve Bank of
the District in which the item is payable is
willing to accept as a cash item. “Cash
item” does not include a returned check.
(f) “Check” means a draft, as defined in the
Uniform Commercial Code, that is drawn on
a bank and payable on demand. “Check as
defined in 12 CFR 229.2(k)” means an item
defined as a check in 12 CFR 229.2(k) for
purposes of subpart C of part 229.
(g) “Item” means an instrument for the pay
ment of money, whether negotiable or not,
that is—
(1) payable in a Federal Reserve District1
(“District”);
(2) sent by a sender to a Reserve Bank for
handling under this subpart; and
(3) collectible in funds acceptable to the
Reserve Bank of the District in which the
instrument is payable.
Unless otherwise indicated, “item” includes
both a cash and a noncash item, and includes
a returned check sent by a paying or returning
bank. “Item” does not include a check that
cannot be collected at par, or an “item” as
defined in section 210.26 that is handled un
der subpart B.
(h) “Nonbank payor” means a payor of an
item, other than a bank.
(i) “Noncash item” means an item that a re
ceiving Reserve Bank classifies in its operating
circulars as requiring special handling. The
term also means an item normally received as
a cash item if a Reserve Bank decides that
special conditions require that it handle the
item as a noncash item.
(j) “Paying bank” means—
(1) the bank by which an item is payable,
unless the item is payable or collectible at
1 For purposes of this subpart, the Virgin Islands and
Puerto Rico are deemed to be in the Second District, and
Guam, American Samoa, and the Northern Mariana Is
lands in the Twelfth District.
1
§ 2 1 0 .2
or through another bank and is sent to the
other bank for payment or collection;
(2) the bank at or through which an item
is payable or collectible and to which it is
sent for payment or collection; or
(3) The bank whose routing number ap
pears on a check in magnetic characters or
fractional form and to which the check is
sent for payment or collection.
(k) “Returned check” means a cash item or
a check as defined in 12 CFR 229.2(k) re
turned by a paying bank, including a notice of
nonpayment in lieu of a returned check,
whether or not a Reserve Bank handled the
check for collection.
(/) “Sender” means any of the following that
sends an item to a Reserve Bank for forward
collection: a depository institution, a clearing
institution, another Reserve Bank, an interna
tional organization, a foreign correspondent,
or a branch or agency of a foreign bank main
taining reserves under section 7 of the Inter
national Banking Act of 1978 (12 USC 347d,
3105).
(1) “Depository institution” means a de
pository institution as defined in section
19(b) of the Federal Reserve Act (12 USC
461(b)).
(2) “Clearing institution” means—
(i) an institution that is not a depository
institution, but maintains with a Reserve
Bank the balance referred to in the first
paragraph of section 13 of the Federal
Reserve Act (12 USC 342); or
(ii) a corporation that maintains an ac
count with a Reserve Bank in conformity
with section 211.4 of this chapter (Regu
lation K).
(3) “International organization” means an
international organization for which a Re
serve Bank is empowered to act as deposi
tary or fiscal agent and maintains an
account.
(4) “Foreign correspondent” means any of
the following for which a Reserve Bank
maintains an account: a foreign bank or
banker, a foreign state as defined in section
25(b) of the Federal Reserve Act (12 USC
632), or a foreign correspondent or agency
referred to in section 14(e) of that act (12
USC 358).
2
Regulation J
(m) “State” means a state of the United
States, the District of Columbia, Puerto Rico,
or a territory, possession, or dependency of
the United States.
Unless the context otherwise requires, the
terms not defined herein have the meanings
set forth in 12 CFR 229.2 applicable to sub
part C of part 229, and the terms not defined
herein or in 12 CFR 229.2 have the meanings
set forth in the Uniform Commercial Code.
SECTION 210.3—General Provisions
(a) General. Each Reserve Bank shall receive
and handle items in accordance with this sub
part, and shall issue operating circulars gov
erning the details of its handling of items and
other matters deemed appropriate by the Re
serve Bank. The circulars may, among other
things, classify cash items and noncash items,
require separate sorts and letters, and provide
different closing times for the receipt of differ
ent classes or types of items.
(b) Binding effect. This subpart, together
with subpart C of part 229 and the operating
circulars of the Reserve Banks, are binding on
all parties interested in an item handled by
any Reserve Bank.
(c) Government items. As depositaries and
fiscal agents of the United States, Reserve
Banks handle certain items payable by the
United States or certain federal agencies as
cash or noncash items. To the extent provided
by regulations issued by, and arrangements
made with, the United States Treasury De
partment and other government departments
and agencies, the handling of such items is
governed by this subpart. The Reserve Banks
shall include in their operating circulars such
information regarding these regulations and
arrangements as the Reserve Banks deem
appropriate.
(d) Government senders. Except as otherwise
provided by statutes of the United States, or
regulations issued or arrangements made
thereunder, this subpart and the operating cir
culars of the Reserve Banks apply to the fol
lowing when acting as a sender: a department,
agency, instrumentality, independent estab
Regulation J
lishment, or office of the United States, or a
wholly owned or controlled government cor
poration, that maintains or uses an account
with a Reserve Bank.
(e) Foreign items. A Reserve Bank also may
receive and handle certain items payable out
side a Federal Reserve District, as provided in
its operating circulars. The handling of such
items in a state is governed by this subpart,
and the handling of such items outside a state
is governed by the local law.
SECTION 210.4— Sending Items to
Reserve Banks
(a) A sender may send any item to the Re
serve Bank with which it maintains or uses an
account, but that Reserve Bank may permit or
require the sender to send direct to another
Reserve Bank an item payable within the oth
er Reserve Bank’s District.
(b) With respect to an item sent direct, the
relationships and the rights and liabilities be
tween the sender, the Reserve Bank of its Dis
trict, and the Reserve Bank to which the item
is sent are the same as if the sender had sent
the item to the Reserve Bank of its District
and that Reserve Bank had sent the item to
the other Reserve Bank.
(c) The Reserve Banks shall receive cash
items and other checks at par.
SECTION 210.5—Sender’s Agreement;
Recovery by Reserve Bank
(a) Sender's agreement. By sending an item
to a Reserve Bank, the sender—
(1) authorizes the receiving Reserve Bank
(and any other Reserve Bank or collecting
bank to which the item is sent) to handle
the item subject to this subpart and to the
Reserve Banks’ operating circulars, and
warrants its authority to give this
authorization;
(2) warrants to each Reserve Bank han
dling the item that (i) the sender has good
title to the item or is authorized to obtain
payment on behalf of one who has good ti
tle (whether or not this warranty is evi
§210.5
denced by the sender’s express guaranty of
prior indorsements on the item); and (ii) to
the extent prescribed by state law applicable
to a Reserve Bank or subsequent collecting
bank handling the item, the item has not
been materially altered; but this subpara
graph (a)(2) does not limit any warranty
by a sender or other prior party arising un
der state law; and
(3) agrees to indemnify each Reserve Bank
for any loss or expense sustained (including
attorneys’ fees and expenses of litigation)
resulting from (i) the sender’s lack of au
thority to make the warranty in paragraph
(a)(1) of this section; (ii) any action taken
by the Reserve Bank within the scope of its
authority in handling the item; or (iii) any
warranty made by the Reserve Bank under
section 210.6(b) of this subpart.
(b) Recovery by Reserve Bank. If an action or
proceeding is brought against (or if defense is
tendered to) a Reserve Bank that has handled
an item, based on—
(1) the alleged failure of the sender to have
the authority to make the warranty and
agreement in subparagraph (a)(1) of this
section;
(2) any action by the Reserve Bank within
the scope of its authority in handling the
item; or
(3) any warranty made by the Reserve
Bank under section 210.6(b) of this sub
part,
the Reserve Bank may, upon the entry of a
final judgment or decree, recover from the
sender the amount of attorneys’ fees and other
expenses of litigation incurred, as well as any
amount the Reserve Bank is required to pay
under the judgment or decree, together with
interest thereon.
(c) Methods of recovery. The Reserve Bank
may recover the amount stated in paragraph
(b) of this section by charging any account on
its books that is maintained or used by the
sender (or if the sender is another Reserve
Bank, by entering a charge against the other
Reserve Bank through the Interdistrict Settle
ment Fund), if—
(1) the Reserve Bank made seasonable
written demand on the sender to assume de
fense of the action or proceeding; and
3
§ 210.5
Regulation J
(2) the sender has not made any other ar (b) Warranties and liability. By presenting or
rangement for payment that is acceptable to sending an item, a Reserve Bank warrants to a
subsequent collecting bank and to the paying
the Reserve Bank.
The Reserve Bank is not responsible for de bank and any other payor—
(1) that the Reserve Bank has good title to
fending the action or proceeding before using
the item (or is authorized to obtain pay
this method of recovery. A Reserve Bank that
ment on behalf of one who either (i) has
has been charged through the Interdistrict
good title or (ii) is authorized to obtain
Settlement Fund may recover from its sender
payment on behalf of one who has good ti
in the manner and under the circumstances
tle), whether or not this warranty is evi
set forth in this paragraph. A Reserve Bank’s
denced by the Reserve Bank’s express guar
failure to avail itself of the remedy provided in
anty of prior indorsements on the item; and
this paragraph does not prejudice its enforce
(2) that the item has not been materially
ment in any other manner of the indemnity
altered to the extent prescribed by state law
agreement referred to in subparagraph (a)(3)
applicable to a Reserve Bank or subsequent
of this section.
collecting bank holding the item.
The Reserve Bank shall not have or assume
any other liability to the paying bank or other
SECTION 210.6— Status, Warranties,
payor, except for the Reserve Bank’s own lack
and Liability of Reserve Bank
of good faith or failure to exercise ordinary
(a)(1) Status and liability. A Reserve Bank care.
shall act only as agent or subagent of the
(c) Time for commencing action against Re
owner with respect to an item. This agency
serve Bank. A claim against a Reserve Bank
terminates not later than the time the Re
for lack of good faith or failure to exercise
serve Bank receives payment for the item in
ordinary care shall be barred unless the action
actually and finally collected funds and
on the claim is commenced within two years
makes the proceeds available for use by the
after the claim accrues. A claim accrues on
sender. A Reserve Bank may be liable to
the date when a Reserve Bank’s alleged failure
the owner, to the sender, to a prior collect
to exercise ordinary care or to act in good
ing bank, or to the depositary bank’s cus
faith first results in damages to the claimant.
tomer with respect to a check as defined in
12 CFR 229.2(k). A Reserve Bank shall
not have or assume any liability with re
spect to an item or its proceeds except for SECTION 210.7—Presenting Items for
the Reserve Bank’s own lack of good faith Payment
or failure to exercise ordinary care except as
(a) Presenting or sending. As provided under
provided in paragraph (b) of this section
state law or as otherwise permitted by this
and except as provided in subpart C of part
section—
229.
(1) a Reserve Bank or a subsequent col
(2) Reliance on routing designation appear
lecting bank may present an item for pay
ing on item. A Reserve Bank may present
ment or send the item for presentment and
or send an item based on the routing num
payment; and
ber or other designation of a paying bank or
(2) a Reserve Bank may send an item to a
nonbank payor appearing in any form on
subsequent collecting bank with authority
the item when the Reserve Bank receives it.
to present it for payment or to send it for
A Reserve Bank shall not be responsible for
presentment and payment.
any delay resulting from its acting on any
designation, whether inscribed by magnetic (b) Place of presentment. A Reserve Bank or
ink or by other means, and whether or not subsequent collecting bank may present an
the designation acted on is consistent with item—
(1) at a place requested by the paying
any other designation appearing on the
bank;
item.
4
Regulation J
(2) In the case of a check as defined in 12
CFR 229.2(k), in accordance with 12 CFR
229.36;
(3) at a place requested by the nonbank
payor, if the item is payable by a nonbank
payor other than through or at a paying
bank;
(4) under a special collection agreement
consistent with this subpart; or
(5) through a clearinghouse and subject to
its rules and practices.
(c) Presenting or sending direct. A Reserve
Bank or subsequent collecting bank may, with
respect to an item payable in the Reserve
Bank’s District—
(1) present or send the item direct to the
paying bank, or to a place requested by the
paying bank; or
(2) if the item is payable by a nonbank
payor other than through a paying bank,
present it direct to the nonbank payor. Doc
uments, securities, or other papers accom
panying a noncash item shall not be deliv
ered to the nonbank payor before the item
is paid unless the sender specifically autho
rizes delivery.
(d) Item payable in another District. A Re
serve Bank receiving an item payable in an
other District ordinarily sends the item to the
Reserve Bank of the other District, but with
the agreement of the other Reserve Bank, may
present or send the item as if it were payable
in its own District.
SECTION 210.8—Presenting Noncash
Items for Acceptance
A Reserve Bank or a subsequent collecting
bank may, if instructed by the sender, present
a noncash item for acceptance in any manner
authorized by law if—
(1) the item provides that it must be pre
sented for acceptance;
(2) the item is payable elsewhere than at
the residence or place of business of the
payor; or
(3) the date of payment of the item de
pends on presentment for acceptance.
Documents accompanying a noncash item
shall not be delivered to the payor upon ac
§210.9
ceptance of the item unless the sender specifi
cally authorizes delivery. A Reserve Bank
shall not have or assume any other obligation
to present or to send for presentment for ac
ceptance any noncash item.
SECTION 210.9—Payment
(a) Cash items. (1) A paying bank becomes
accountable for the amount of a cash item
received directly or indirectly from a Re
serve Bank, at the close of the paying
bank’s banking day on which it receives2
the item if it retains the item after the close
of that banking day, unless, prior to that
time, it pays for the item by—
(i) debit to an account on the Reserve
Bank’s books;
(ii) cash; or
(iii) in the discretion of the Reserve
Bank, any other form of payment.
(2) The proceeds of any payment shall be
available to the Reserve Bank by the close
of the Reserve Bank’s banking day on the
banking day of receipt of the item by the
paying bank. If the banking day of receipt is
not a banking day for the Reserve Bank,
payment shall be made on the next day that
is a banking day for the Reserve Bank by
the close of the Reserve Bank’s banking
day. A paying bank that closes voluntarily
on a day that is a banking day for the Re
serve Bank shall either pay on that day by
the close of the Reserve Bank’s banking day
for cash items that the Reserve Bank makes
available to the paying bank on that day, or
compensate the Reserve Bank for the value
of the float associated with the items in ac
cordance with procedures provided in its
Reserve Bank’s operating circular; in such
circumstances, the paying bank is not con
sidered to receive the item until its next
banking day.*1
2 A paying bank is deemed to receive a cash item on its
next banking day if it receives the item:
(1) on a day other than a banking day for it; or
(2) on a banking day for it, but
(i) after its regular banking hours;
(ii) after a “cut-off hour” established by it in accord
ance with state law; or
(iii) during afternoon or evening periods when it is
open for limited functions only.
5
§210.9
(b) Noncash items. A Reserve Bank may re
quire the paying or collecting bank to which it
has presented or sent a noncash item to pay
for the item in cash, but the Reserve Bank
may permit payment by a debit to an account
on the Reserve Bank’s books or by any of the
following that is in a form acceptable to the
Reserve Bank: bank draft, transfer of funds or
bank credit, or any other form of payment au
thorized by state law.
(c) Nonbank payor. A Reserve Bank may re
quire a nonbank payor to which it has pre
sented an item to pay for it in cash, but the
Reserve Bank may permit payment in any of
the following that is in a form acceptable to
the Reserve Bank: cashier’s check, certified
check, or other bank draft or obligation.
(d) Handling of payment. A Reserve Bank
may handle a bank draft or other form of pay
ment it receives in payment of a cash item as a
cash item. A Reserve Bank may handle a
bank draft or other form of payment it re
ceives in payment of a noncash item as either
a cash item or a noncash item.
(e) Liability o f Reserve Bank. Except as set
forth in 12 CFR 229.35(b), a Reserve Bank
shall not be liable for the failure of a collecting
bank, paying bank, or nonbank payor to pay
for an item, or for any loss resulting from the
Reserve Bank’s acceptance of any form of
payment other than cash authorized in para
graphs (a), (b), and (c) of this section. A
Reserve Bank that acts in good faith and exer
cises ordinary care shall not be liable for the
nonpayment of, or failure to realize upon, a
bank draft or other form of payment that it
accepts under paragraphs (a), (b), and (c).
Regulation J
use by the sender or paying or returning bank.
The Reserve Bank shall give either immediate
or deferred credit in accordance with its time
schedule to a sender or paying or returning
bank other than a foreign correspondent. A
Reserve Bank ordinarily gives credit to a for
eign correspondent only when the Reserve
Bank receives payment of the item in actually
and finally collected funds, but, in its discre
tion, a Reserve Bank may give immediate or
deferred credit in accordance with its time
schedule.
(b) Notwithstanding its time schedule, a Re
serve Bank may refuse at any time to permit
the use of credit given for any cash item or
returned check, and may defer availability af
ter credit is received by the Reserve Bank for
a period of time that is reasonable under the
circumstances.
SECTION 210.11—Availability of
Proceeds of Noncash Items; Time
Schedule
(a) Availability of credit. A Reserve Bank
shall give credit to the sender for the proceeds
of a noncash item when it receives payment in
actually and finally collected funds (or advice
from another Reserve Bank of such payment
to it). The amount of the item is counted as
reserve for purposes of part 204 of this chap
ter (Regulation D) and becomes available for
use by the sender when the Reserve Bank re
ceives the payment or advice, except as pro
vided in paragraph (b) of this section.
(b) Time schedule. A Reserve Bank may give
credit for the proceeds of a noncash item sub
ject to payment in actually and finally collect
ed funds in accordance with a time schedule
included in its operating circulars. The time
SECTION 210.10—Time Schedule and
schedule shall indicate when the proceeds of
Availability of Credits for Cash Items
the noncash item will be counted as reserve
and Returned Checks
for purposes of part 204 of this chapter (Reg
(a) Each Reserve Bank shall include in its
ulation D) and become available for use by
operating circulars a time schedule for each of
the sender. A Reserve Bank may, however,
its offices indicating when the amount of any
refuse at any time to permit the use of credit
cash item or returned check received by it (or
given for a noncash item for which the Re
sent direct to another Reserve office for the
serve Bank has not yet received payment in
account of that Reserve Bank) is counted as
actually and finally collected funds.
reserves for purposes of part 204 of this chap
ter (Regulation D) and becomes available for (c) Handling of payment. If a Reserve Bank
6
Regulation J
receives, in payment for a noncash item, a
bank draft or other form of payment that it
elects to handle as a noncash item, the Re
serve Bank shall neither count the proceeds as
reserve for purposes of part 204 of this chap
ter (Regulation D) nor make the proceeds
available for use until it receives payment in
actually and finally collected funds.
SECTION 210.12—Return of Cash
Items and Handling of Returned Checks
(a) Return of cash items. A paying bank that
receives a cash item directly or indirectly from
a Reserve Bank, other than for immediate
payment over the counter, and that pays for
the item as provided in section 210.9(a) of
this subpart, may, before it has finally paid the
item, return the item in accordance with sub
part C of part 229, the Uniform Commercial
Code, and its Reserve Bank’s operating circu
lar. The rules or practices of a clearinghouse
through which the item was presented, or a
special collection agreement under which the
item was presented, may not extend these re
turn times, but may provide for a shorter re
turn time.
(b) Return of checks not handled by Reserve
Banks. A paying bank that receives a check as
defined in 12 CFR 229.2(k ), other than di
rectly or indirectly from a Reserve Bank, and
that determines not to pay the check, may
send the returned check to its Reserve Bank in
accordance with subpart C of part 229, the
Uniform Commercial Code, and its Reserve
Bank’s operating circular. A returning bank
may send a returned check to its Reserve
Bank in accordance with subpart C of part
229, the Uniform Commercial Code, and its
Reserve Bank’s operating circular.
(c) Paying bank's and returning bank's
agreement. By sending a returned check to a
Reserve Bank, the paying bank or returning
bank—
(1) Authorizes the receiving Reserve Bank
(and any other Reserve Bank or returning
bank to which the returned check is sent)
to handle the returned check subject to this
subpart and to the Reserve Banks’ operat
ing circulars;
§ 2 1 0 .1 2
(2) Makes the warranties set forth in 12
CFR 229.34; and
(3) Agrees to indemnify each Reserve
Bank for any loss or expense (including at
torneys’ fees and expenses of litigation) re
sulting from—
(i) The paying or returning bank’s lack
of authority to give the authorization in
paragraph (c)(1) of this section;
(ii) Any action taken by a Reserve Bank
within the scope of its authority in han
dling the returned check; or
(iii) Any warranty made by the Reserve
Bank under 12 CFR 229.34.
(d) Recovery by Reserve Bank. If an action or
proceeding is brought against (or if defense is
tendered to) a Reserve Bank that has handled
a returned check based on—
(1) The alleged failure of the paying or re
turning bank to have the authority to give
the authorization in paragraph (c)(1) of
this section;
(2) Any action by the Reserve Bank with
in the scope of its authority in handling the
returned check; or
(3) Any warranty made by the Reserve
Bank under 12 CFR 229.34,
the Reserve Bank may, upon the entry of a
final judgment or decree, recover from the
paying bank or returning bank the amount of
attorneys’ fees and other expenses of litigation
incurred, as well as any amount the Reserve
Bank is required to pay under the judgment or
decree, together with interest thereon.
(e) Methods o f recovery. The Reserve Bank
may recover the amount stated in paragraph
(d) of this section by charging any account on
its books that is maintained or used by the
paying or returning bank (or, if the returning
bank is another Reserve Bank, by entering a
charge against the other Reserve Bank
through the Interdistrict Settlement Fund),
if—
(1) The Reserve Bank made seasonable
written demand on the paying or returning
bank to assume defense of the action or pro
ceeding; and
(2) The paying or returning bank has not
made any other arrangement for payment
that is acceptable to the Reserve Bank.
The Reserve Bank is not responsible for de
7
§ 2 1 0 .1 2
fending the action or proceeding before using
this method of recovery. A Reserve Bank that
has been charged through the Interdistrict
Settlement Fund may recover from the paying
or returning bank in the manner and under
the circumstances set forth in this paragraph.
A Reserve Bank’s failure to avail itself of the
remedy provided in this paragraph does not
prejudice its enforcement in any other manner
of the indemnity agreement referred to in par
agraph (c)(3) of this section.
(f) Reserve Bank's responsibility. A Reserve
Bank shall handle a returned check, or a no
tice of nonpayment, in accordance with subpart C of part 229 and its operating circular.
A Reserve Bank may permit or require the
paying or returning bank to send direct to an
other Reserve Bank a returned check with re
spect to which the depositary bank is located
within the other Reserve Bank’s District, in
accordance with section 210.4(b).
(g) Settlement. A subsequent returning bank
or depositary bank shall settle for returned
checks in the same manner as for cash items
presented for payment.
SECTION 210.13—Unpaid Items
(a) Right o f charge-back. If a Reserve Bank
does not receive payment in actually and final
ly collected funds for an item, the Reserve
Bank shall recover by charge-back or other
wise the amount of the item from the sender,
paying bank, or returning bank from which it
was received, whether or not the item itself
can be sent back. In the event of recovery,
neither the owner or holder of the item, nor
the sender, paying bank, or returning bank
from which it was received, shall have any
interest in any reserve balance or other funds
in the Reserve Bank’s possession of the bank
failing to make payment in actually and final
ly collected funds.
(b) Suspension or closing of bank. A Reserve
Bank shall not pay or act on a draft, authori
zation to charge, or other order on a reserve
balance or other funds in its possession after it
receives notice of suspension or closing of the
bank making the payment for that bank’s own
or another’s account.
8
Regulation J
SECTION 210.14— Extension of Time
Limits
If, because of interruption of communication
facilities, suspension of payments by a bank or
nonbank payor, war, emergency conditions or
other circumstances beyond its control, a
bank (including a Reserve Bank) or nonbank
payor is delayed in acting on an item beyond
applicable time limits, its time for acting is
extended for the time necessary to complete
the action, if it exercises such diligence as the
circumstances require.
SECTION 210.15—Direct Presentment
of Certain W arrants
If a Reserve Bank elects to present direct to
the payor a bill, note, or warrant that is issued
and payable by a state or a political subdivi
sion and that is a cash item not payable or
collectible through a bank—
(a) sections 210.9, 210.12, and 210.13 and
the operating circulars of the Reserve Banks
apply to the payor as if it were a paying bank;
(b) section 210.14 applies to the payor as if it
were a bank; and
(c) under section 210.9 each day on which
the payor is open for the regular conduct of its
affairs or the accommodation of the public is
considered a banking day.
SUBPART B—FUNDS TRANSFERS
TH R O U G H FED W IRE
SECTION 210.25—Authority, Purpose,
and Scope
(a) Authority and purpose. This subpart pro
vides rules to govern funds transfers through
Fedwire, and has been issued pursuant to the
Federal Reserve Act—section 13 (12 USC
342), paragraph (f) of section 19 (12 USC
464), paragraph 14 of section 16 (12 USC
248(o)), and paragraphs (i) and (j) of section
11 (12 USC 248(i) and (j))—and other laws
and has the force and effect of federal law. This
Regulation J
subpart is not a funds-transfer system rule as
defined in section 4A-501(b) of article 4A.*
(b) Scope. (1) This subpart incorporates the
provisions of article 4A set forth in appen
dix B to this subpart. In the event of an
inconsistency between the provisions of the
sections of this subpart and appendix B to
this subpart, the provisions of the sections
of this subpart shall prevail.
(2) Except as otherwise provided in para
graphs (3) and (4) of this section, this sub
part governs the rights and obligations of—
(i) Federal Reserve Banks sending or re
ceiving payment orders;
(ii) senders that send payment orders
directly to a Federal Reserve Bank;
(iii) receiving banks that receive pay
ment orders directly from a Federal Re
serve Bank;
(iv) beneficiaries that receive payment
for payment orders sent to a Federal Re
serve Bank by means of credit to an ac
count maintained or used at a Federal
Reserve Bank; and
(v) other parties to a funds transfer any
part of which is carried out through Fedwire to the same extent as if this subpart
were considered a funds-transfer system
rule under article 4A.
(3) This subpart governs a funds transfer
that is sent through Fedwire, as provided in
paragraph (b)(2) of this section, even
though a portion of the funds transfer is
governed by the Electronic Fund Transfer
Act, but the portion of such funds transfer
that is governed by the Electronic Fund
Transfer Act is not governed by this
subpart.
(4) In the event that any portion of this
subpart establishes rights or obligations
with respect to the availability of funds that
are also governed by the Expedited Funds
Availability Act or the Board’s Regulation
CC, Availability of Funds and Collection of
Checks, those provisions of the Expedited
Funds Availability Act or Regulation CC
shall apply and the portion of this subpart,
including article 4A as incorporated herein,
shall not apply.
* Section 4A-501(b) of article 4A of the Uniform Com
mercial Code.
§ 2 1 0 .2 6
(c) Operating circulars. Each Federal Re
serve Bank shall issue an operating circular
consistent with this subpart that governs the
details of its funds-transfer operations and
other matters it deems appropriate. Among
other things, the operating circular may set
cut-off hours and funds-transfer business days;
address available security procedures; specify
format and media requirements for payment
orders; identify messages that are not pay
ment orders; and impose charges for fundstransfer services.
(d) Government senders, receiving banks, and
beneficiaries. Except as otherwise expressly
provided by the statutes of the United States,
the parties specified in paragraph (b)(2)(h)(v) of this section include—
(1) a department, agency, instrumentality,
independent establishment, or office of the
United States, or a wholly owned or con
trolled government corporation;
(2) an international organization;
(3) a foreign central bank; and
(4) a department, agency, instrumentality,
independent establishment, or office of a
foreign government, or a wholly owned or
controlled corporation of a foreign
government.
SECTION 210.26—Definitions
As used in this subpart, the following defini
tions apply:
(a) Article 4A means article 4A of the Uni
form Commercial Code as set forth in appen
dix B of this subpart.
(b) As-of adjustment means a debit or credit,
for reserve- or clearing-balance maintenance
purposes only, applied to the reserve or clear
ing balance of a bank that either sends a pay
ment order to a Federal Reserve Bank, or that
receives a payment order from a Federal Re
serve Bank, in lieu of an interest charge or
payment.
(c) Automated clearinghouse transfer means
any transfer designated as an automated clear
inghouse transfer in a Federal Reserve Bank
operating circular.
9
§ 210.26
(d) Beneficiary's bank has the same meaning
as in article 4A, except that—
(1) a Federal Reserve Bank need not be
identified in the payment order in order to
be the beneficiary’s bank; and
(2) the term includes a Federal Reserve
Bank when that Federal Reserve Bank is
the beneficiary of a payment order.
(e) Fedwire is the funds-transfer system
owned and operated by the Federal Reserve
Banks that is used primarily for the transmis
sion and settlement of payment orders gov
erned by this subpart. Fedwire does not in
clude the system for making automated clear
inghouse transfers.
(f) Inter-District transfer means a funds
transfer involving entries to accounts main
tained at two Federal Reserve Banks.
(g) Intra-District transfer means a funds
transfer involving entries to accounts main
tained at one Federal Reserve Bank.
(h) Off-line bank means a bank that trans
mits payment orders to and receives payment
orders from a Federal Reserve Bank by tele
phone orally or by other means other than
electronic data transmission.
(i) Payment order has the same meaning as
in article 4A, except that the term does not
include automated clearinghouse transfers or
any communication designated in a Federal
Reserve Bank operating circular issued under
this subpart as not being a payment order.
(j) Sender's account, receiving bank's ac
count, and beneficiary's account mean the re
serve, clearing, or other funds deposit account
at a Federal Reserve Bank maintained or used
by the sender, receiving bank, or beneficiary,
respectively.
(k) Sender's Federal Reserve Bank and re
ceiving bank's Federal Reserve Bank mean the
Federal Reserve Bank at which the sender or
receiving bank, respectively, maintains or uses
an account.
SECTION 210.27—Reliance on
Identifying Number
(a) Reliance by a Federal Reserve Bank on
10
Regulation J
number to identify an intermediary bank or
beneficiary's bank. A Federal Reserve Bank
may rely on the number in a payment order
that identifies the intermediary bank or benefi
ciary’s bank, even if it identifies a bank differ
ent from the bank identified by name in the
payment order, if the Federal Reserve Bank
does not know of such an inconsistency in
identification. A Federal Reserve Bank has no
duty to detect any such inconsistency in
identification.
(b) Reliance by a Federal Reserve Bank on
number to identify beneficiary. A Federal Re
serve Bank, acting as a beneficiary’s bank,
may rely on the number in a payment order
that identifies the beneficiary, even if it identi
fies a person different from the person identi
fied by name in the payment order, if the Fed
eral Reserve Bank does not know of such an
inconsistency in identification. A Federal Re
serve Bank has no duty to detect any such
inconsistency in identification.
SECTION 210.28—Agreement of Sender
(a) Payment of sender's obligation to a Feder
al Reserve Bank. A sender (other than a Fed
eral Reserve Bank), by maintaining or using
an account with a Federal Reserve Bank, au
thorizes the sender’s Federal Reserve Bank to
obtain payment for the sender’s payment or
ders by debiting the amount of the payment
order from the sender’s account.
(b) Overdrafts. (1) A sender does not have
the right to an overdraft in the sender’s ac
count. In the event an overdraft is created,
the overdraft shall be due and payable im
mediately without the need for a demand
by the Federal Reserve Bank, at the earliest
of the following times:
(i) at the end of the funds-transfer busi
ness day;
(ii) at the time the Federal Reserve
Bank, in its sole discretion, deems itself
insecure and gives notice thereof to the
sender; or
(iii) at the time the sender suspends pay
ments or is closed.
(2) The sender shall have in its account, at
the time the overdraft is due and payable, a
balance of actually and finally collected
Regulation J
funds sufficient to cover the aggregate
amount of all its obligations to the Federal
Reserve Bank, whether the obligations re
sult from the execution of a payment order
or otherwise.
(3) To secure any overdraft, as well as any
other obligation due or to become due to its
Federal Reserve Bank, each sender, by
sending a payment order to a Federal Re
serve Bank that is accepted by the Federal
Reserve Bank, grants to the Federal Re
serve Bank a security interest in all of the
sender’s assets in the possession of, or held
for the account of, the Federal Reserve
Bank. The security interest attaches when
an overdraft, or any other obligation to the
Federal Reserve Bank, becomes due and
payable.
(4) A Federal Reserve Bank may take any
action authorized by law to recover the
amount of an overdraft that is due and pay
able, including, but not limited to, the exer
cise of rights of set off, the realization on
any available collateral, and any other
rights it may have as a creditor under appli
cable law.
(c) Review o f payment orders. A sender, by
sending a payment order to a Federal Reserve
Bank, agrees that for the purposes of sections
4A-204(a) and 4A-304 of article 4A, a rea
sonable time to notify a Federal Reserve Bank
of the relevant facts concerning an unautho
rized or erroneously executed payment order
is within 30 calendar days after the sender re
ceives notice that the payment order was ac
cepted or executed, or that the sender’s ac
count was debited with respect to the payment
order.
SECTION 210.29—Agreement of
Receiving Bank
(a) Payment. A receiving bank (other than a
Federal Reserve Bank) that receives a pay
ment order from its Federal Reserve Bank au
thorizes that Federal Reserve Bank to pay for
the payment order by crediting the amount of
the payment order to the receiving bank’s
account.
(b) Off-line banks. An off-line bank that does
not expressly notify its Federal Reserve Bank
§ 210.31
in writing that it maintains an account for an
other bank warrants to that Federal Reserve
Bank that the off-line bank does not act as an
intermediary bank or a beneficiary’s bank
with respect to payment orders received
through Fedwire for a beneficiary that is a
bank.
SECTION 210.30—Payment Orders
(a) Rejection. A sender shall not send a pay
ment order to a Federal Reserve Bank unless
authorized to do so by the Federal Reserve
Bank. A Federal Reserve Bank may reject, or
impose conditions that must be satisfied be
fore it will accept, a payment order for any
reason.
(b) Selection of an intermediary bank. For an
inter-District transfer, a Federal Reserve
Bank is authorized and directed to execute a
payment order through another Federal Re
serve Bank. A sender shall not send a pay
ment order to a Federal Reserve Bank that
requires the Federal Reserve Bank to issue a
payment order to an intermediary bank (oth
er than a Federal Reserve Bank) unless that
intermediary bank is designated in the send
er’s payment order. A sender shall not send to
a Federal Reserve Bank a payment order in
structing use by a Federal Reserve Bank of a
funds-transfer system or means of transmis
sion other than Fedwire, unless the Federal
Reserve Bank agrees with the sender in writ
ing to follow such instructions.
(c) Same-day execution. A sender shall not
issue a payment order that instructs a Federal
Reserve Bank to execute the payment order
on a funds-transfer business day that is later
than the funds-transfer business day on which
the order is received by the Federal Reserve
Bank, unless the Federal Reserve Bank agrees
with the sender in writing to follow such
instructions.
SECTION 210.31—Payment by a
Federal Reserve Bank to a Receiving
Bank or Beneficiary
(a) Payment to a receiving bank. Payment of
a Federal Reserve Bank’s obligation to pay a
11
§ 2 1 0 .3 1
receiving bank (other than a Federal Reserve
Bank) occurs at the earlier of the time when
the amount of the payment order is credited
to the receiving bank’s account or when the
payment order is sent to the receiving bank.
(b) Paym ent to a beneficiary. Payment by a
Federal Reserve Bank to a beneficiary of a
payment order, where the Federal Reserve
Bank is the beneficiary’s bank, occurs at the
earlier of the time when the amount of the
payment order is credited to the beneficiary’s
account or when notice of the credit is sent to
the beneficiary.
SECTION 210.32—Federal Reserve
Bank Liability; Payment of Interest
(a) Damages. In connection with its handling
of a payment order under this subpart, a Fed
eral Reserve Bank shall not be liable to a
sender, receiving bank, beneficiary, or other
Federal Reserve Bank, governed by this sub
part, for any damages other than those pay
able under article 4A. A Federal Reserve
Bank shall not agree to be liable to a sender,
receiving bank, beneficiary, or other Federal
Reserve Bank for consequential damages un
der section 4A-305(d) of article 4A.
R egulation J
interest to its sender, its receiving bank,
its beneficiary, or another party to the
funds transfer that is entitled to such
payment, in an amount that is calculated
in accordance with section 4A-506 of ar
ticle 4A.
(2) If the sender or receiving bank that is
the recipient of an as-of adjustment or an
interest payment is not the party entitled to
compensation under article 4A, the sender
or receiving bank shall pass through the
benefit of the as-of adjustment or interest
payment by making an interest payment, as
of the day the as-of adjustment or interest
payment is effected, to the party entitled to
compensation. The interest payment that is
made to the party entitled to compensation
shall not be less than the value of the as-of
adjustment or interest payment that was
provided by the Federal Reserve Bank to
the sender or receiving bank. The party en
titled to compensation may agree to accept
compensation in a form other than a direct
interest payment, provided that such an al
ternative form of compensation is not less
than the value of the interest payment that
otherwise would be made.
(c) Nonwaiver o f right o f recovery. Nothing in
this subpart or any operating circular issued
(b) Paym ent o f interest.
hereunder shall constitute, or be construed as
(1) A Federal Reserve Bank, in its discre constituting, a waiver by a Federal Reserve
tion, may satisfy its obligation, or that of Bank of a cause of action for recovery under
another Federal Reserve Bank, to pay com any applicable law of mistake and restitution.
pensation in the form of interest under arti
cle 4A by—
(i) providing an as-of adjustment to its APPENDIX A TO SUBPART B—
sender, its receiving bank, or its benefi Commentary
ciary, as provided in the Federal Reserve
See page 13.
Bank’s operating circular, in an amount
equal to the amount on which interest is
to be calculated multiplied by the num
APPENDIX B TO SUBPART B —
ber of days for which interest is to be cal
UCC Article 4A
culated; or
(ii) paying compensation in the form of See page 23.
12
Commentary on Regulation J
12
CFR 210, appendix A to subpart B; effective January 1, 1991
The commentary provides background mate
rial to explain the intent of the Board of Gov
ernors of the Federal Reserve System (Board)
in adopting a particular provision in the sub
part and to help readers interpret that provi
sion. In some comments, examples are offered.
The commentary constitutes an official Board
interpretation of subpart B of this part. Com
mentary is not provided for every provision of
subpart B of this part, as some provisions are
self-explanatory.
SECTION 210.25—Authority, Purpose,
and Scope
25(a) Authority and Purpose
Section 210.25(a) states that the purpose of
subpart B of this part is to provide rules to
govern funds transfers through Fedwire and
recites the Board’s rulemaking authority for
this subpart. Subpart B is federal law and is
not a “funds-transfer system rule,” as defined
in section 4A-501(b) of article 4A, Funds
Transfers, of the Uniform Commercial Code
(UCC), as set forth in appendix B of this
part. Certain provisions of article 4A may not
be varied by a funds-transfer system rule, but
under section 4A-107, regulations of the
Board and operating circulars of the Federal
Reserve Banks supersede inconsistent provi
sions of article 4A to the extent of the incon
sistency. In addition, regulations of the Board
may preempt inconsistent provisions of state
law. Accordingly, subpart B of this part su
persedes or preempts inconsistent provisions
of state law. It does not affect state law gov
erning funds transfers that does not conflict
with the provisions of subpart B of this part,
such as article 4A, as enacted in any state, as
it applies to parties to funds transfers through
Fedwire whose rights are not governed by
subpart B of this part.
25(b) Scope
Subpart B of this part incorporates the provi
sions of article 4A set forth in appendix B of
this part. The provisions set forth expressly in
the sections of subpart B of this part super
sede or preempt any inconsistent provisions of
article 4A as set forth in appendix B of this
part or as enacted in any state. The official
comments to article 4A are not incorporated
in subpart B of this part or this commentary
to subpart B of this part, but the official com
ments may be useful in interpreting article
4A. Because section 4A-105 refers to other
provisions of the Uniform Commercial Code,
e.g., definitions in article 1 of the UCC, these
other provisions of the UCC, as approved by
the National Conference of Commissioners on
Uniform State Laws and the American Law
Institute, from time to time, are also incorpo
rated in subpart B of this part. Subpart B of
this part applies to any party to a Fedwire
funds transfer that is in privity with a Federal
Reserve Bank. These parties include a sender
(bank or nonbank) that sends a payment or
der directly to a Federal Reserve Bank, a re
ceiving bank that receives a payment order di
rectly from a Federal Reserve Bank, and a
beneficiary that receives credit to an account
that it uses or maintains at a Federal Reserve
Bank for a payment order sent to a Federal
Reserve Bank. Other parties to a funds trans
fer are covered by this subpart to the same
extent that this subpart would apply to them
if this subpart were a “funds-transfer system
rule” under article 4A that selected subpart B
of this part as the governing law.
The scope of the applicability of a fundstransfer system rule under article 4A is speci
fied in section 4A-501(b), and the scope of
the choice of law provision is specified in sec
tion 4A-507(c). Under section 4A-507(c), a
choice of law provision is binding on the par
ticipants in a funds-transfer system and cer
tain other parties having notice that the fundstransfer system might be used for the funds
transfer and of the choice of law provision.
The Uniform Commercial Code provides that
a person has notice when the person has actu
al knowledge, receives notification, or has rea
son to know from all the facts and circum
stances known to the person at the time in
13
§ 2 1 0 .2 5
question. (See UCC § 1-201(25).) However,
under sections 4A-507(b) and 4A-507(d), a
choice of law by agreement of the parties
takes precedence over a choice of law made by
funds-transfer system rule.
If originators, receiving banks, and benefi
ciaries that are not in privity with a Federal
Reserve Bank have the notice contemplated
by Section 4A-507(c) or if those parties agree
to be bound by subpart B of this part, subpart
B of this part generally would apply to pay
ment orders between those remote parties, in
cluding participants in other funds-transfer
systems. For example, a funds transfer may be
sent from an originator’s bank through a
funds-transfer system other than Fedwire to a
receiving bank which, in turn, sends a pay
ment order through Fedwire to execute the
funds transfer. Similarly, a Federal Reserve
Bank may execute a payment order through
Fedwire to a receiving bank that sends it
through a funds-transfer system other than
Fedwire to a beneficiary’s bank. In the first
example, if the originator’s bank has notice
that Fedwire may be used to effect part of the
funds transfer, the sending of the payment or
der through the other funds-transfer system to
the receiving bank will be governed by sub
part B of this part unless the parties to the
payment order have agreed otherwise. In the
second example, if the beneficiary’s bank has
notice that Fedwire may be used to effect part
of the funds transfer, the sending of the pay
ment order to the beneficiary’s bank through
the other funds-transfer system will be gov
erned by subpart B of this part unless the par
ties have agreed otherwise. In both cases, the
other funds-transfer system’s rules would also
apply to, at a minimum, the portion of these
funds transfers going through that fundstransfer system. Because subpart B of this part
is federal law, to the extent of any inconsist
ency, subpart B of this part will take prece
dence over any funds-transfer system rule ap
plicable to the remote sender or receiving
bank or to a Federal Reserve Bank. If remote
parties to a funds transfer, a portion of which
is sent through Fedwire, have expressly select
ed by agreement a law other than subpart B of
this part under section 4A-507(b), subpart B
of this part would not take precedence over
the choice of law made by the agreement even
14
R egulation J C om m entary
though the remote parties had notice that
Fedwire may be used and of the governing
law. (See 4A-507(d).) In addition, subpart B
of this part would not apply to a funds trans
fer sent through another funds-transfer sys
tem where no Federal Reserve Bank handles
the funds transfer, even though settlement for
the funds transfer is made by means of a sepa
rate net settlement or funds transfer through
Fedwire.
Under section 4A-108, article 4A does not
apply to a funds transfer, any part of which is
governed by the Electronic Fund Transfer
Act (15 USC 1693 et seq.). Fedwire funds
transfers to or from consumer accounts are
exempt from the Electronic Fund Transfer
Act and Regulation E (12 CFR 205). A funds
transfer from a consumer originator or a
funds transfer to a consumer beneficiary could
be carried out in part through Fedwire and in
part through an automated clearinghouse or
other means that is subject to the Electronic
Fund Transfer Act or Regulation E. In these
cases, subpart B would not govern the portion
of the funds transfer that is governed by the
Electronic Fund Transfer Act or Regulation
E. (See the commentary to section 210.26(i),
“Payment Order”.)
Finally, section 4A-404(a) provides that a
beneficiary’s bank is obliged to pay the
amount of a payment order to the beneficiary
on the payment date unless acceptance of the
payment order occurs on the payment date
after the close of the funds-transfer business
day of the bank. The Expedited Funds Avail
ability Act provides that funds received by a
bank by wire transfer shall be available for
withdrawal not later than the banking day af
ter the business day on which such funds are
received (12 USC 4002(a)). That act also
preempts any provision of state law that was
not effective on September 1, 1989, that is in
consistent with that act or its implementing
Regulation CC (12 CFR 229). Accordingly,
the Expedited Funds Availability Act and
Regulation CC may preempt section 4A404(a) as enacted in any state. In order to
ensure that section 4A-404(a), or other provi
sions of article 4A, as incorporated in subpart
B of this part, do not take precedence over
provisions of the Expedited Funds Availabil
ity Act, this section provides that where sub
§ 2 1 0 .2 6
R egulation J C om m entary
part B of this part establishes rights or obliga
tions that are also governed by the Expedited
Funds Availability Act or Regulation CC, the
Expedited Funds Availability Act or Regula
tion CC provision shall apply and subpart B
of this part shall not apply.
appendix B of this part. It does not refer to
the law of any particular state unless the con
text indicates otherwise. Subject to the express
provisions of this subpart, this version of arti
cle 4A is incorporated into this subpart and
made federal law for transactions covered by
this subpart.
25(c) Operating Circulars
The Federal Reserve Banks issue operating
circulars consistent with this subpart that
contain additional provisions applicable to
payment orders sent through Fedwire. Under
section 4A-107, these operating circulars su
persede inconsistent provisions of article 4A,
as set forth in appendix B and as enacted in
any state. These operating circulars are not
funds-transfer system rules, but, by their
terms, they are binding on all parties covered
by this subpart.
26(b) As-of Adjustments
As-of adjustments are memorandum items
that affect a bank’s reserve or clearing balance
for the purpose of meeting the required bal
ance, but do not represent funds that can be
used for other purposes. As discussed in the
commentary to section 210.32(b), the Federal
Reserve Banks generally provide as-of adjust
ments as a means of effecting interest pay
ments or charges.
26(d) Beneficiary’s Bank
25(d) Government Senders, Receiving
Banks, and Beneficiaries
This section clarifies that unless a statute of
the United States provides otherwise, subpart
B of this part applies to governmental entities,
domestic or foreign, including foreign central
banks as specified in paragraph (b)(1).
SECTION 210.26—Definitions
Article 4A defines many terms (e.g., “benefi
ciary,” “intermediary bank,” “receiving
bank,” “security procedure”) used in this
subpart. These terms are defined or listed in
sections 4A-103 through 4A-105. These
terms, such as the term “bank” (defined in
section 4A-105(d)(2)), may differ from com
parable terms in subpart A of this part. As
subpart B of this part incorporates consistent
provisions of article 4A, it incorporates these
definitions unless these terms are expressly de
fined otherwise in subpart B of this part. This
subpart modifies the definitions of two article
4A terms, “beneficiary’s bank” and “payment
order.” This subpart also defines terms not de
fined in article 4A.
26(a) Article 4A
“Article 4A” means the version of that article
of the Uniform Commercial Code set forth in
The definition of “beneficiary’s bank” in sub
part B of this part differs from the section 4A103(a) (3) definition. The subpart B definition
clarifies that where a Federal Reserve Bank
functions as the beneficiary’s bank, it need not
be identified in the payment order as the bene
ficiary’s bank and that a Federal Reserve
Bank that receives a payment order as benefi
ciary is also the beneficiary’s bank with re
spect to that payment order.
26(e) Fedwire
Fedwire refers to the funds-transfer system
owned and operated by the Federal Reserve
Banks that is governed by this subpart. The
term does not refer to any particular comput
er, telecommunications facility, or funds
transfer, but to the system as a whole, which
may include transfers by telephone or by writ
ten instrument in particular circumstances.
Fedwire does not include the system used for
automated clearinghouse transfers.
26(h) Off-Line Bank
Most Fedwire payment orders are transmitted
electronically from a sender to a Federal Re
serve Bank or from a Federal Reserve Bank to
a receiving bank. Banks transmitting payment
orders to Federal Reserve Banks electronical
ly are often referred to as on-line banks. Some
15
§ 210.26
R egulation J C om m entary
Fedwire participants, however, transmit pay
ment orders to a Federal Reserve Bank or re
ceive payment orders from a Federal Reserve
Bank orally by telephone, or, in unusual cir
cumstances, in writing. A bank that does not
use either a terminal or a computer that links
it electronically to a terminal or computer at
its Federal Reserve Bank to send payment or
ders through Fedwire is an off-line bank.
that are consumers. (See also section
210.25(b) and accompanying commentary.)
26(i) Payment Order
Section 4A-208 provides that a receiving
bank, such as a Federal Reserve Bank, may
rely on the routing number of an intermediary
bank or the beneficiary’s bank specified in a
payment order as identifying the appropriate
intermediary bank or beneficiary’s bank, even
if the payment order identifies another bank
by name, provided that the receiving bank
does not know of the inconsistency. Under
section 4A-208(b)(2), if the sender of the
payment order is not a bank, a receiving bank
may rely on the number only if the sender had
notice before the receiving bank accepted the
sender’s order that the receiving bank might
rely on the number. This section provides this
notice to entities that are not banks, such as
the Department of the Treasury, that send
payment orders directly to a Federal Reserve
Bank.
The definition of “payment order” in subpart
B of this part differs from the section 4A103(a)(1) definition. The subpart B definition
clarifies that, for the purposes of Subpart B of
this part, automated clearinghouse transfers
and certain messages that are transmitted
through Fedwire are not payment orders.
Federal Reserve Banks and banks participat
ing in Fedwire send various types of messages
relating to payment orders or to other mat
ters, through Fedwire, that are not intended
to be payment orders. Under the subpart B
definition, these messages, and messages in
volved with automated clearinghouse trans
fers, are not “payment orders” and therefore
are not governed by this subpart. The operat
ing circulars of the Federal Reserve Banks
specify those messages that may be transmit
ted through Fedwire but that are not payment
orders.
In some cases, messages sent through Fed
wire, such as certain requests for credit trans
fer, may be payment orders under article 4A,
but are not treated as payment orders under
subpart B because they are not an instruction
to a Federal Reserve Bank to pay money.
This subpart and article 4A govern a pay
ment order even though the originator’s or
beneficiary’s account may be a consumer ac
count established primarily for personal, fami
ly, or household purposes. Under section 4A108, article 4A does not apply to a funds
transfer any part of which is governed by the
Electronic Fund Transfer Act. That act, and
Regulation E implementing it, do not apply to
funds transfers through Fedwire (see 15 USC
1693a(6)(B) and 12 CFR 205.3(b)). Thus,
this subpart applies to all funds transfers
through Fedwire even though some such
transfers involve originators or beneficiaries
16
SECTION 210.27—Reliance on
Identifying Number
27 (a) Reliance by a Federal Reserve
Bank on Number to Identify
Intermediary Bank or Beneficiary’s Bank
27 (b) Reliance by a Federal Reserve
Bank on Number to Identify Beneficiary
Section 4A-207 provides that a beneficiary’s
bank, such as a Federal Reserve Bank, may
rely on the number identifying a beneficiary,
such as the beneficiary’s account number,
specified in a payment order as identifying the
appropriate beneficiary, even if the payment
order identifies another beneficiary by name,
provided that the beneficiary’s bank does not
know of the inconsistency. Under Section 4A207(c)(2), if the originator is not a bank, an
originator is not obliged to pay for a payment
order if the originator did not have notice that
the beneficiary’s bank might rely on the iden
tifying number and the person paid on the ba
sis of the identifying number was not entitled
to receive payment. This section of subpart B
provides this notice to entities that are not
banks, such as the Department of the Trea
sury, that are originators of payment orders
§ 2 1 0 .2 8
R egulation J C om m entary
sent directly by the originators to a Federal
Reserve Bank, where that Federal Reserve
Bank or another Federal Reserve Bank is the
beneficiary’s bank (see also section 4A402(b), providing that a sender must pay a
beneficiary’s bank for a payment order accept
ed by the beneficiary’s bank).
SECTION 210.28—Agreement of Sender
28 (a) Payment of Sender’s Obligation to
a Federal Reserve Bank
When a sender issues a payment order to a
Federal Reserve Bank and the Federal Re
serve Bank issues a conforming order imple
menting the sender’s payment order, under
section 4A-403, the sender is indebted to the
Federal Reserve Bank for the amount of the
payment order. A sender, other than a Feder
al Reserve Bank, that maintains or uses an
account at a Federal Reserve Bank authorizes
the Federal Reserve Bank to debit that ac
count so that the Federal Reserve Bank can
obtain payment for the payment order.
28(b) Overdrafts
In some cases, debits to a sender’s account
will create an overdraft in the sender’s ac
count. The Board and the Federal Reserve
Banks have established policies concerning
when a Federal Reserve Bank will permit a
bank to incur an overdraft in its account at a
Federal Reserve Bank. These policies do not
give a bank or other sender a right to an over
draft in its account. Subpart B clarifies that a
sender does not have a right to such an over
draft. If an overdraft arises, it becomes imme
diately due and payable at the earliest of: the
end of the funds-transfer business day of the
Federal Reserve Bank; the time the Federal
Reserve Bank, in its sole discretion, deems it
self insecure and gives notice to the sender; or
the time that the sender suspends payments or
is closed by governmental action, such as the
appointment of a receiver. In some cases, a
Federal Reserve Bank extends its Fedwire op
erations beyond its cut-off-hour for that fundstransfer business day. For the purposes of this
section, unless otherwise specified by the Fed
eral Reserve Bank making such an extension,
an overdraft becomes due and payable at the
end of the extended operating hours. An over
draft becomes due and payable prior to a Fed
eral Reserve Bank’s cut-off hour if the Federal
Reserve Bank deems itself insecure and gives
notice to the sender. Notice that the Federal
Reserve Bank deems itself insecure may be
given in accordance with the provisions on
notice in section 1-201(27) of the UCC, in
accordance with any other applicable law or
agreement, or by any other reasonable means.
An overdraft also becomes due and payable at
the time that a bank is closed or suspends pay
ments. For example, an overdraft becomes
due and payable if a receiver is appointed for
the bank or the bank is prevented from mak
ing payments by governmental order. The
Federal Reserve Bank need not make demand
on the sender for the overdraft to become due
and payable.
A sender must cover any overdraft and any
other obligation of the sender to the Federal
Reserve Bank by the time the overdraft be
comes due and payable. By sending a payment
order to a Federal Reserve Bank, the sender
grants a security interest to the Federal Re
serve Bank in any assets of the sender held by,
or for the account of, the Federal Reserve
Bank in order to secure all obligations due or
to become due to the Federal Reserve Bank.
The security interest attaches when the over
draft, or other obligation of the sender to the
Federal Reserve Bank, becomes due and pay
able. The security interest does not apply to
assets held by the sender as custodian or trust
ee for the sender’s customers or third parties.
Once an overdraft is due and payable, a Fed
eral Reserve Bank may exercise its right of
set-off, liquidate collateral, or take other simi
lar action to satisfy the overdrafting bank’s
obligation owed to the Federal Reserve Bank.
28 (c) Review of Payment Orders
Under section 4A-204, a receiving bank is re
quired to refund the principal amount of an
unauthorized payment order that the sender
was not obliged to pay, together with interest
on the refundable amount calculated from the
date that the receiving bank received payment
to the date of the refund. The sender is not
entitled to compensation in the form of inter17
§ 2 1 0 .2 8
est if the sender fails to exercise ordinary care
to determine that the order was not autho
rized and to notify the receiving bank within a
reasonable period of time after the sender re
ceives a notice that the payment order was
accepted or that the sender’s account was deb
ited with respect to the order. Similarly, under
section 4A-304, if a sender of a payment order
that was erroneously executed does not notify
the bank receiving the payment order within a
reasonable time, the bank is not liable to the
sender for compensation in the form of inter
est on any amount refundable to the sender.
Section 210.28(d) establishes 30 calendar
days as the reasonable period of time for the
purposes of these provisions of article 4A.
Section 4A-505 provides that a customer
must object to a debit to its account by a re
ceiving bank within one year after the custom
er received notification reasonably identifying
the payment order. Subpart B of this part does
not vary this one-year period.
SECTION 210.29—Agreement of
Receiving Bank
29(b) Off-Line Banks
Generally, an on-line bank receiving payment
orders or advices of credit for payment orders
from a Federal Reserve Bank receives the pay
ment orders or advices electronically a short
time after the corresponding payment orders
are received by the on-line bank’s Federal Re
serve Bank. An off-line bank receiving pay
ment orders or advices of credit from a Feder
al Reserve Bank does not have an electronic
connection with the Federal Reserve Bank;
therefore, payment orders or advices are
transmitted either by telephone on the day the
payment order is received by the receiving
bank’s Federal Reserve Bank, or sent by cou
rier or mail along with the off-line bank’s dai
ly account statement, on the funds-transfer
business day following the day the payment
order is received by the off-line bank’s Federal
Reserve Bank.
Under section 4A-302(a)(2), a Federal Re
serve Bank must transmit payment orders at a
time and by means reasonably necessary to
allow payment to the beneficiary on the pay18
R egulation J C om m entary
ment date, or as soon thereafter as is feasible.
Therefore, where an off-line receiving bank is
an intermediary bank or beneficiary’s bank in
a payment order, its Federal Reserve Bank at
tempts to transmit the payment order to the
off-line bank by telephone on the day the pay
ment order is received by the Federal Reserve
Bank. A Federal Reserve Bank can generally
identify these payment orders from the type
code designated in the payment order.
Under section 4A-404(b), if a payment or
der instructs payment to the account of the
beneficiary, the beneficiary’s bank must notify
the beneficiary of the receipt of a payment or
der before midnight of the next funds-transfer
business day following the payment date.
Where an off-line bank is the beneficiary of a
payment order, telephone notice by a Federal
Reserve Bank to the off-line bank of the re
ceipt of the order is not required by Article
4A because the Federal Reserve Bank sends
notice to the off-line bank by courier or mail,
along with its daily account statement, on the
day after the payment order is received by its
Federal Reserve Bank. Payment orders for
which an off-line bank is the beneficiary of the
order are generally designated as settlement
transactions.
If an off-line receiving bank maintains an
account for another bank, the off-line bank
may receive payment orders designated as set
tlement transactions in its capacity as benefi
ciary’s bank or intermediary bank. A Federal
Reserve Bank cannot readily distinguish these
payment orders from settlement transactions
for which the off-line bank is the beneficiary of
the order. If an off-line bank notifies its Feder
al Reserve Bank that it maintains an account
for another bank, the Federal Bank will at
tempt to telephone the off-line bank with re
spect to all settlement transactions received by
such bank, whether the off-line bank is the
beneficiary, the beneficiary’s bank, or an inter
mediary bank in the payment order. Under
this section, an off-line bank that does not ex
pressly notify its Federal Reserve Bank in
writing that it maintains an account for an
other bank warrants to that Federal Reserve
Bank that it does not act as an intermediary
bank or a beneficiary’s bank for a bank benefi
ciary with respect to payment orders received
through Fedwire.
§ 2 1 0 .3 1
R egulation J C om m entary
SECTION 210.30—Payment Orders
30(a) Rejection
A sender must make arrangements with its
Federal Reserve Bank before it can send pay
ment orders to the Federal Reserve Bank.
Federal Reserve Banks reserve the right to re
ject or impose conditions on the acceptance of
payment orders for any reason. For example,
a Federal Reserve Bank might reject or im
pose conditions on accepting a payment order
where a sender does not have sufficient funds
in its account with the Federal Reserve Bank
to cover the amount of the sender’s payment
order and other obligations of the sender due
or to become due to the Federal Reserve
Bank. A Federal Reserve Bank may require a
sender to execute a written agreement con
cerning security procedures or other matters
before the sender may send payment orders to
the Federal Reserve Bank.
30(b) Selection of an Intermediary Bank
Under section 4A-302, if a receiving bank
(other than a beneficiary’s bank), such as a
Federal Reserve Bank, accepts a payment or
der, it must issue a payment order that com
plies with the sender’s order. The sender’s or
der may include instructions concerning an
intermediary bank to be used that must be fol
lowed by a receiving bank {see section 4A302(a)(1)). If the sender does not designate
any intermediary bank in its payment order,
the receiving bank may select an intermediary
bank through which the sender’s payment
order can be expeditiously issued to the bene
ficiary’s bank so long as the receiving bank
exercises ordinary care in selecting the inter
mediary bank {see section 4A-302(b)).
This section provides that in an inter-District transfer, a Federal Reserve Bank is au
thorized and directed to select another Feder
al Reserve Bank as an intermediary bank. A
sender may, however, instruct a Federal Re
serve Bank to use a particular intermediary
bank by designating that bank as the bank to
be credited by that Federal Reserve Bank (or
the second Federal Reserve Bank in the case
of an inter-District transfer) in its payment
order, in which case the Federal Reserve
Bank will send the payment order to that
bank if that bank receives payment orders
through Fedwire. A sender may not instruct a
Federal Reserve Bank to use its discretion to
select an intermediary bank other than a Fed
eral Reserve Bank or an intermediary bank
designated by the sender. In addition, a sender
may not instruct a Federal Reserve Bank to
use a funds-transfer system or means of trans
mission other than Fedwire unless the sender
and the Federal Reserve Bank agree in writing
to the use of the funds-transfer system or
means of transmission.
30(c) Same-Day Execution
Generally, Fedwire is a same-day value trans
fer system through which funds may be trans
ferred from the originator to the beneficiary
on the same funds-transfer business day. A
sender may not send a payment order to a
Federal Reserve Bank that specifies an execu
tion date or payment date later than the day
on which the payment order is issued, unless
the sender of the order and the Federal Re
serve Bank agree in writing to the
arrangement.
SECTION 210.31—Payment by a
Federal Reserve Bank to a Receiving
Bank or Beneficiary
31 (a) Payment to a Receiving Bank
Under section 4A-402, when a Federal Re
serve Bank executes a sender’s payment order
by issuing a conforming order to a receiving
bank that accepts the payment order, the Fed
eral Reserve Bank must pay the receiving
bank the amount of the payment order. Sec
tion 210.29(a) authorizes a Federal Reserve
Bank to make the payment by crediting the
account at the Federal Reserve Bank main
tained or used by the receiving bank. Section
210.31(a) provides that the payment occurs
when the receiving bank’s account is credited
or when the payment order is sent by the Fed
eral Reserve Bank to the receiving bank,
whichever is earlier. Ordinarily, payment will
occur during the funds-transfer business day a
short time after the payment order is received,
even if the receiving bank is an off-line bank.
19
§ 2 1 0 .3 1
This credit is final and irrevocable when made
and constitutes final settlement under section
4A-403. Payment does not waive a Federal
Reserve Bank’s right of recovery under the
applicable law of mistake and restitution (see
section 210.32(c)), affect a Federal Reserve
Bank’s right to apply the funds to any obliga
tion due or to become due to the Federal Re
serve Bank, or affect legal process or claims by
third parties on the funds.
This section on final payment does not ap
ply to settlement for payment orders between
Federal Reserve Banks. These paym en t orders
are settled by other means.
31(b) Payment to a Beneficiary
Section 210.31(b) specifies when a Federal
Reserve Bank makes payment to a beneficiary
for which it is the beneficiary’s bank. As in the
case of payment to a receiving bank, this pay
ment occurs at the earlier of the time that the
Federal Reserve Bank credits the beneficiary’s
account or sends notice of the credit to the
beneficiary, and is final and irrevocable when
made.
SECTION 210.32—Federal Reserve
Bank Liability; Payment of Interest
32(a) Damages
Under section 4A-305(d), damages for failure
of a receiving bank to execute a payment or
der that it was obliged to execute by express
agreement are limited to expenses in the trans
action and incidental expenses and interest
and do not include additional damages, in
cluding consequential damages, unless they
are provided for in an express written agree
ment of the receiving bank. This section clari
fies that in connection with the handling of
payment orders, Federal Reserve Banks may
not agree to be liable for consequential dam
ages under this provision and shall not be lia
ble for damages other than those that may be
due under article 4A to parties governed by
this subpart. Any agreement in conflict with
these provisions would not be effective, be
cause it would be in violation of subpart B.
This section does not affect the ability of
20
R egulation J C om m entary
other parties to a funds transfer to agree to be
liable for consequential damages, the liability
of a Federal Reserve Bank under section 4A404, or the liability to parties governed by
subpart B for claims not based on the han
dling of a payment order under this subpart.
32 (b) Payment of Interest
Under article 4A, a Federal Reserve Bank
may be required to pay compensation in the
form of interest to another party in connec
tion with its handling of a funds transfer. For
example, payment of compensation in the
form of interest is required in certain situa
tions pursuant to sections 4A-204 (relating to
refund of payment and duty of customer to
report with respect to unauthorized payment
order), 4A-209 (relating to acceptance of
payment order), 4A-210 (relating to rejection
of payment order), 4A-304 (relating to duty
of sender to report erroneously executed pay
ment order), 4A-305 (relating to liability for
late or improper execution or failure to exe
cute a payment order), 4A-402 (relating to
obligation of sender to pay receiving bank),
and 4A-404 (relating to obligation of benefi
ciary’s bank to pay and give notice to benefi
ciary). Under Section 4A-506(a), the amount
of such interest may be determined by agree
ment between the sender and receiving bank
or by funds-transfer system rule. If there is no
such agreement, under section 4A-506(b), the
amount of interest is based on the federal
funds rate. Section 210.32(b) provides two
means by which Federal Reserve Banks may
provide compensation in the form of interest:
through an as-of adjustment or through an ex
plicit interest payment.
An as-of adjustment is a memorandum
credit or debit that is applied to the reserve or
clearing balance of the bank that sent the pay
ment order to, or received the payment order
from, a Federal Reserve Bank. Federal Re
serve Banks generally provide as-of adjust
ments to correct errors and recover float. An
as-of adjustment differs from a debit or credit
to an account in that it does not affect the
actual balance of the account; it only affects
the balance for reserve- or clearing-balance
computation purposes. These adjustments af
fect the level of reserve or clearing balances
R egulation J C om m entary
that the bank must fund by other means and
are therefore an effective substitute for explicit
interest payments.
A party that sent or received a payment or
der from a Federal Reserve Bank may be un
able to make use of an as-of adjustment as
compensation in lieu of explicit interest. For
example, if the sender or receiving bank is not
subject to reserve requirements or satisfies its
reserve requirements with vault cash, the as-of
adjustment could not be used to free other
balances for investment. A Federal Reserve
Bank may, in its discretion, provide compen
sation by an explicit interest payment rather
than through an as-of adjustment. Interest
would be calculated in accordance with the
procedures specified in section 4A-506(b).
Similarly, compensation in the form of explic
it interest will be paid to government senders,
receiving banks, or beneficiaries described in
section 210.25(d) if they are entitled to inter
est under this subpart. A Federal Reserve
Bank may also, in its discretion, pay explicit
interest directly to a remote party to a Fedwire funds transfer that is entitled to interest,
rather than providing compensation to its di
rect sender or receiving bank.
§ 210.32
If a bank that received an as-of adjustment
or explicit interest payment is not the party
entitled to interest compensation under article
4A, the bank must pass the benefit of the as-of
adjustment or explicit interest payment made
to it to the party that is entitled to compensa
tion in the form of interest from a Federal
Reserve Bank. The benefit may be passed on
either in the form of a direct payment of inter
est or in the form of a compensating balance,
if the party entitled to interest agrees to accept
the other form of compensation, and the value
of the compensating balance is at least equiva
lent to the value of the explicit interest that
otherwise would have been provided.
32(c) Non waiver of Right of Recovery
Several sections of article 4A allow for a party
to a funds transfer to make a claim pursuant
to the applicable law of mistake and restitu
tion. Nothing in subpart B of this part or any
operating circular issued under subpart B
waives any such claim. A Federal Reserve
Bank, however, may waive such a claim by
express written agreement in order to settle
litigation or for other purposes.
21
Uniform Commercial Code Article 4A
Funds Transfers
12 CFR 210, appendix B to subpart B
PART 1— SUBJECT MATTER AND
DEFINITIONS
(5) “Sender” means the person giving the
instruction to the receiving bank.
This Article may be cited as Uniform Com
mercial Code—Funds Transfers.
(b) If an instruction complying with subsec
tion (a)(1) is to make more than one pay
ment to a beneficiary, the instruction is a sepa
rate payment order with respect to each
payment.
SECTION 4A -102—Subject Matter
(c) A payment order is issued when it is sent
to the receiving bank.
Except as otherwise provided in Section 4A108, this Article applies to funds transfers de
fined in Section 4A-104.
SECTION 4A -104— Funds Transfer;
Definitions
SECTION 4A-101— Short Title
SECTION 4A -103—Payment Order;
Definitions
(a) In this Article:
(1) “Payment order” means an instruction
of a sender to a receiving bank, transmitted
orally, electronically, or in writing, to pay,
or to cause another bank to pay, a fixed or
determinable amount of money to a benefi
ciary if:
(i) the instruction does not state a con
dition to payment to the beneficiary other
than time of payment,
(ii) the receiving bank is to be reim
bursed by debiting an account of, or oth
erwise receiving payment from, the send
er, and
(iii) the instruction is transmitted by the
sender directly to the receiving bank or
to an agent, funds-transfer system, or
communication system for transmittal to
the receiving bank.
(2) “Beneficiary” means the person to be
paid by the beneficiary’s bank.
(3) “Beneficiary’s bank” means the bank
identified in a payment order in which an
account of the beneficiary is to be credited
pursuant to the order or which otherwise is
to make payment to the beneficiary if the
order does not provide for payment to an
account.
(4) “Receiving bank” means the bank to
which the sender’s instruction is addressed.
In this Article:
(a) “Funds transfer” means the series of
transactions, beginning with the origina
tor’s payment order, made for the purpose
of making payment to the beneficiary of the
order. The term includes any payment or
der issued by the originator’s bank or an
intermediary bank intended to carry out the
originator’s payment order. A funds trans
fer is completed by acceptance by the bene
ficiary’s bank of a payment order for the
benefit of the beneficiary of the originator’s
payment order.
(b) “Intermediary bank” means a receiv
ing bank other than the originator’s bank or
the beneficiary’s bank.
(c) “Originator” means the sender of the
first payment order in a funds transfer.
(d) “Originator’s bank” means (i) the re
ceiving bank to which the payment order of
the originator is issued if the originator is
not a bank, or (ii) the originator if the orig
inator is a bank.
SECTION 4A-105—Other Definitions
(a) In this Article:
(1) “Authorized account” means a deposit
account of a customer in a bank designated
by the customer as a source of payment of
payment orders issued by the customer to
the bank. If a customer does not so desig
nate an account, any account of the cus23
§ 4A -105
U C C A rticle 4 A
tomer is an authorized account if payment
of a payment order from that account is not
inconsistent with a restriction on the use of
that account.
(2) “Bank” means a person engaged in the
business of banking and includes a savings
bank, savings and loan association, credit
union, and trust company. A branch or sep
arate office of a bank is a separate bank for
purposes of this Article.
(3) “Customer” means a person, including
a bank, having an account with a bank or
from whom a bank has agreed to receive
payment orders.
(4) “Funds-transfer business day” of a re
ceiving bank means the part of a day during
which the receiving bank is open for the
receipt, processing, and transmittal of pay
ment orders and cancellations and amend
ments of payment orders.
(5) “Funds-transfer system” means a wire
transfer network, automated clearing
house, or other communication system of a
clearing house or other association of banks
through which a payment order by a bank
may be transmitted to the bank to which
the order is addressed.
(6) “Good faith” means honesty in fact
and the observance of reasonable commer
cial standards of fair dealing.
(7) “Prove” with respect to a fact means
to meet the burden of establishing the fact
(Section 1-201(8)).
(b) Other definitions applying to this Article
and the sections in which they appear are:
‘Acceptance”
‘Beneficiary”
‘Beneficiary’s bank”
‘Executed”
‘Execution date”
‘Funds transfer”
‘Funds-transfer system
rule”
‘Intermediary bank”
‘Originator”
‘Originator’s bank”
‘Payment by beneficiary’s
bank to beneficiary
‘Payment by originator to
beneficiary”
24
Section
Section
Section
Section
Section
Section
4A-209
4A-103
4A-103
4A-301
4A-301
4A-104
Section
Section
Section
Section
4A-501
4A-104
4A-104
4A-104
Section 4A-405
Section 4A-406
“Payment by sender to
receiving bank”
“Payment date”
“Payment order”
“Receiving bank”
“Security procedure”
“Sender”
Section
Section
Section
Section
Section
Section
4A-403
4A-401
4A-103
4A-103
4A-201
4A-103
(c) The following definitions in Article 4 ap
ply to this Article:
“Clearing house”
“Item”
“Suspends payments”
Section
Section
Section
4-104
4-104
4-104
(d) In addition Article 1 contains general
definitions and principles of construction and
interpretation applicable throughout this
Article.
SECTION 4A-106—Time Payment
Order Is Received
(a) The time of receipt of a payment order or
communication canceling or amending a pay
ment order is determined by the rules applica
ble to receipt of a notice stated in Section 1201(27). A receiving bank may fix a cut-off
time or times on a funds-transfer business day
for the receipt and processing of payment or
ders and communications canceling or
amending payment orders. Different cut-off
times may apply to payment orders, cancella
tions, or amendments, or to different catego
ries of payment orders, cancellations, or
amendments. A cut-off time may apply to
senders generally or different cut-off times
may apply to different senders or categories of
payment orders. If a payment order or com
munication canceling or amending a payment
order is received after the close of a fundstransfer business day or after the appropriate
cut-off time on a funds-transfer business day,
the receiving bank may treat the payment or
der or communication as received at the open
ing of the next funds-transfer business day.
(b) If this Article refers to an execution date
or payment date or states a day on which a
receiving bank is required to take action, and
the date or day does not fall on a funds-trans
fer business day, the next day that is a fundstransfer business day is treated as the date or
U C C A rticle 4 A
day stated, unless the contrary is stated in this
Article.
SECTION 4A-107—Federal Reserve
Regulations and Operating Circulars
Regulations of the Board of Governors of the
Federal Reserve System and operating circu
lars of the Federal Reserve Banks supersede
any inconsistent provision of this Article to
the extent of the inconsistency.
SECTION 4A -108—Exclusion of
Consumer Transactions Governed by
Federal Law
This Article does not apply to a funds transfer
any part of which is governed by the Electron
ic Fund Transfer Act of 1978 (Title XX, Pub
lic Law 95-630, 92 Stat. 3728, 15 U.S.C.
§ 1693 et seq.) as amended from time to time.
PART 2—ISSUE AND
ACCEPTANCE OF PAYMENT
ORDER
SECTION 4A-201—Security Procedure
“Security procedure” means a procedure es
tablished by agreement of a customer and a
receiving bank for the purpose of (i) verifying
that a payment order or communication
amending or canceling a payment order is
that of the customer, or (ii) detecting error in
the transmission or the content of the pay
ment order or communication. A security
procedure may require the use of algorithms
or other codes, identifying words or numbers,
encryption, callback procedures, or similar se
curity devices. Comparison of a signature on a
payment order or communication with an au
thorized specimen signature of the customer is
not by itself a security procedure.
SECTION 4A-202—Authorized and
Verified Payment Orders
§ 4A -202
the order or is otherwise bound by it under
the law of agency.
(b) If a bank and its customer have agreed
that the authenticity of payment orders issued
to the bank in the name of the customer as
sender will be verified pursuant to a security
procedure, a payment order received by the
receiving bank is effective as the order of the
customer, whether or not authorized, if (i)
the security procedure is a commercially rea
sonable method of providing security against
unauthorized payment orders, and (ii) the
bank proves that it accepted the payment or
der in good faith and in compliance with the
security procedure and any written agreement
or instruction of the customer restricting ac
ceptance of payment orders issued in the
name of the customer. The bank is not re
quired to follow an instruction that violates a
written agreement with the customer or notice
of which is not received at a time and in a
manner affording the bank a reasonable op
portunity to act on it before the payment or
der is accepted.
(c) Commercial reasonableness of a security
procedure is a question of law to be deter
mined by considering the wishes of the cus
tomer expressed to the bank, the circum
stances of the customer known to the bank,
including the size, type, and frequency of pay
ment orders normally issued by the customer
to the bank, alternative security procedures
offered to the customer, and security proce
dures in general use by customers and receiv
ing banks similarly situated. A security proce
dure is deemed to be commercially reasonable
if (i) the security procedure was chosen by
the customer after the bank offered, and the
customer refused, a security procedure that
was commercially reasonable for that custom
er, and (ii) the customer expressly agreed in
writing to be bound by any payment order,
whether or not authorized, issued in its name
and accepted by the bank in compliance with
the security procedure chosen by the
customer.
(d) The term “sender” in this Article in
(a) A payment order received by the receiv cludes the customer in whose name a payment
ing bank is the authorized order of the person order is issued if the order is the authorized
identified as sender if that person authorized order of the customer under subsection (a),
25
§ 4A -202
or it is effective as the order of the customer
under subsection (b).
(e) This section applies to amendments and
cancellations of payment orders to the same
extent it applies to payment orders.
(f) Except as provided in this section and in
Section 4A-203(a)(1), rights and obligations
arising under this section or Section 4A-203
may not be varied by agreement.
SECTION 4A-203— Unenforceability of
Certain Verified Payment Orders
(a) If an accepted payment order is not, un
der Section 4A-202(a), an authorized order of
a customer identified as sender, but is effective
as an order of the customer pursuant to Sec
tion 4A-202(b), the following rules apply:
(1) By express written agreement, the re
ceiving bank may limit the extent to which
it is entitled to enforce or retain payment of
the payment order.
(2) The receiving bank is not entitled to
enforce or retain payment of the payment
order if the customer proves that the order
was not caused, directly or indirectly, by a
person (i) entrusted at any time with duties
to act for the customer with respect to pay
ment orders or the security procedure, or
(ii) who obtained access to transmitting fa
cilities of the customer or who obtained,
from a source controlled by the customer
and without authority of the receiving
bank, information facilitating breach of the
security procedure, regardless of how the
information was obtained or whether the
customer was at fault. Information includes
any access device, computer software, or
the like.
(b) This section applies to amendments of
payment orders to the same extent it applies
to payment orders.
SECTION 4A-204— Refund of Payment
and Duty of Customer to Report with
Respect to Unauthorized Payment Order
(a) If a receiving bank accepts a payment
order issued in the name of its customer as
26
U C C A rticle 4 A
sender which is (i) not authorized and not
effective as the order of the customer under
Section 4A-202, or (ii) not enforceable, in
whole or in part, against the customer under
Section 4A-203, the bank shall refund any
payment of the payment order received from
the customer to the extent the bank is not en
titled to enforce payment and shall pay inter
est on the refundable amount calculated from
the date the bank received payment to the
date of the refund. However, the customer is
not entitled to interest from the bank on the
amount to be refunded if the customer fails to
exercise ordinary care to determine that the
order was not authorized by the customer and
to notify the bank of the relevant facts within
a reasonable time not exceeding 90 days after
the date the customer received notification
from the bank that the order was accepted or
that the customer’s account was debited with
respect to the order. The bank is not entitled
to any recovery from the customer on account
of a failure by the customer to give notifica
tion as stated in this section.
(b) Reasonable time under subsection (a)
may be fixed by agreement as stated in Section
1-204(1), but the obligation of a receiving
bank to refund payment as stated in subsec
tion (a) may not otherwise be varied by
agreement.
SECTION 4A-205—Erroneous Payment
Orders
(a) If an accepted payment order was trans
mitted pursuant to a security procedure for
the detection of error and the payment order
(i) erroneously instructed payment to a bene
ficiary not intended by the sender, (ii) errone
ously instructed payment in an amount great
er than the amount intended by the sender, or
(iii) was an erroneously transmitted duplicate
of a payment order previously sent by the
sender, the following rules apply:
(1) If the sender proves that the sender or
a person acting on behalf of the sender pur
suant to Section 4A-206 complied with the
security procedure and that the error would
have been detected if the receiving bank
had also complied, the sender is not obliged
U C C A rticle 4 A
to pay the order to the extent stated in par
agraphs (2) and (3).
(2) If the funds transfer is completed on
the basis of an erroneous payment order de
scribed in clause (i) or (iii) of subsection
(a), the sender is not obliged to pay the
order and the receiving bank is entitled to
recover from the beneficiary any amount
paid to the beneficiary to the extent allowed
by the law governing mistake and
restitution.
(3) If the funds transfer is completed on
the basis of a payment order described in
clause (ii) of subsection (a), the sender is
not obliged to pay the order to the extent
the amount received by the beneficiary is
greater than the amount intended by the
sender. In that case, the receiving bank is
entitled to recover from the beneficiary the
excess amount received to the extent al
lowed by the law governing mistake and
restitution.
(b) If (i) the sender of an erroneous payment
order described in subsection (a) is not
obliged to pay all or part of the order, and (ii)
the sender receives notification from the re
ceiving bank that the order was accepted by
the bank or that the sender’s account was deb
ited with respect to the order, the sender has a
duty to exercise ordinary care, on the basis of
information available to the sender, to discov
er the error with respect to the order and to
advise the bank of the relevant facts within a
reasonable time, not exceeding 90 days, after
the bank’s notification was received by the
sender. If the bank proves that the sender
failed to perform that duty, the sender is liable
to the bank for the loss the bank proves it
incurred as a result of the failure, but the lia
bility of the sender may not exceed the
amount of the sender’s order.
(c) This section applies to amendments to
payment orders to the same extent it applies
to payment orders.
SECTION 4A-206—Transmission of
Payment Order Through Funds-Transfer
or Other Communication System
(a) If a payment order addressed to a receiv
ing bank is transmitted to a funds-transfer
§ 4A -207
system or other third-party communication
system for transmittal to the bank, the system
is deemed to be an agent of the sender for the
purpose of transmitting the payment order to
the bank. If there is a discrepancy between the
terms of the payment order transmitted to the
system and the terms of the payment order
transmitted by the system to the bank, the
terms of the payment order of the sender are
those transmitted by the system. This section
does not apply to a funds-transfer system of
the Federal Reserve Banks.
(b) This section applies to cancellations and
amendments of payment orders to the same
extent it applies to payment orders.
SECTION 4A-207—Misdescription of
Beneficiary
(a) Subject to subsection (b), if, in a pay
ment order received by the beneficiary’s bank,
the name, bank account number, or other
identification of the beneficiary refers to a
nonexistent or unidentifiable person or ac
count, no person has rights as a beneficiary of
the order and acceptance of the order cannot
occur.
(b) If a payment order received by the benefi
ciary’s bank identifies the beneficiary both by
name and by an identifying or bank account
number and the name and number identify
different persons, the following rules apply:
(1) Except as otherwise provided in sub
section (c), if the beneficiary’s bank does
not know that the name and number refer
to different persons, it may rely on the num
ber as the proper identification of the bene
ficiary of the order. The beneficiary’s bank
need not determine whether the name and
number refer to the same person.
(2) If the beneficiary’s bank pays the per
son identified by name or knows that the
name and number identify different per
sons, no person has rights as beneficiary ex
cept the person paid by the beneficiary’s
bank if that person was entitled to receive
payment from the originator of the funds
transfer. If no person has rights as benefi
ciary, acceptance of the order cannot occur.
(c) If (i) a payment order described in sub27
§ 4A -207
section (b) is accepted, (ii) the originator’s
payment order described the beneficiary in
consistently by name and number, and (iii)
the beneficiary’s bank pays the person identi
fied by number as permitted by subsection
(b)(1), the following rules apply:
(1) If the originator is a bank, the origina
tor is obliged to pay its order.
(2) If the originator is not a bank and
proves that the person identified by num
ber was not entitled to receive payment
from the originator, the originator is not
obliged to pay its order unless the origina
tor’s bank proves that the originator, be
fore acceptance of the originator’s order,
had notice that payment of a payment or
der issued by the originator might be
made by the beneficiary’s bank on the ba
sis of an identifying or bank account num
ber even if it identifies a person different
from the named beneficiary. Proof of no
tice may be made by any admissible evi
dence. The originator’s bank satisfies the
burden of proof if it proves that the origi
nator, before the payment order was ac
cepted, signed a writing stating the infor
mation to which the notice relates.
U C C A rticle 4 A
intermediary or beneficiary’s bank and need
not determine whether the number identi
fies a bank.
(2) The sender is obliged to compensate
the receiving bank for any loss and expenses
incurred by the receiving bank as a result of
its reliance on the number in executing or
attempting to execute the order.
(b) This subsection applies to a payment or
der identifying an intermediary bank or the
beneficiary’s bank both by name and an iden
tifying number if the name and number identi
fy different persons.
(1) If the sender is a bank, the receiving
bank may rely on the number as the proper
identification of the intermediary or benefi
ciary’s bank if the receiving bank, when it
executes the sender’s order, does not know
that the name and number identify different
persons. The receiving bank need not deter
mine whether the name and number refer
to the same person or whether the number
refers to a bank. The sender is obliged to
compensate the receiving bank for any loss
and expenses incurred by the receiving
bank as a result of its reliance on the num
ber in executing or attempting to execute
(d) In a case governed by subsection (b)(1),
the order.
if the beneficiary’s bank rightfully pays the
(2) If the sender is not a bank and the re
person identified by number and that person
ceiving bank proves that the sender, before
was not entitled to receive payment from the
the payment order was accepted, had notice
originator, the amount paid may be recovered
that the receiving bank might rely on the
from that person to the extent allowed by the
number as the proper identification of the
law governing mistake and restitution as
intermediary or beneficiary’s bank even if it
follows:
identifies a person different from the bank
(1) If the originator is obliged to pay its
identified by name, the rights and obliga
payment order as stated in subsection (c),
tions of the sender and the receiving bank
the originator has the right to recover.
are governed by subsection (b)(1), as
(2) If the originator is not a bank and is
though the sender were a bank. Proof of
not obliged to pay its payment order, the
notice may be made by any admissible evi
originator’s bank has the right to recover.
dence. The receiving bank satisfies the bur
den of proof it it proves that the sender,
before the payment order was accepted,
SECTION 4A-208—Misdescription of
signed a writing stating the information to
Intermediary Bank or Beneficiary’s Bank
which the notice relates.
(a) This subsection applies to a payment or
(3) Regardless of whether the sender is a
der identifying an intermediary bank or the
bank, the receiving bank may rely on the
beneficiary’s bank only by an identifying
name as the proper identification of the in
number.
termediary or beneficiary’s bank if the re
(1) The receiving bank may rely on the
ceiving bank, at the time it executes the
number as the proper identification of the
sender’s order, does not know that the
28
§ 4A -210
U C C A rticle 4 A
name and number identify different per
sons. The receiving bank need not deter
mine whether the name and number refer
to the same person.
(4) If the receiving bank knows that the
name and number identify different per
sons, reliance on either the name or the
number in executing the sender’s payment
order is a breach of the obligation stated in
Section 4A-302(a)(l).
SECTION 4a-209—Acceptance of
Payment Order
(a) Subject to subsection (d), a receiving
bank other than the beneficiary’s bank accepts
a payment order when it executes the order.
(b) Subject to subsections (c) and (d), a
beneficiary’s bank accepts a payment order at
the earliest of the following times:
(1) when the bank (i) pays the beneficiary
as stated in Section 4A-405(a) or 4A405(b), or (ii) notifies the beneficiary of re
ceipt of the order or that the account of the
beneficiary has been credited with respect
to the order unless the notice indicates that
the bank is rejecting the order or that funds
with respect to the order may not be with
drawn or used until receipt of payment
from the sender of the order;
(2) when the bank receives payment of
the entire amount of the sender’s order pur
suant to Section 4A-403 (a)(1) or 4A403(a)(2); or
(3) the opening of the next funds-transfer
business day of the bank following the pay
ment date of the order if, at that time, the
amount of the sender’s order is fully cov
ered by a withdrawable credit balance in an
authorized account of the sender or the
bank has otherwise received full payment
from the sender, unless the order was re
jected before that time or is rejected within
(i) one hour after that time, or (ii) one
hour after the opening of the next business
day of the sender following the payment
date if that time is later. If notice of rejec
tion is received by the sender after the pay
ment date and the authorized account of
the sender does not bear interest, the bank
is obliged to pay interest to the sender on
the amount of the order for the number of
days elapsing after the payment date to the
day the sender receives notice or learns that
the order was not accepted, counting that
day as an elapsed day. If the withdrawable
credit balance during that period falls be
low the amount of the order, the amount of
interest payable is reduced accordingly.
(c) Acceptance of a payment order cannot
occur before the order is received by the re
ceiving bank. Acceptance does not occur un
der subsection (b)(2) or (b)(3) if the benefi
ciary of the payment order does not have an
account with the receiving bank, the account
has been closed, or the receiving bank is not
permitted by law to receive credits for the
beneficiary’s account.
(d) A payment order issued to the origina
tor’s bank cannot be accepted until the pay
ment date if the bank is the beneficiary’s bank,
or the execution date if the bank is not the
beneficiary’s bank. If the originator’s bank ex
ecutes the originator’s payment order before
the execution date or pays the beneficiary of
the originator’s payment order before the pay
ment date and the payment order is subse
quently canceled pursuant to Section
4A-211(b), the bank may recover from the
beneficiary any payment received to the extent
allowed by the law governing mistake and
restitution.
SECTION 4A -210—Rejection of
Payment Order
(a) A payment order is rejected by the re
ceiving bank by a notice of rejection transmit
ted to the sender orally, electronically, or in
writing. A notice of rejection need not use any
particular words and is sufficient if it indicates
that the receiving bank is rejecting the order
or will not execute or pay the order. Rejection
is effective when the notice is given if trans
mission is by a means that is reasonable in the
circumstances. If notice of rejection is given
by a means that is not reasonable, rejection is
effective when the notice is received. If an
agreement of the sender and receiving bank
establishes the means to be used to reject a
payment order, (i) any means complying with
the agreement is reasonable and (ii) any
29
§ 4A -2 1 0
means not complying is not reasonable unless
no significant delay in receipt of the notice re
sulted from the use of the noncomplying
means.
(b) This subsection applies if a receiving
bank other than the beneficiary’s bank fails to
execute a payment order despite the existence
on the execution date of a withdrawable credit
balance in an authorized account of the send
er sufficient to cover the order. If the sender
does not receive notice of rejection of the or
der on the execution date and the authorized
account of the sender does not bear interest,
the bank is obliged to pay interest to the send
er on the amount of the order for the number
of days elapsing after the execution date to the
earlier of the day the order is canceled pursu
ant to Section 4A-211(d) or the day the send
er receives notice or learns that the order was
not executed, counting the final day of the pe
riod as an elapsed day. If the withdrawable
credit balance during that period falls below
the amount of the order, the amount of inter
est is reduced accordingly.
(c) If a receiving bank suspends payments,
all unaccepted payment orders issued to it are
deemed rejected at the time the bank suspends
payments.
(d) Acceptance of a payment order precludes
a later rejection of the order. Rejection of a
payment order precludes a later acceptance of
the order.
SECTION 4A-211—Cancellation and
Amendment of Payment Order
(a) A communication of the sender of a pay
ment order canceling or amending the order
may be transmitted to the receiving bank oral
ly, electronically, or in writing. If a security
procedure is in effect between the sender and
the receiving bank, the communication is not
effective to cancel or amend the order unless
the communication is verified pursuant to the
security procedure or the bank agrees to the
cancellation or amendment.
(b) Subject to subsection (a), a communica
tion by the sender canceling or amending a
payment order is effective to cancel or amend
30
U C C A rticle 4A
the order if notice of the communication is
received at a time and in a manner affording
the receiving bank a reasonable opportunity to
act on the communication before the bank ac
cepts the payment order.
(c) After a payment order has been accepted,
cancellation or amendment of the order is not
effective unless the receiving bank agrees or a
funds-transfer system rule allows cancellation
or amendment without agreement of the
bank.
(1) With respect to a payment order ac
cepted by a receiving bank other than the
beneficiary’s bank, cancellation or amend
ment is not effective unless a conforming
cancellation or amendment of the payment
order issued by the receiving bank is also
made.
(2) With respect to a payment order ac
cepted by the beneficiary’s bank, cancella
tion or amendment is not effective unless
the order was issued in execution of an un
authorized payment order, or because of a
mistake by a sender in the funds transfer
which resulted in the issuance of a payment
order (i) that is a duplicate of a payment
order previously issued by the sender, (ii)
that orders payment to a beneficiary not en
titled to receive payment from the origina
tor, or (iii) that orders payment in an
amount greater than the amount the benefi
ciary was entitled to receive from the origi
nator. If the payment order is canceled or
amended, the beneficiary’s bank is entitled
to recover from the beneficiary any amount
paid to the beneficiary to the extent allowed
by the law governing mistake and
restitution.
(d) An unaccepted payment order is can
celed by operation of law at the close of the
fifth funds-transfer business day of the receiv
ing bank after the execution date or payment
date of the order.
(e) A canceled payment order cannot be ac
cepted. If an accepted payment order is can
celed, the acceptance is nullified and no per
son has any right or obligation based on the
acceptance. Amendment of a payment order
is deemed to be cancellation of the original
order at the time of amendment and issue of a
U C C A rticle 4 A
new payment order in the amended form at
the same time.
(f) Unless otherwise provided in an agree
ment of the parties or in a funds-transfer sys
tem rule, if the receiving bank, after accepting
a payment order, agrees to cancellation or
amendment of the order by the sender or is
bound by a funds-transfer system rule allow
ing cancellation or amendment without the
bank’s agreement, the sender, whether or not
cancellation or amendment is effective, is lia
ble to the bank for any loss and expenses, in
cluding reasonable attorney’s fees, incurred by
the bank as a result of the cancellation or
amendment or attempted cancellation or
amendment.
§ 4A -302
PART 3—EXECUTION OF
SENDER’S PAYMENT ORDER BY
RECEIVING BANK
SECTION 4A-301—Execution and
Execution Date
(a) A payment order is “executed” by the re
ceiving bank when it issues a payment order
intended to carry out the payment order re
ceived by the bank. A payment order received
by the beneficiary’s bank can be accepted but
cannot be executed.
(h) A funds-transfer system rule is not effec
tive to the extent it conflicts with subsection
(c)(2).
(b) “Execution date” of a payment order
means the day on which the receiving bank
may properly issue a payment order in execu
tion of the sender’s order. The execution date
may be determined by instruction of the send
er but cannot be earlier than the day the order
is received and, unless otherwise determined,
is the day the order is received. If the sender’s
instruction states a payment date, the execu
tion date is the payment date or an earlier
date on which execution is reasonably neces
sary to allow payment to the beneficiary on
the payment date.
SECTION 4A-212—Liability and Duty
of Receiving Bank Regarding
Unaccepted Payment Order
SECTION 4A-302—Obligations of
Receiving Bank in Execution of Payment
Order
If a receiving bank fails to accept a payment
order that it is obliged by express agreement
to accept, the bank is liable for breach of the
agreement to the extent provided in the agree
ment or in this Article, but does not otherwise
have any duty to accept a payment order or,
before acceptance, to take any action, or re
frain from taking action, with respect to the
order except as provided in this Article or by
express agreement. Liability based on accept
ance arises only when acceptance occurs as
stated in Section 4A-209, and liability is limit
ed to that provided in this Article. A receiving
bank is not the agent of the sender or benefi
ciary of the payment order it accepts, or of
any other party to the funds transfer, and the
bank owes no duty to any party to the funds
transfer except as provided in this Article or
by express agreement.
(a) Except as provided in subsections (b)
through (d), if the receiving bank accepts a
payment order pursuant to Section 4A209(a), the bank has the following obligations
in executing the order:
(1) The receiving bank is obliged to issue,
on the execution date, a payment order
complying with the sender’s order and to
follow the sender’s instructions concerning
(i) any intermediary bank or funds-transfer
system to be used in carrying out the funds
transfer, or (ii) the means by which pay
ment orders are to be transmitted in the
funds transfer. If the originator’s bank is
sues a payment order to an intermediary
bank, the originator’s bank is obliged to in
struct the intermediary bank according to
the instruction of the originator. An inter
mediary bank in the funds transfer is simi
(g) A payment order is not revoked by the
death or legal incapacity of the sender unless
the receiving bank knows of the death or of an
adjudication of incapacity by a court of com
petent jurisdiction and has reasonable oppor
tunity to act before acceptance of the order.
31
§ 4A -302
larly bound by an instruction given to it by
the sender of the payment order it accepts.
(2) If the sender’s instruction states that
the funds transfer is to be carried out telephonically or by wire transfer or otherwise
indicates that the funds transfer is to be car
ried out by the most expeditious means, the
receiving bank is obliged to transmit its
payment order by the most expeditious
available means, and to instruct any inter
mediary bank accordingly. If a sender’s in
struction states a payment date, the receiv
ing bank is obliged to transmit its payment
order at a time and by means reasonably
necessary to allow payment to the beneficia
ry on the payment date or as soon thereaf
ter as is feasible.
(b) Unless otherwise instructed, a receiving
bank executing a payment order may (i) use
any funds-transfer system if use of that system
is reasonable in the circumstances, and (ii)
issue a payment order to the beneficiary’s
bank or to an intermediary bank through
which a payment order conforming to the
sender’s order can expeditiously be issued to
the beneficiary’s bank if the receiving bank ex
ercises ordinary care in the selection of the
intermediary bank. A receiving bank is not re
quired to follow an instruction of the sender
designating a funds-transfer system to be used
in carrying out the funds transfer if the receiv
ing bank, in good faith, determines that it is
not feasible to follow the instruction or that
following the instruction would unduly delay
completion of the funds transfer.
(c) Unless subsection (a)(2) applies or the
receiving bank is otherwise instructed, the
bank may execute a payment order by trans
mitting its payment order by first class mail or
by any means reasonable in the circum
stances. If the receiving bank is instructed to
execute the sender’s order by transmitting its
payment order by a particular means, the re
ceiving bank may issue its payment order by a
means stated or by any means as expeditious
as the means stated.
(d) Unless instructed by the sender, (i) the
receiving bank may not obtain payment of its
charges for services and expenses in connec
tion with the execution of the sender’s order
32
U C C A rticle 4 A
by issuing a payment order in an amount
equal to the amount of the sender’s order less
the amount of the charges, and (ii) may not
instruct a subsequent receiving bank to obtain
payment of its charges in the same manner.
SECTION 4A-303—Erroneous
Execution of Payment Order
(a) A receiving bank that (i) executes the
payment order of the sender by issuing a pay
ment order in an amount greater than the
amount of the sender’s order, or (ii) issues a
payment order in execution of the sender’s or
der and then issues a duplicate order, is enti
tled to payment of the amount of the sender’s
order under Section 4A-402(c) if that subsec
tion is otherwise satisfied. The bank is entitled
to recover from the beneficiary of the errone
ous order the excess payment received to the
extent allowed by the law governing mistake
and restitution.
(b) A receiving bank that executes the pay
ment order of the sender by issuing a payment
order in an amount less than the amount of
the sender’s order is entitled to payment of the
amount of the sender’s order under Section
4A-402(c) if (i) that subsection is otherwise
satisfied and (ii) the bank corrects its mistake
by issuing an additional payment order for the
benefit of the beneficiary of the sender’s order.
If the error is not corrected, the issuer of the
erroneous order is entitled to receive or retain
payment from the sender of the order it ac
cepted only to the extent of the amount of the
erroneous order. This subsection does not ap
ply if the receiving bank executes the sender’s
payment order by issuing a payment order in
an amount less than the amount of the send
er’s order for the purpose of obtaining pay
ment of its charges for services and expenses
pursuant to instruction of the sender.
(c) If a receiving bank executes the payment
order of the sender by issuing a payment order
to a beneficiary different from the beneficiary
of the sender’s order and the funds transfer is
completed on the basis of that error, the send
er of the payment order that was erroneously
executed and all previous senders in the funds
transfer are not obliged to pay the payment
U C C A rticle 4 A
orders they issued. The issuer of the erroneous
order is entitled to recover from the beneficia
ry of the order the payment received to the
extent allowed by the law governing mistake
and restitution.
SECTION 4A-304— Duty of Sender to
Report Erroneously Executed Payment
Order
If the sender of a payment order that is erro
neously executed as stated in Section 4A-303
receives notification from the receiving bank
that the order was executed or that the send
er’s account was debited with respect to the
order, the sender has a duty to exercise ordi
nary care to determine, on the basis of infor
mation available to the sender, that the order
was erroneously executed and to notify the
bank of the relevant facts within a reasonable
time not exceeding 90 days after the notifica
tion from the bank was received by the sender.
If the sender fails to perform that duty, the
bank is not obliged to pay interest on any
amount refundable to the sender under Sec
tion 4A-402(d) for the period before the bank
learns of the execution error. The bank is not
entitled to any recovery from the sender on
account of a failure by the sender to perform
the duty stated in this section.
SECTION 4A-305—Liability for Late or
Improper Execution or Failure to
Execute Payment Order
(a) If a funds transfer is completed but exe
cution of a payment order by the receiving
bank in breach of Section 4A-302 results in
delay in payment to the beneficiary, the bank
is obliged to pay interest to either the origi
nator or the beneficiary of the funds transfer
for the period of delay caused by the im
proper execution. Except as provided in sub
section (c), additional damages are not
recoverable.
(b) If execution of a payment order by a re
ceiving bank in breach of Section 4A-302 re
sults in (i) noncompletion of the funds trans
fer, (ii) failure to use an intermediary bank
designated by the originator, or (iii) issuance
§ 4A -401
of a payment order that does not comply with
the terms of the payment order of the origina
tor, the bank is liable to the originator for its
expenses in the funds transfer and for inciden
tal expenses and interest losses, to the extent
not covered by subsection (a), resulting from
the improper execution. Except as provided in
subsection (c), additional damages are not
recoverable.
(c) In addition to the amounts payable under
subsections (a) and (b), damages, including
consequential damages, are recoverable to the
extent provided in an express written agree
ment of the receiving bank.
(d) If a receiving bank fails to execute a pay
ment order it was obliged by express agree
ment to execute, the receiving bank is liable to
the sender for its expenses in the transaction
and for incidental expenses and interest losses
resulting from the failure to execute. Addi
tional damages, including consequential dam
ages, are recoverable to the extent provided in
an express written agreement of the receiving
bank, but are not otherwise recoverable.
(e) Reasonable attorney’s fees are recover
able if demand for compensation under sub
section (a) or (b) is made and refused before
an action is brought on the claim. If a claim is
made for breach of an agreement under sub
section (d) and the agreement does not pro
vide for damages, reasonable attorney’s fees
are recoverable if demand for compensation
under subsection (d) is made and refused be
fore an action is brought on the claim.
(f) Except as stated in this section, the liabili
ty of a receiving bank under subsections (a)
and (b) may not be varied by agreement.
PART 4— PAYMENT
SECTION 4A-401—Payment Date
“Payment date” of a payment order means
the day on which the amount of the order is
payable to the beneficiary by the beneficiary’s
bank. The payment date may be determined
by instruction of the sender but cannot be ear
lier than the day the order is received by the
33
§ 4A -401
U C C A rticle 4 A
beneficiary’s bank and, unless otherwise deter
mined, is the day the order is received by the
beneficiary’s bank.
that intermediary bank is subrogated to the
right of the bank that paid the intermediary
bank to refund as stated in subsection (d).
SECTION 4A-402—Obligation of
Sender to Pay Receiving Bank
(0 The right of the sender of a payment or
der to be excused from the obligation to pay
the order as stated in subsection (c) or to re
ceive refund under subsection (d) may not be
varied by agreement.
(a) This section is subject to Sections 4A-205
and 4A-207.
(b) With respect to a payment order issued
to the beneficiary’s bank, acceptance of the or
der by the bank obliges the sender to pay the
bank the amount of the order, but payment is
not due until the payment date of the order.
SECTION 4A-403—Payment by Sender
to Receiving Bank
(e) If a funds transfer is not completed as
stated in subsection (c) and an intermediary
bank is obliged to refund payment as stated in
subsection (d) but is unable to do so because
not permitted by applicable law or because the
bank suspends payments, a sender in the
funds transfer that executed a payment order
in compliance with an instruction, as stated in
Section 4A-302(a)(l), to route the funds
transfer through that intermediary bank is en
titled to receive or retain payment from the
sender of the payment order that it accepted.
The first sender in the funds transfer that is
sued an instruction requiring routing through
obligations multilaterally among participants,
the receiving bank receives final settlement
when settlement is complete in accordance
with the rules of the system. The obligation of
the sender to pay the amount of a payment
order transmitted through the funds-transfer
system may be satisfied, to the extent permit
ted by the rules of the system, by setting off
and applying against the sender’s obligation
the right of the sender to receive payment
from the receiving bank of the amount of any
other payment order transmitted to the sender
by the receiving bank through the fundstransfer system. The aggregate balance of obli
(a) Payment of the sender’s obligation under
Section 4A-402 to pay the receiving bank oc
(c) This subsection is subject to subsection curs as follows:
(e) and to Section 4A-303. With respect to a
(1) If the sender is a bank, payment occurs
payment order issued to a receiving bank oth
when the receiving bank receives final set
er than the beneficiary’s bank, acceptance of
tlement of the obligation through a Federal
the order by the receiving bank obliges the
Reserve Bank or through a funds-transfer
sender to pay the bank the amount of the
system.
sender’s order. Payment by the sender is not
(2) If the sender is a bank and the sender
due until the execution date of the sender’s
(i) credited an account of the receiving
order. The obligation of that sender to pay its
bank with the sender, or (ii) caused an ac
payment order is excused if the funds transfer
count of the receiving bank in another bank
is not completed by acceptance by the benefi
to be credited, payment occurs when the
ciary’s bank of a payment order instructing
credit is withdrawn or, if not withdrawn, at
payment to the beneficiary of that sender’s
midnight of the day on which the credit is
payment order.
withdrawable and the receiving bank learns
of that fact.
(d) If the sender of a payment order pays the
(3) If the receiving bank debits an account
order and was not obliged to pay all or part of
of the sender with the receiving bank, pay
the amount paid, the bank receiving payment
ment occurs when the debit is made to the
is obliged to refund payment to the extent the
extent the debit is covered by a withdrawa
sender was not obliged to pay. Except as pro
ble credit balance in the account.
vided in Sections 4A-204 and 4A-304, interest
is payable on the refundable amount from the (b) If the sender and receiving bank are
date of payment.
members of a funds-transfer system that nets
34
U C C A rticle 4 A
gations owed by each sender to each receiving
bank in the funds-transfer system may be sat
isfied, to the extent permitted by the rules of
the system, by setting off and applying against
that balance the aggregate balance of obliga
tions owed to the sender by other members of
the system. The aggregate balance is deter
mined after the right of setoff stated in the
second sentence of this subsection has been
exercised.
(c) If two banks transmit payment orders to
each other under an agreement that settle
ment of the obligations of each bank to the
other under Section 4A-402 will be made at
the end of the day or other period, the total
amount owed with respect to all orders trans
mitted by one bank shall be set off against the
total amount owed with respect to all orders
transmitted by the other bank. To the extent
of the setoff, each bank has made payment to
the other.
(d) In a case not covered by subsection (a),
the time when payment of the sender’s obliga
tion under Section 4A-402(b) or 4A-402(c)
occurs is governed by applicable principles of
law that determine when an obligation is
satisfied.
SECTION 4A-404— Obligation of
Beneficiary’s Bank to Pay and Give
Notice to Beneficiary
(a) Subject to Sections 4A-211(e), 4A405(d), and 4A-405(e), if a beneficiary’s
bank accepts a payment order, the bank is
obliged to pay the amount of the order to the
beneficiary of the order. Payment is due on
the payment date of the order, but if accept
ance occurs on the payment date after the
close of the funds-transfer business day of
the bank, payment is due on the next fundstransfer business day. If the bank refuses to
pay after demand by the beneficiary and re
ceipt of notice of particular circumstances
that will give rise to consequential damages as
a result of nonpayment, the beneficiary may
recover damages resulting from the refusal to
pay to the extent the bank had notice of the
damages, unless the bank proves that it did
not pay because of a reasonable doubt con
§ 4A -405
cerning the right of the beneficiary to
payment.
(b) If a payment order accepted by the bene
ficiary’s bank instructs payment to an account
of the beneficiary, the bank is obliged to notify
the beneficiary of receipt of the order before
midnight of the next funds-transfer business
day following the payment date. If the pay
ment order does not instruct payment to an
account of the beneficiary, the bank is re
quired to notify the beneficiary only if notice
is required by the order. Notice may be given
by first class mail or any other means reason
able in the circumstances. If the bank fails to
give the required notice, the bank is obliged to
pay interest to the beneficiary on the amount
of the payment order from the day notice
should have been given until the day the bene
ficiary learned of receipt of the payment order
by the bank. No other damages are recover
able. Reasonable attorney’s fees are also re
coverable if demand for interest is made and
refused before an action is brought on the
claim.
(c) The right of a beneficiary to receive pay
ment and damages as stated in subsection (a)
may not be varied by agreement or a fundstransfer system rule. The right of a beneficiary
to be notified as stated in subsection (b) may
be varied by agreement of the beneficiary or
by a funds-transfer system rule if the benefi
ciary is notified of the rule before initiation of
the funds transfer.
SECTION 4A-405—Payment by
Beneficiary’s Bank to Beneficiary
(a) If the beneficiary’s bank credits an ac
count of the beneficiary of a payment order,
payment of the bank’s obligation under Sec
tion 4A-404(a) occurs when and to the extent
(i) the beneficiary is notified of the right to
withdraw the credit, (ii) the bank lawfully ap
plies the credit to a debt of the beneficiary, or
(iii) funds with respect to the order are other
wise made available to the beneficiary by the
bank.
(b) If the beneficiary’s bank does not credit
an account of the beneficiary of a payment
order, the time when payment of the bank’s
obligation under Section 4A-404(a) occurs is
35
§ 4A -405
governed by principles of law that determine
when an obligation is satisfied.
(c) Except as stated in subsections (d) and
(e), if the beneficiary’s bank pays the benefi
ciary of a payment order under a condition to
payment or agreement of the beneficiary giv
ing the bank the right to recover payment
from the beneficiary if the bank does not re
ceive payment of the order, the condition to
payment or agreement is not enforceable.
(d) A funds-transfer system rule may pro
vide that payments made to beneficiaries of
funds transfers made through the system are
provisional until receipt of payment by the
beneficiary’s bank of the payment order it ac
cepted. A beneficiary’s bank that makes a pay
ment that is provisional under the rule is enti
tled to refund from the beneficiary if (i) the
rule requires that both the beneficiary and the
originator be given notice of the provisional
nature of the payment before the funds trans
fer is initiated, (ii) the beneficiary, the benefi
ciary’s bank and the originator’s bank agreed
to be bound by the rule, and (iii) the benefi
ciary’s bank did not receive payment of the
payment order that it accepted. If the benefi
ciary is obliged to refund payment to the ben
eficiary’s bank, acceptance of the payment or
der by the beneficiary’s bank is nullified and
no payment by the originator of the funds
transfer to the beneficiary occurs under Sec
tion 4A-406.
(e) This subsection applies to a funds trans
fer that includes a payment order transmitted
over a funds-transfer system that (i) nets obligations-multilaterally among participants, and
(ii) has in effect a loss-sharing agreement
among participants for the purpose of provid
ing funds necessary to complete settlement of
the obligations of one or more participants
that do not meet their settlement obligations.
If the beneficiary’s bank in the funds transfer
accepts a payment order and the system fails
to complete settlement pursuant to its rules
with respect to any payment order in the
funds transfer, (i) the acceptance by the bene
ficiary’s bank is nullified and no person has
any right or obligation based on the accept
ance, (ii) the beneficiary’s bank is entitled to
recover payment from the beneficiary, (iii) no
36
U C C A rticle 4 A
payment by the originator to the beneficiary
occurs under Section 4A-406, and (iv) subject
to Section 4A-402(e), each sender in the
funds transfer is excused from its obligation to
pay its payment order under Section 4A402(c) because the funds transfer has not
been completed.
SECTION 4A-406— Payment by
Originator to Beneficiary; Discharge of
Underlying Obligation
(a) Subject to Sections 4A-211(e), 4A405(d), and 4A-405(e), the originator of a
funds transfer pays the beneficiary of the orig
inator’s payment order (i) at the time a pay
ment order for the benefit of the beneficiary is
accepted by the beneficiary’s bank in the funds
transfer and (ii) in an amount equal to the
amount of the order accepted by the beneficia
ry’s bank, but not more than the amount of
the originator’s order.
(b) If payment under subsection (a) is made
to satisfy an obligation, the obligation is dis
charged to the same extent discharge would
result from payment to the beneficiary of the
same amount in money, unless (i) the pay
ment under subsection (a) was made by a
means prohibited by the contract of the bene
ficiary with respect to the obligation, (ii) the
beneficiary, within a reasonable time after re
ceiving notice of receipt of the order by the
beneficiary’s bank, notified the originator of
the beneficiary’s refusal of the payment, (iii)
funds with respect to the order were not with
drawn by the beneficiary or applied to a debt
of the beneficiary, and (iv) the beneficiary
would suffer a loss that could reasonably have
been avoided if payment had been made by a
means complying with the contract. If pay
ment by the originator does not result in dis
charge under this section, the originator is
subrogated to the rights of the beneficiary to
receive payment from the beneficiary’s bank
under Section 4A-404(a).
(c) For the purpose of determining whether
discharge of an obligation occurs under sub
section (b), if the beneficiary’s bank accepts a
payment order in an amount equal to the
amount of the originator’s payment order less
charges of one or more receiving banks in the
U C C A rticle 4A
funds transfer, payment to the beneficiary is
deemed to be in the amount of the originator’s
order unless upon demand by the beneficiary
the originator does not pay the beneficiary the
amount of the deducted charges.
§ 4A -502
cess” means levy, attachment, garnishment,
notice of lien, sequestration, or similar process
issued by or on behalf of a creditor or other
claimant with respect to an account.
(d) Rights of the originator or of the benefi (b) This subsection applies to creditor pro
ciary of a funds transfer under this section cess with respect to an authorized account of
may be varied only by agreement of the origi the sender of a payment order if the creditor
process is served on the receiving bank. For
nator and the beneficiary.
the purpose of determining rights with respect
to the creditor process, if the receiving bank
accepts the payment order the balance in the
PART 5— MISCELLANEOUS
authorized account is deemed to be reduced
PROVISIONS
by the amount of the payment order to the
extent the bank did not otherwise receive pay
ment of the order, unless the creditor process
SECTION 4A-501—Variation by
is served at a time and in a manner affording
Agreement and Effect of Funds-Transfer
the bank a reasonable opportunity to act on it
System Rule
before the bank accepts the payment order.
(a) Except as otherwise provided in this Ar
ticle, the rights and obligations of a party to a
funds transfer may be varied by agreement of (c) If a beneficiary’s bank has received a pay
ment order for payment to the beneficiary’s
the affected party.
account in the bank, the following rules apply:
(b) “Funds-transfer system rule” means a
(1) The bank may credit the beneficiary’s
rule of an association of banks (i) governing
account. The amount credited may be set
transmission of payment orders by means of a
off against an obligation owed by the benefi
funds-transfer system of the association or
ciary to the bank or may be applied to satis
rights and obligations with respect to those
fy creditor process served on the bank with
orders, or (ii) to the extent the rule governs
respect to the account.
rights and obligations between banks that are
(2) The bank may credit the beneficiary’s
parties to a funds transfer in which a Federal
account and allow withdrawal of the
Reserve Bank, acting as an intermediary
amount credited unless creditor process
bank, sends a payment order to the beneficia
with respect to the account is served at a
ry’s bank. Except as otherwise provided in
time and in a manner affording the bank a
this Article, a funds-transfer system rule gov
reasonable opportunity to act to prevent
erning rights and obligations between partici
withdrawal.
pating banks using the system may be effective
(3) If creditor process with respect to the
even if the rule conflicts with this Article and
beneficiary’s account has been served and
indirectly affects another party to the funds
the bank has had a reasonable opportunity
transfer who does not consent to the rule. A
to act on it, the bank may not reject the
funds-transfer system rule may also govern
payment order except for a reason unrelat
rights and obligations of parties other than
ed to the service of process.
participating banks using the system to the
extent stated in Sections 4A-404(c), 4A(d) Creditor process with respect to a pay
405(d), and 4A-507(c).
ment by the originator to the beneficiary pur
suant to a funds transfer may be served only
on the beneficiary’s bank with respect to the
SECTION 4A-502—Creditor Process
debt owed by that bank to the beneficiary.
Served on Receiving Bank; Setoff by
Any other bank served with the creditor pro
Beneficiary’s Bank
cess is not obliged to act with respect to the
(a) As used in this section, “creditor pro process.
37
§ 4A -503
SECTION 4A-503—Injunction or
Restraining Order with Respect to Funds
Transfer
For proper cause and in compliance with ap
plicable law, a court may restrain (i) a person
from issuing a payment order to initiate a
funds transfer, (ii) an originator’s bank from
executing the payment order of the originator,
or (iii) the beneficiary’s bank from releasing
funds to the beneficiary or the beneficiary
from withdrawing the funds. A court may not
otherwise restrain a person from issuing a
payment order, paying or receiving payment
of a payment order, or otherwise acting with
respect to a funds transfer.
SECTION 4A-504— Order in Which
Items and Payment Orders May Be
Charged to Account; Order of
Withdrawals from Account
(a) If a receiving bank has received more
than one payment order of the sender or one
or more payment orders and other items that
are payable from the sender’s account, the
bank may charge the sender’s account with
respect to the various orders and items in any
sequence.
(b) In determining whether a credit to an ac
count has been withdrawn by the holder of
the account or applied to a debt of the holder
of the account, credits first made to the ac
count are first withdrawn or applied.
U C C A rticle 4 A
SECTION 4A-506— Rate of Interest
(a) If, under this Article, a receiving bank is
obliged to pay interest with respect to a pay
ment order issued to the bank, the amount
payable may be determined (i) by agreement
of the sender and receiving bank, or (ii) by a
funds-transfer system rule if the payment or
der is transmitted through a funds-transfer
system.
(b) If the amount of interest is not deter
mined by an agreement or rule as stated in
subsection (a), the amount is calculated by
multiplying the applicable Federal Funds rate
by the amount on which interest is payable,
and then multiplying the product by the num
ber of days for which interest is payable. The
applicable Federal Funds rate is the average
of the Federal Funds rates published by the
Federal Reserve Bank of New York for each
of the days for which interest is payable divid
ed 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 next
preceding day for which there is a published
rate. If a receiving bank that accepted a pay
ment order is required to refund payment to
the sender of the order because the funds
transfer was not completed, but the failure to
complete was not due to any fault by the
bank, the interest payable is reduced by a per
centage equal to the reserve requirement on
deposits of the receiving bank.
SECTION 4A-507—Choice of Law
SECTION 4A-505—Preclusion of
Objection to Debit of Customer’s
Account
If a receiving bank has received payment from
its customer with respect to a payment order
issued in the name of the customer as sender
and accepted by the bank, and the customer
received notification reasonably identifying
the order, the customer is precluded from as
serting that the bank is not entitled to retain
the payment unless the customer notifies the
bank of the customer’s objection to the pay
ment within one year after the notification
was received by the customer.
38
(a) The following rules apply unless the af
fected parties otherwise agree or subsection
(c) applies:
(1) The rights and obligations between the
sender of a payment order and the receiving
bank are governed by the law of the juris
diction in which the receiving bank is
located.
(2) The rights and obligations between the
beneficiary’s bank and the beneficiary are
governed by the law of the jurisdiction in
which the beneficiary’s bank is located.
(3) The issue of when payment is made
pursuant to a funds transfer by the origina
tor to the beneficiary is governed by the law
U C C A rticle 4A
of the jurisdiction in which the beneficiary’s
bank is located.
(b) If the parties described in each paragraph
of subsection (a) have made an agreement se
lecting the law of a particular jurisdiction to
govern rights and obligations between each
other, the law of that jurisdiction governs
those rights and obligations, whether or not
the payment order or the funds transfer bears
a reasonable relation to that jurisdiction.
(c) A funds-transfer system rule may select
the law of a particular jurisdiction to govern
(i) rights and obligations between participat
ing banks with respect to payment orders
transmitted or processed through the system,
or (ii) the rights and obligations of some or
all parties to a funds transfer any part of
which is carried out by means of the system.
A choice of law made pursuant to clause (i) is
binding on participating banks. A choice of
law made pursuant to clause (ii) is binding on
the originator, other sender, or a receiving
bank having notice that the funds-transfer sys
tem might be used in the funds transfer and of
§ 4A -507
the choice of law by the system when the orig
inator, other sender, or receiving bank issued
or accepted a payment order. The beneficiary
of a funds transfer is bound by the choice of
law if, when the funds transfer is initiated, the
beneficiary has notice that the funds-transfer
system might be used in the funds transfer
and of the choice of law by the system. The
law of a jurisdiction selected pursuant to this
subsection may govern, whether or not that
law bears a reasonable relation to the matter
in issue.
(d) In the event of inconsistency between an
agreement under subsection (b) and a choiceof-law rule under subsection (c), the agree
ment under subsection (b) prevails.
(e) If a funds transfer is made by use of more
than one funds-transfer system and there is
inconsistency between choice-of-law rules of
the systems, the matter in issue is governed by
the law of the selected jurisdiction that has the
most significant relationship to the matter in
issue.
39
Statutory Provisions
FEDERAL RESERVE ACT
otherwise; but no such charges shall be made
against the Federal reserve banks.
[12 u s e 342.]
SECTION 13—Powers of Federal
Reserve Banks
Any Federal reserve bank may receive from
any of its member banks or other depository
institutions, and from the United States, de
posits of current funds in lawful money, na
tional-bank notes, Federal reserve notes, or
checks, and drafts, payable upon presentation,
or other items and also, for collection, matur
ing notes and bills; or solely for purposes of
exchange or of collection, may receive from
other Federal reserve banks deposits of cur
rent funds in lawful money, national-bank
notes, or checks upon other Federal reserve
banks, and checks and drafts, payable upon
presentation within its district, or other items,
and maturing notes and bills payable within
its district; or, solely for the purposes of ex
change or of collection, may receive from any
nonmember bank or trust company or other
depository institution deposits of current
funds in lawful money, national-bank notes,
Federal reserve notes, checks and drafts pay
able upon presentation or other items, or
maturing notes and bills: Provided, Such non
member bank or trust company or other de
pository institution maintains with the Feder
al reserve bank of its district a balance in such
amount as the Board determines taking into
account items in transit, services provided by
the Federal Reserve Bank, and other factors
as the Board may deem appropriate; Provided
further, That nothing in this or any other sec
tion of this Act shall be construed as prohibit
ing a member or nonmember bank or other
depository institution from making reasonable
charges, to be determined and regulated by
the Board of Governors of the Federal Re
serve System, but in no case to exceed 10 cents
per $100 or fraction thereof, based on the to
tal of checks and drafts presented at any one
time, for collection or payment of checks and
drafts and remission therefor by exchange or
*
*
*
*
*
SECTION 16— Note Issues
*
*
*
*
*
Every Federal reserve bank shall receive on
deposit at par from depository institutions or
from Federal Reserve banks checks and other
items, including negotiable orders of with
drawal and share drafts and drafts drawn
upon any of its depositors, and when remitted
by a Federal reserve bank, checks and other
items, including negotiable orders of with
drawal and share drafts and drafts drawn by
any depositor in any other Federal reserve
bank or depository institution upon funds to
the credit of said depositor in said reserve
bank or depository institution. Nothing herein
contained shall be construed as prohibiting a
depository institution from charging its actual
expense incurred in collecting and remitting
funds, or for exchange sold to its patrons. The
Board of Governors of the Federal Reserve
System shall, by rule, fix the charges to be
collected by the member banks from its pa
trons whose checks are cleared through the
Federal reserve bank and the charge which
may be imposed for the service of clearing or
collection rendered by the Federal reserve
bank.
[12 USC 360.]
The Board of Governors of the Federal Re
serve System shall make and promulgate from
time to time regulations governing the trans
fer of funds and charges therefor among Fed
eral reserve banks and their branches, and
may at its discretion exercise the functions of
a clearing house for such Federal reserve
banks, or may designate a Federal reserve
bank to exercise such functions, and may also
require each such bank to exercise the func41
Statutory P rovisions
tions of a clearing house for depository
institutions.
[12 USC 248(o).]
SECTION 11—Powers of Board of
Governors of Federal Reserve System
*
*
*
*
*
The Board of Governors of the Federal Re
serve System shall be authorized and
empowered:
*
*
*
*
*
(i) To require bonds of Federal reserve
agents, to make regulations for the safeguard
ing of all collateral, bonds, Federal reserve
notes, money or property of any kind deposit
ed in the hands of such agents, and said board
shall perform the duties, functions, or services
specified in this Act, and make all rules and
regulations necessary to enable said board ef
fectively to perform the same.
grace, and which bear the signature of two or
more responsible parties, and, with the con
sent of the Board of Governors of the Federal
Reserve System, to open and maintain bank
ing accounts for such foreign correspondents
or agencies, or for foreign banks or bankers,
or for foreign states as defined in section
25(b) of this Act. Whenever any such ac
count has been opened or agency or corre
spondent has been appointed by a Federal re
serve bank, with the consent of or under the
order and direction of the Board of Governors
of the Federal Reserve System, any other Fed
eral reserve bank may, with the consent and
approval of the Board of Governors of the
Federal Reserve System, be permitted to carry
on or conduct, through the Federal reserve
bank opening such account or appointing
such agency or correspondent, any transac
tion authorized by this section under rules
and regulations to be prescribed by the board.
[12 USC 358.]
*
*
*
*
*
[12 USC 248(i).]
*
*
*
*
*
SECTION 14— Open Market Operations
*
*
*
*
*
Every Federal reserve bank shall have power:
*
*
*
*
*
(e) To establish accounts with other Federal
reserve banks for exchange purposes and, with
the consent or upon the order and direction of
the Board of Governors of the Federal Re
serve System and under regulations to be pre
scribed by said board, to open and maintain
accounts in foreign countries, appoint corre
spondents, and establish agencies in such
countries wheresoever it may be deemed best
for the purpose of purchasing, selling, and col
lecting bills of exchange, and to buy and sell,
with or without its indorsement, through such
correspondents or agencies, bills of exchange
(or acceptances) arising out of actual com
mercial transactions which have not more
than ninety days to run, exclusive of days of
42
SECTION 25(b)—Jurisdiction of Suits
*
*
*
*
*
For the purposes of this section, * * * (2)
the term “foreign state” includes any foreign
government, or any department, district,
province, county, possession, or other similar
governmental organization or subdivision of a
foreign government, and any agency or instru
mentality of any such foreign government or
of any such organization or subdivision; (3)
the term “central bank” includes any foreign
bank or banker authorized to perform any one
or more of the functions of a central bank;
* * *
[12 USC 632.]
BRETTON WOODS AGREEMENTS
ACT
SECTION 6— Federal Reserve Banks as
Depositories
Any Federal Reserve bank which is requested
to do so by the Fund or the Bank shall act as
Statutory P rovisions
its depository or as its fiscal agent, and the
Board of Governors of the Federal Reserve
System shall supervise and direct the carrying
out of these functions by the Federal Reserve
banks.
shall supervise and direct the carrying out of
these functions by the Federal Reserve banks.
[22 USC 286d.]
INTERNATIONAL FINANCE
CORPORATION ACT
INTER-AMERICAN
DEVELOPMENT BANK ACT
SECTION 6— Federal Reserve Banks as
Depositories
SECTION 6— Federal Reserve Banks as
Depositories
Any Federal Reserve bank which is requested
to do so by the Corporation shall act as its
depository or as its fiscal agent, and the Board
of Governors of the Federal Reserve System
shall supervise and direct the carrying out of
these functions by the Federal Reserve banks.
Any Federal Reserve bank which is requested
to do so by the Bank shall act as its depository
or as its fiscal agent and the Board of Gover
nors of the Federal Reserve System shall su
pervise and direct the carrying out of these
functions by the Federal Reserve banks.
[22 USC 283d.]
INTERNATIONAL DEVELOPMENT
ASSOCIATION ACT
SECTION 6— Federal Reserve Banks as
Depositories
Any Federal Reserve bank which is requested
to do so by the Association shall act as its
depository or as its fiscal agent, and the Board
of Governors of the Federal Reserve System
[22 USC 284d.]
[22 USC 282d. ]
ASIAN DEVELOPMENT BANK ACT
SECTION 6— Federal Reserve Banks as
Depositories
Any Federal Reserve bank which is requested
to do so by the Bank shall act as its depository
or as its fiscal agent, and the Board of Gover
nors of the Federal Reserve System shall su
pervise and direct the carrying out of these
functions by the Federal Reserve banks.
[22 USC 285d. ]
43
Board of Governors of the Federal Reserve System
. - f a
Regulation CC
Availability of Funds
and Collection of Checks
12 CFR 229; as amended effective February 1, 1991
^
•
W
.
Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the
Federal Reserve District in which the inquiry arises.
March 1991
Contents
Page
Section 229.1—Authority and
purpose; scope...............................
Section 229.2—Definitions...............
Commentary on section 229.2............
Section 229.3—Administrative
enforcement...................................
(a) Enforcement agencies............
(b) Additional pow ers...............
(c) Enforcement by the Board . . .
3
5
9
20
20
20
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 d a t e .......................
(b) Local checks and certain
other checks.........................
(c) Nonlocal checks...................
(d) Deposits at nonproprietary
A T M s...................................
(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 te .......................
(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................
Page
(f)
Subpart A—General
21
21
21
21
23
27
27
27
27
27
27
28
31
31
31
31
31
31
Deposits at nonproprietary
A T M s............................
Commentary on section 229.12..........
Section 229.13—Exceptions..............
(a) New accounts................
(b) Large deposits................
(c) Redeposited checks ..............
(d) Repeated overdrafts.......
(e) 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
availability-policy disclosure .
(c) Longer delays on a case-by
case basis........................
(d) Credit-union notice of
interest-payment policy........
Commentary on section 229.16..........
Section 229.17—Initial disclosures. . .
(a) New accounts................
(b) Existing accounts...........
Commentary on section 229.17..........
Section 229.18—Additional
disclosure requirements.................
31
33
35
35
35
35
35
35
36
36
37
38
45
45
45
45
46
48
48
48
48
48
49
50
50
50
50
50
52
56
56
56
57
58
i
Contents
Page
(a) Deposit slips.........................
(b) Locations where employees
accept consumer deposits. . . .
(c) Automated teller machines ..
(d) Upon request.........................
(e) Changes in policy.................
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 determination . . .
(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 e rro rs ...................
(d) Jurisdiction...........................
(e) Reliance on Board rulings . . .
(f) Exclusions.............................
(g) Record retention...................
Commentary on section 229.21..........
58
58
58
58
58
59
61
61
61
61
61
61
62
62
63
67
67
67
67
67
68
70
70
70
70
70
70
70
70
71
Subpart C—Collection of Checks
Section 229.30—Paying bank’s
reponsibility 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..........
n
72
72
72
72
73
73
73
Page
(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.............................
(d) Charges.................................
(e) Depositary bank without
accounts ...............................
(f) Notice in lieu of return..........
(g) Reliance on routing number .
Commentary on section 229.31..........
Section 229.32—Depositary bank’s
responsibility for returned checks..
(a) Acceptance of returned
checks...................................
(b) Payment ...............................
(c) Misrouted returned checks
and written notices of
nonpayment........................
(d) Charges.................................
Commentary on section 229.32..........
Section 229.33—Notice of
nonpayment...................................
(a) Requirement.........................
(b) Content of n o tice.................
(c) Acceptance of n o tice............
(d) Notification to custom er___
(e) Depositary bank without
accounts ...............................
Commentary on section 229.33..........
Section 229.34—Warranties by
paying bank and returning bank . . .
(a) Warranties.............................
(b) Warranty of notice of
nonpayment .........................
(c) Damages...............................
(d) Tender of defense.................
Commentary on section 229.34..........
Section 229.35—Indorsements..........
(a) Indorsement standards..........
(b) Liability of bank handling
check....................................
(c) Indorsement by a bank..........
(d) Indorsement for depositary
bank......................................
Commentary on section 229.35..........
Section 229.36—Presentation and
issuance of checks.........................
73
74
82
82
82
83
83
83
83
83
84
89
89
89
89
89
90
93
93
93
93
93
93
94
96
96
96
96
96
97
98
98
98
98
98
99
103
Contents
Page
(a) Payable-through and payableat checks...............................
(b) Receipt at bank office or
processing center .................
(c) Truncation ...........................
( d ) Liability of bank during
forward collection.................
(e) Issuance of payable-through
checks..................................
Commentary on section 229.36..........
Section 229.37—Variation by
agreement......................................
Commentary on section 229.37..........
Section 229.38—Liability..................
(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..............
(f) Exclusion...............................
(g) Jurisdiction...........................
(h) Reliance on Board rulings . . .
Commentary on section 229.38..........
Section 229.39—Insolvency of bank..
(a) Duty of receiver....................
103
103
103
103
103
105
107
108
109
109
109
109
109
109
110
110
110
I ll
114
114
Page
(b) Preference against paying or
depositary bank.....................
(c) Preference against collecting,
paying, or returning bank . . .
(d) Finality of settlement...........
Commentary on section 229.39..
115
Section 229.40—Effect of merger
transaction.............................
116
Commentary on section 229.40..
117
Section 229.41—Relation to state law
Commentary on section 229.41..
119
Section 229.42—Exclusions......
120
Commentary on section 229.42...
121
Appendix A—Routing number guide
to next-day availability checks and
local checks ...................................
114
114
114
118
122
Appendix B—reduction of schedules
for certain nonlocal checks...........
126
Appendix C—Model forms, clauses,
and notices.............................
149
Commentary on appendix C ......
164
Appendix D—Indorsement standards
168
Appendix F—Preemption
determinations...............................
169
EXPEDITED FUNDS
AVAILABILITY ACT ...............
187
iii
Note on Regulation CC
In the Code of Federal Regulations, the com
mentary on Regulation CC is set out separate
ly as appendix E. In the version of Regulation
CC that follows, each section of the regulation
is followed by the commentary on that sec
tion. The beginning of each commentary sec
tion is clearly labeled “Commentary,” and the
running head at the top of each page indicates
whether the text on that page is regulation 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. Un
der 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, reg
ulation, 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.
1
Regulation CC
Availability of Funds and Collection of Checks
12 CFR 229; as amended effective February 1, 1991
Subpart A—General
Section
229.1 Authority and purpose; organization
229.2 Definitions
229.3 Administrative enforcement
Subpart B—Availability of Funds and
Disclosure of Funds-Availability Policies
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
Appendix
Certain
Appendix
Notices
Appendix
Appendix
Appendix
B—Reduction of Schedules for
Nonlocal Checks
C—Model Forms, Clauses, and
D—Indorsement Standards
E—Commentary f
F—Preemption Determinations
SUBPART A—GENERAL
Next-day availability
Temporary availability schedule
Permanent availability schedule
Exceptions
Payment of interest
General disclosure requirements
Content of specific availability-policy
disclosure
Initial disclosures
Additional disclosure requirements
Miscellaneous
Relation to state law
Civil liability
SECTION 229.1—Authority and
Purpose; Organization
(a) Authority and purpose. This part (Regu
lation CC; 12 CFR part 229) is issued by the
Board of Governors of the Federal Reserve
System (“Board”) to implement the Expedit
ed Funds Availability Act (“act”), which is
contained in title VI of Public Law 100-86.
Section
229.30 Paying bank’s responsibility for re
turn of checks
229.31 Returning bank’s responsibility for
return of checks
229.32 Depositary bank’s responsibility for
returned checks
229.33 Notice of nonpayment
229.34 Warranties by paying bank and re
turning bank
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 informa
tion. It sets forth—
(i) The authority,
purpose,
and
organization;
(ii) Definition of terms; and
(iii) Authority for administrative en
forcement of this part’s provisions.
(2) Subpart B of this part contains rules
regarding 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 in
terest, liability of banks for failure to com
ply 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-
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 of the regulation immedi
ately follows that section.
Subpart C—Collection of Checks
3
§ 2 2 9 .1
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,
rules regarding indorsement and present
ment, 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) (1) (i) that is a transaction
account 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,
telephone transfer, electronic payment, or
other similar means for the purpose of making
payments or transfers to third persons or oth
ers. “Account” also includes accounts at a
bank from which the account holder may
make third-party payments at an ATM, re
mote service 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 ac
counts permit third-party transfers. An ac
count may be in the form of—
(1) A demand deposit account,
(2) A negotiable order of withdrawal ac
count,
(3) A share draft account,
(4) An automatic transfer account, or
(5) Any other transaction account de
scribed 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 cred
it transfers under rules established by a Feder
al Reserve Bank operating circular on auto
mated clearinghouse items or under rules of
an automated 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
includes 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
§ 2 2 9 .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 substantial
ly 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 Monday 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 December 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 govern
6
Regulation CC
ment or unit of general local government that
is not payable through or at a bank;
(5) A United States Postal Service money
order; or
(6) A traveler’s check drawn on or pay
able 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
geographical 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
transfer 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.
Regulation CC
(s) “Local paying bank” means a paying
bank that is located in the same check-pro
cessing 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-process
ing 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 associa
tion; and
(2) Both collects and receives for payment
checks through the check clearinghouse as
sociation either directly or through another
participant.
§ 229.2
(z) “Paying bank” means—
(1) The bank by which a check is payable,
unless the check is payable at another bank
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
definition, 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 enve
lope 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
7
§ 229.2
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 section 4-202(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 communi
ty, and with similar check-handling activities
as the paying bank or returning bank.
(If) “State” means a state, the District of Co
lumbia, Puerto Rico, or the U.S. Virgin
Islands.
(gg) “Teller’s check” means a check provid
ed 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 instru
ment 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 corpora
tion 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 politi
cal subdivision of a state. The term does not
8
Regulation CC
include 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
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 Inter
bank 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) Unless the context requires otherwise,
the terms not defined in this section have the
meanings set forth in the UCC.
§ 229.2
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 Expedit
ed Funds Availability Act (12 USC 4001).
The Board has made a number of changes for
the sake of clarity, to conform the terminolo
gy 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
defines “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 ob
ligations (see 12 CFR 204.2(a) (1) (vii)), that
are covered under the definition of “transac
tion account” in Regulation D. The definition
applies to accounts witfi general third-party
payment powers but does not cover time de
posits or savings deposits, including money
market deposit accounts, even though they
may have limited third-party payment pow
ers. The Board believes that it is appropriate
to exclude these accounts because of the refer
ence to demand deposits in the act, which sug
gests 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 “de
pository 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
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 Ac
counts 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 debit
ed and another account credited. In an ACH
debit transfer, the originator, with prior au
thorization, orders another account to be deb
ited and the originator’s account to be
credited.
A facility that handles only “wire transfers”
(defined elsewhere) is not an ACH.
2(c) Automated Teller Machine
“Automated teller machine (ATM)” is not
defined 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, ma
chines that only dispense cash, night deposito
ries, and lobby deposit boxes are not ATMs
within the meaning of the definition, either be
cause they do not accept deposits of cash or
9
Regulation CC Commentary
§ 229.2
checks (e.g., point-of-sale terminals and cash
dispensers) or because they only accept de
posits (e.g., night depositories and lobby box
es) and cannot perform other transactions. A
lobby deposit box or similar receptacle in
which written payment orders or deposits
may be placed is not an ATM.
A facility may be an ATM within this defi
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
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 cus
tomer’s account under the customer’s account
agreement with the bank. Examples of such
uses include payment of checks drawn on the
account, certification of checks, electronic
payments, and cash withdrawals. Funds are
available for these uses notwithstanding provi
sions 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.
10
2(e) Bank
The act uses the term “depository
institution,” which it defines by reference
to section 19(b)(l)(A )(i) through (vi) of
the Federal Reserve Act (12 USC
461 (b)(1) (A) (i) through (vi)). This regula
tion uses the term “bank,” a term that con
forms to the usage the Board has previously
adopted in Regulation J. “Bank” is also used
in article 4 of the Uniform Commercial 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, commer
cial lending companies under 12 USC 3101,
certain industrial banks, and private bankers,
so that virtually all checks will be covered by
the same rules for forward collection and re
turn, even though they may not be covered by
the requirements of subpart B. For the pur
poses of subpart C, and in connection there
with, 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.
§ 229.2
Regulation CC Commentary
2(f) and (g) Banking Day and Business
Day
The act defines “business day” as any day ex
cluding Saturdays, Sundays, and legal holi
days. “Legal holiday,” however, is not
defined, and the variety of local holidays, to
gether with the practice of some banks to
close midweek, makes the act’s definition diffi
cult to apply. The Board believes that two
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 business
day on which a bank is open for substantially
all of its banking activities.
The definition of “banking day” corre
sponds to the definition of banking day in
UCC section 4—104( 1) (c), except that a bank
ing 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
purposes 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 re
mote depository or a lock box) is considered
made at the branch holding the account into
which the deposit is made for the purpose of
determining the day of deposit. All other de
posits are considered made at the branch at
which the deposit is received. For example,
under section 229.19(a)(1), funds deposited
at an ATM are considered deposited at the
time they are received at the ATM. On a cal
endar day that is a banking day for the branch
or other location of the depositary bank at
which the account is maintained, a deposit re
ceived 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 considered deposit
ed on the next banking day of the branch or
other location where the account is main
tained. On a calendar day that is not a bank
ing day for the account-holding location, all
ATM deposits are considered received on that
location’s next banking day. This rule for de
termining the day of deposit would also apply
to a deposit to an off-premise facility, such as a
night depository or lock box, which is consid
ered deposited when removed from the facil
ity and available for processing under
§ 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 determined 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 non
customers for remittance purposes, including
loan-disbursement checks. Cashier’s checks
11
§ 229.2
provided to customers or others are often la
beled as “cashier’s check,” “officer’s check,”
or “official check.” The definition excludes
checks that a bank draws on itself for other
purposes, such as to pay employees and ven
dors, and checks issued by the bank in con
nection with a payment service, such as a pay
roll or a bill-paying service. Cashier’s checks
are generally sold by banks to substitute the
bank’s credit for the customer’s credit and
thereby enhance the collectibility of the
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
§§ 3-410, 3-411). 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 insti
tution located in the United States, excluding
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
12
Regulation CC Commentary
the payable-through bank is a collecting bank
to make presentment and is generally not au
thorized to make payment (UCC § 3-120).
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
operations of payable at banks—by far the
largest proportion of payable-at items are not
negotiable demand drafts, but time items,
such as commercial paper, bonds, notes, bank
er s acceptances, and securities. These time
items are not covered by the requirements of
the act or this regulation. (The treatment of
payable-through 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 insti
tution, and checks drawn by state and local
governments. The act also gives the Board au
thority to define functionally equivalent in
struments as “depository checks.” 1 Thus, the
1 Section 602(11) of the act (12 USC 4001(11)) defines
“depository check” as “any cashier’s check, certified check,
teller's check, and any other functionally equivalent instru
ment as determined by the Board.”
§ 229.2
Regulation CC Commentary
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
warrants drawn by a state or a unit of general
local government on itself.
The fifth category of instrument included in
the definition of “check” is U.S. Postal Service
money orders. These instruments are defined
as checks because they are often used as a sub
stitute for checks by consumers, even though
money orders are not negotiable under Postal
Service regulations. The Board has not pro
vided 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
purposes of subpart C, and in connection
therewith, subpart A, the definition of
“check” includes nonnegotiable demand
drafts because these instruments are often
handled as cash items in the forward-collec
tion process.
The definition of “check” does not include
an instrument payable in foreign currency
(i.e., other than in United States money as
defined 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
metropolitan area. In some cases, most nota
bly California, a single clearinghouse associa
tion sponsors separate exchanges in different
metropolitan areas. For purposes of this regu
lation, 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. Both consumer and noncon
sumer accounts are subject to the require
ments of this regulation, including the
requirement that funds be made available ac
cording to specific schedules and that the
bank make specified disclosures of its avail
ability 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 229.19(d) (Use
13
§ 229.2
of Calculated Availability) applies only to
nonconsumer 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 col
lection, the U.S. correspondent is the deposi
tary 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. (Un
der section 229.35 the depositary bank may
agree with the bank servicing the nonproprie
tary ATM to have the servicing bank place its
own indorsement on the check as the deposi
tary bank. For the purposes of subpart C, the
bank applying its indorsement as the deposi
tary-bank indorsement on the check is the de
positary 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 deposited,
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 considered a
depositary bank with respect to checks it re
ceives as payee. For example, a bank is a de
positary 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 “de
posited to accounts,” they would not be sub
ject to the availability or disclosure require
ments of subpart B.
14
Regulation CC Commentary
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 defi
nition of the term “wire transfer” to the
Board. Because ACH credit transfers fre
quently involve important consumer pay
ments, 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
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 returned
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 pay
ing 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
§ 229.2
Regulation CC Commentary
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 wheth
er or not such a check is local. If, however, a
check is payable by one bank but payable
through another bank, the routing number ap
pearing on the check will be that of the pay
able-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 rout
ing 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
designated 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
determine whether the check is local or nonlo
cal. For payable-through checks that meet the
labelling 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
determine 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.
located in another check-processing region,
the check is considered local or nonlocal de
pending 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
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
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 in15
§ 229.2
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 accompanied by special instruc
tions. (In the context of this definition, “pay
ing bank” refers to the paying bank as defined
for purposes 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 cur
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(0.)
Regulation CC Commentary
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 payablethrough 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
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
contract with the payor with respect to its lia
bility 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. Sub
part C places on payable-through and payable-at banks the requirements of expeditious
2(y) Participant
return based on the time the payable-through
“Participant” means a bank that is located in or payable-at bank received the check for for
the geographic area served by a clearinghouse ward collection.
If a check is sent for forward collection
and that both collects checks drawn on other
clearinghouse participants and receives for based on the routing number, the bank associ
payment checks from other clearinghouse ated with the routing number is a paying bank
participants through the clearinghouse either for the purposes of subpart C requirements,
directly or through another participant. The including notice of nonpayment, even if the
phrase “through a participant” covers associ check is not drawn by a customer of that bank
ate members of the clearinghouse, but a bank or the check is fraudulent.
16
§ 229.2
Regulation CC Commentary
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.
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 wheth
er a bank operates the ATM is the primary
criterion in determining whether the ATM is
proprietary to that bank. Since a bank should
be capable of ascertaining the composition of
deposits made to an ATM operated by that
bank, an exception to the availability sched
ules is not warranted for these deposits. If
more than one bank meets the owns-or-operates criterion, the ATM is considered proprie
tary to the bank that operates it. For the pur
pose of this definition, the bank that operates
an ATM is the bank that puts checks deposit
ed 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
regulation defines an ATM located within 50
feet of a bank to be proprietary to that bank
unless it is identified as being owned or oper
ated by another entity. The Board believes
that the statutory proximity test was designed
to apply to situations where it would appear
to the depositor 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 of
fice would be presumed proprietary to that
bank unless it is clearly identified as being
owned or operated by another entity.
2(bb) Qualified Returned Check
Subpart C requires the paying bank and re
turning bank(s) to return checks in an expe
ditious manner. The banks may meet this
responsibility by returning a check to the de
positary bank by the same general means used
for forward collection of a check from the de
positary bank to the paying bank. One way to
speed the return process is to prepare the re
turned check for automated processing. Re
turned checks can be automated by either the
paying bank or a returning bank by placing
the return in a carrier envelope or by placing a
strip on the bottom of the return, and encod
ing the envelope or strip with the routing
number of the depositary bank, the amount of
the check, and a special return identifier. Re
turns are identified by placing a “2” in posi
tion 44 of the MICR line. (See American Na
tional Standards Committee on Financial
Services, Specification for the Placement and
Location of MICR Printing, X9.13 (Sept. 8,
17
§ 229.2
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, as is required under the direct-return
provision of UCC section 4-212(2). Because
indorsements and other information on carri
er envelopes or strips will not appear on a re
turned check itself, banks will wish to retain
carrier envelopes and/or microfilm 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
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 col
lecting bank’s duty to act seasonably under
UCC section 4-202(2) and is analogous to a
collecting bank for purposes of final settle
ment. (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
18
Regulation CC Commentary
the fractional form routing number (which
normally appears in the upper right-hand cor
ner 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 requires de
positary banks and subsequent collecting
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 defi
nition 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-paying
service. Teller’s checks are generally sold by
banks to substitute the bank’s credit for the
customer’s credit and thereby enhance the
collectibility of the 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 col
lectibility. 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
Regulation CC Commentary
checks be treated as cashier’s, teller’s, or certi
fied checks when a new depositor opens an
account. (See section 229.13(a); 12 USC
4003(a)(1)(C).) The act does not define
traveler’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 individual
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.
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 politi
cal subdivision of a state. The term does not
include special-purpose units, such as school
districts, water districts, or Indian nations.
2(11) Wire Transfer
The act delegates to the Board the authority
to define the term “wire transfer.” The regula
tion defines “wire transfer” as an uncondition
al order to a bank to pay a fixed or determin
§ 229.2
able 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 be
tween commercial accounts. Unconditional
means that no condition, such as presentation
of documents, must be met before the bank
receiving the order is to make payment. A
wire transfer may be transmitted by electronic
or other means. “Electronic means” includes
computer-to-computer links, on-line termi
nals, telegrams (including TWX, TELEX, or
similar methods of communication), tele
phone calls, or other similar methods. Fedwire (the Federal Reserve’s wire transfer net
work), 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 transfer” excludes “electronic fund
transfers” as that term is defined by the Elec
tronic Fund Transfer Act.
§ 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 by the Comptroller
of the Currency;
(ii) Member banks of the Federal Re
serve System (other than national banks)
by the Board; and
(iii) Banks insured by the Federal Depo
sit Insurance Corporation (other than
members of the Federal Reserve System)
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
Insurance Fund.
(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
provision 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.
20
Regulation CC
(2) If the Board determines that—
(i) Any bank that is not a bank de
scribed 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
transaction involving the receipt, payment,
collection, 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 depos
ited, 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 re
ceived. 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 ac
count held by a payee of the check;
§229.10
(ii) A U.S. Postal Service money order
deposited—
(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 Re
serve 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
government 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 un
der 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 un
der 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) (1) (i) through (vi) of
this section.
21
§229.10
(2) Checks not deposited in person. A de
positary bank shall make funds deposited in
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) (ii), (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 enve
lope, 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 prepared
or obtained and make the slip or enve
lope reasonably available.
22
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.10—Next-Day
Availability
10(a) Cash Deposits
This paragraph implements the act’s require
ment for next-day availability for cash depos
its to accounts at a depositary bank “staffed
by individuals employed by such institution.”2
This paragraph, as well as other provisions of
this subpart governing the availability of
funds, provides that funds must be made
available for withdrawal not later than a spec
ified number of business days following the
banking day on which the funds are deposited.
Thus, a deposit is only considered made on a
banking day, i.e., a day that the bank is open
to the public for carrying on substantially all
of its banking functions. For example, if a de
posit is made at an ATM on a Saturday, Sun
day, or other day on which the bank is closed
to the public, the deposit is considered re
ceived on that bank’s next banking day.
Nevertheless, business days are used to de
termine the number of days following the
banking day of deposit that funds must be
available for withdrawal. For example, if a de
posit of a local check were made on a Monday
under the temporary schedule, which requires
that funds be available for withdrawal on the
third business day after deposit, funds must be
made available on Thursday regardless of
whether the bank was closed on Wednesday
for other than a standard legal holiday as
specified in the definition of “business day.”
Under this paragraph, cash deposited in an
account at a staffed teller station on a Monday
must become available for withdrawal by the
start of business on Tuesday. It must become
available for withdrawal by the start of busi
ness on Wednesday if it is deposited by mail,
at a proprietary ATM (or at a nonproprietary
ATM under the permanent schedule), or by
other means other than at a staffed teller
station.
2 N othin g in the act o r this regulation affects terms o f
account arrangements, such as negotiable order o f w ith
drawal accounts, w hich may require p rio r notice o f w ith
drawal. (See 12 C FR 2 0 4 .2 (e )(2 ).)
§ 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
under the next-day availability requirement.
(See the discussion of definitions of “automat
ed clearinghouse,” “electronic payment,” and
“wire transfer” in section 229.2.)
The act requires that funds received by wire
transfer be available for withdrawal not later
than the business day following the day a wire
transfer is received. This paragraph clarifies
what constitutes receipt of an electronic pay
ment. For the purposes of this paragraph, a
bank receives an electronic payment when the
bank receives both payment in finally collect
ed funds and the payment instructions indi
cating the customer accounts to be credited
and the amount to be credited to each ac
count. For example, in the case of Fedwire,
the bank receives finally collected funds at the
time the payment is made. (See 12 CFR
210.36.) Finally collected funds generally are
received for an ACH credit transfer when
they are posted to the receiving bank’s ac
count on the settlement day. In certain cases,
the bank receiving ACH credit payments will
not receive the specific payment instructions
indicating which accounts to credit until after
settlement day. In these cases, the payments
are not considered received until the informa
tion on the account and amount to be credited
is received.
This paragraph also establishes the extent
to which an electronic payment is considered
made. Thus, if a participant on a private net
work fails to settle and the receiving bank re
ceives finally settled funds representing only a
partial amount of the payment, it must make
only the amount that it actually received
available for withdrawal.
The availability requirements of this regula
tion do not preempt or invalidate other rules,
regulations, or agreements which require
funds to be made available on a more prompt
basis. For example, the next-day availability
requirement for ACH credits in this section
does not preempt ACH association rules and
Treasury regulations (31 CFR 210) which
23
§229.10
provide that the proceeds of these credit pay
ments be available to the recipient for with
drawal 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. Post
al 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 sub
ject to the next-day availability requirement if
they are deposited in an account held by a
payee of the check and in person to an em
ployee 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 re
quirement. (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
24
Regulation CC Commentary
availability to such checks. The regulation,
therefore, provides that funds must be avail
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 purposes
of this section, payee does not include trans
ferees other than named payees. The
regulation 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 of the
Depositary Bank
In most cases, next-day availability of the pro
ceeds of checks subject to this section is condi
tioned on the deposit of these checks in person
to an employee of the depositary bank. If the
deposit is not made to an employee of the de
positary 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
example, 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
receipt 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
Regulation CC Commentary
bank, if both branches are located in the same
state or check-processing region. Thus, checks
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 de
posits at nonproprietary ATMs.
The $100 that must be made available un
der this rule is in addition to the amount that
must be made available for withdrawal on the
business day after deposit under other provi
sions of this section. For example, if a custom
er 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 purposes
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
§229.10
deposits to each account, $100 of the total de
posited to the two accounts must be made
available on the business day after deposit.
Banks may aggregate deposits to individual
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 deposit,
the bank need not make an additional $100
available for withdrawal on the following 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 deposi
tary bank; or a U.S. Postal Service money or
der. Appendix A includes the routing num
bers of certain categories of checks that are
subject to next-day availability. The bank can
not 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
25
§ 2 2 9 .1 0
slip (or a special deposit envelope in the case
of a deposit at an ATM or other unstaffed
facility) as a condition to granting next-day
availability under paragraphs (c)(l)(iv ) or
(c )(l)(v ) of this section or second day avail
ability 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 request
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 special deposit
slips could be required, and to indicate on a
regular deposit slip that such checks are being
deposited, if the bank so instructs its custom
ers 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 Re
serve Bank or Federal Home Loan Bank;
a check drawn by a state or unit of gener
al 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 with
drawal by cash or similar means unless the
checks are drawn on or payable at or
through a local paying bank that is a partic
ipant in the same check clearinghouse asso
ciation 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 grant
ing 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 Re
serve Bank or Federal Home Loan Bank;
a check drawn by a state or unit of gener
al 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)(1) (ii) is a nonlocal
check that is not governed by the avail
ability 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 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 deposit,
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 locat
ed 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 accord
ed next-day availability, are categorized as
either local or nonlocal, with different avail
ability 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
refers to the day on which funds must be
available 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 depos
itary bank must make funds from the deposit
of a local check available on the third business
day following the banking day on which the
check is deposited. This requirement corre
sponds to the two intervening business days
specified in the act. Thus, under the
temporary schedule, a local check deposited
on a Monday must be available for withdraw
al on Thursday, except in the case of deposits
at nonproprietary ATMs and deposits to ac
counts in banks located outside the 48 contig
uous 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
28
Regulation CC Commentary
Reserve Bank or Federal Home Loan Bank;
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 A djustm ent fo r W ithdrawal by
Cash
The act provides an adjustment to the avail
ability 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 de
posits 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 ratio
nale for accommodating a bank’s ATM with
drawal limit also applies to other cash with
drawal limits established by that bank. Sec
tion 229.19(c)(4) of the reglation addresses
the relation between a bank’s cash withdrawal
limit (for over-the-counter cash withdrawals
as well as ATM cash withdrawals) and the
requirements of this subpart.
The Board believes that the Congress in
cluded this special cash withdrawal rule to
«
§ 229.11
Regulation CC Commentary
provide a depositary bank with additional
time to learn of the nonpayment of a check
before it must make funds available to its cus
tomer. 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 tem
porary schedule), but may not receive the re
turned check by the start of business on
Thursday. Checks written by the customer
that are presented to the depositary bank on
Thursday are typically not posted to the cus
tomer’s account until late Thursday night.
Any returned checks that have been received
on that day are debited to the customer’s ac
count before the checks being presented are
posted. Thus, for the purpose of checks writ
ten by the customer, 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
withdraws the funds in cash, because the
withdrawal may occur before the return is re
ceived 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
includes withdrawals by electronic payment,
issuance of a cashier’s or teller’s check, certifi
cation of a check, or other irrevocable com
mitment to pay, such as authorization of an
on-line point-of-sale debit. The rule would
also apply to checks presented over the coun
ter for payment on the day of presentment by
the depositor or another person. Such checks
could not be dishonored for insufficient funds
if an amount sufficient to cover the check had
become available for cash withdrawal under
this rule; however, payment of such checks
would be subject to the bank’s cut-off hour
established under UCC section 4-107. The
cash-withdrawal rule does not apply to checks
and other provisional debits presented to the
bank for payment that the bank has the right
to return.
11 (c) Nonlocal Checks
Under the temporary schedule, funds deposit
ed by nonlocal checks must be made available
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
business 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. Spe29
§229.11
cifically, 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
other Federal Reserve cities, where transpor
tation arrangements allow for faster collection
and return. In addition, shorter schedules 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, in
cluding any deposit by cash or checks that
would otherwise be subject to next-day avail
ability, 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.1
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.
Virgin 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
30
Regulation CC Commentary
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
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 pay
ing bank must be made available for with
drawal not later than the third rather than the
fourth business day following deposit.
Regulation CC
SECTION 229.12—Permanent
Availability Schedule
(a) Effective date. Except as provided in par
agraph (f) of this section, 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 re
quirements 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 tell
er’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 para
graphs (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 Re
serve Bank or Federal Home Loan Bank;
a check drawn by a state or unit of gener
al 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)(1) (ii) is a nonlocal
check that is not governed by the avail
ability requirements of section 229.10(c).
§ 229.12
(2) Nonlocal checks specified in appendix
B-2 to this part must be made available for
withdrawal not later than the times pre
scribed in that appendix.
(d) Time period adjustm ent fo r withdrawal
by cash or sim ilar 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 o f schedule fo r 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 o f any deposit,
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 locat
ed in the same state as the depositary bank.
(0 Deposits a t nonproprietary A TMs.
(1) (i) A depositary bank shall make funds
deposited in an account at a nonproprie
tary ATM by cash or check available for
withdrawal not later than the fifth busi
ness day following the banking day on
which the funds are deposited.
(ii) Paragraph (0 (1 ) of this section is
effective September 1, 1990, through No
vember 27, 1992.
(2) (i) A depositary bank shall make funds
31
§ 229.12
deposited in an account at a nonproprie
tary ATM available for withdrawal not
later than the second business day follow
ing the banking day on which the funds
are deposited, in the case of—
(A) cash;
(B) a check described in section
229.10(c) (l)(i) through (v) and
(vii), even though the check or checks
are not deposited in person to an em
ployee of the depositary bank; and
(C) a check described in paragraph
(b) of this section.
(ii) A depositary bank shall make funds
deposited in an account by a check de
scribed in paragraph (c) of this section at
a nonproprietary ATM available for
withdrawal not later than the fifth busi
ness day following the banking day on
which the funds are deposited.
(iii) Paragraph (0 (2 ) of this section is
effective November 28, 1992.
32
Regulation CC
Regulation CC Commentary
COMMENTARY
SECTION 229.12—Permanent
Availability Schedule
12(a) Effective Date
The permanent schedule supersedes the tem
porary schedule on September 1, 1990. Para
graph (f) provides special effective dates for
deposits made at nonproprietary ATMs.
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) avail
ability 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 de
posited on a Monday generally must be made
available for withdrawal on Wednesday.
12(c) Nonlocal Checks
Under the permanent schedule, the time peri
od 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
§ 229.12
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
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 withdrawal 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).
The act and regulation provide a special
rule for deposits made at nonproprietary
ATMs. This paragraph does not apply to de
posits made at proprietary ATMs. During the
period from September 1, 1990, through No33
§ 229.12
vember 27, 1992, all deposits at a nonproprie
tary ATM must be made available for with
drawal by the fifth business day following the
banking day of deposit (i.e., such deposits
may be treated in the same manner as deposits
of nonlocal checks under the permanent
schedule). For example, during that time pe
riod, a deposit made at a nonproprietary
ATM on a Monday, including any deposit by
cash or checks that would otherwise be sub
ject to next-day (or second-day) availability,
must be made available for withdrawal not
later than Monday of the following week.
Effective November 28, 1992, deposits of
cash, “next-day” checks, and local checks at a
nonproprietary ATM must be made available
by the second business day following the
banking day of deposit. In addition, the first
$100 of the aggregate deposit at a nonproprie
tary ATM on any one banking day must be
made available for withdrawal on the second
business day after the banking day of deposit
(rather than on the next day, as required by
section 229.10(c) (1) (vii) for deposits at
staffed teller stations and proprietary ATMs).
If a customer makes a deposit at a nonpro
prietary ATM and one or more deposits to the
same account on the same dat at another loca
tion, such as a staffed teller station, the $100
rule is applied to the aggregate of all deposits
made on that day. In this situation, the $100
rule is applied first to funds for which the
$100 must be available for withdrawal on the
next day (e.g., funds deposited at a staffed
teller station) and then to funds deposited at
nonproprietary ATMs for which the $100
must be made available for withdrawal on the
second day. For example, if a customer depos
its a $75 nonlocal check at a staffed teller sta
tion and a $100 nonlocal check at a nonpro
prietary ATM on the same banking day, $75
must be available for withdrawal on the next
business day (as required by section
229.10(c)(1)(vii)) and an additional $25
must be available for withdrawal on the sec
ond business day after the banking day of de
posit (as required by this paragraph). Nonlo
cal checks deposited at a nonproprietary
ATM after November 28, 1992, must contin
ue to be made available for withdrawal by the
fifth business day following the banking day of
deposit.
34
Regulation CC Commentary
Regulation CC
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
section 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 deposit
ed; and
(iii) Is not subject to the availability re
quirements of sections 229.10(c) (1) (vi)
and (vii), 229.11, and 229.12.
For purposes of this paragraph, checks sub
ject to section 229.10(c) (1) (v) include
traveler’s checks.
(2) An account is considered a new ac
count during the first 30 calendar days after
the account is established. An account is
not considered a new account if each cus
tomer on the account has had, within 30
calendar days before the account is estab
lished, another account at the depositary
bank for at least 30 calendar days.
(b) Large deposits. Sections 229.11 and
229.12 do not apply to the aggregate amount
of deposits by one or more checks to the ex
tent that the aggregate amount is in excess of
$5,000 on any one banking day. For custom
ers that have multiple accounts at a deposi
tary bank, the bank may apply this exception
to the aggregate deposits to all accounts held
by the customer, even if the customer is not
the sole holder of the accounts and not all of
the holders of the accounts are the same.
(c) Redeposited checks. Sections 229.11 and
229.12 do not apply to a check that has been
returned unpaid and redeposited by the cus
tomer or the depositary bank. This exception
does not apply—
(1) To a check that has been returned due
§ 229.13
to a missing indorsement and redeposited
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 229.11 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 bal
ance 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. If a depositary bank has
reasonable cause to believe that the check is
uncollectible from the paying bank, then
section 229.10(c)(1) (iii) and (v); section
229.10(c)(2) to the extent that it applies to
a check drawn on a Federal Reserve Bank
or a Federal Home Loan Bank, or a cash
ier’s, teller’s, or certified check; section
229.11; and section 229.12 do not apply
with respect to a check deposited in an ac
count at a depositary bank. Reasonable
cause to believe a check is uncollectible re
quires the existence of facts that would
cause a well-grounded belief in the mind of
a reasonable person. Such belief shall not be
based on the fact that the check is of a par
ticular class or is deposited by a particular
class of persons. The reason for the bank’s
belief that the check is uncollectible shall be
35
§ 229.13
included in the notice required under para
graph (g) of this section.
(2) Overdraft and returned-check fees. A
depositary bank that extends the time when
funds will be available for withdrawal as de
scribed in paragraph (e) (1) of this section,
and does not furnish the depositor with
written notice at the time of deposit shall
not assess any fees for any subsequent over
drafts (including use of a line of credit) or
return of checks of other debits to the ac
count, if —
(i) The overdraft or return of the check
would not have occurred except for the
fact that the deposited funds were de
layed under paragraph (e) (1) of this sec
tion; 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 of exception required in par
agraph (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
refund of overdraft or returned-check fees
that are assessed if the check subject to the
exception is paid and how to obtain a
refund.
(f) Emergency conditions. Sections 229.11
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 suspension of payments by another
bank;
(3) A war; or
(4) An emergency condition beyond the
control of the depositary bank,
if the depositary bank exercises such diligence
as the circumstances require.
(g) Notice o f exception.
(1 ) In general. When a depositary bank
extends the time when funds will be avail
able for withdrawal based on the applica
tion of an exception contained in para
graphs (b) through (f) of this section, it
must provide the depositor with a written
36
Regulation CC
notice. The notice shall include the follow
ing information—
(i) The account number of the
customer;
(ii) The date and amount of the deposit;
(iii) The amount of the deposit that is
being delayed;
(iv) The reason the exception was in
voked; and
(v) The day the funds will be available
for withdrawal, unless the emergencyconditions exception in paragraph (f) of
this section has been invoked, and the de
positary bank, in good faith, does not
know the duration of the emergency and,
consequently, when the funds must be
made available at the time the notice
must be given.
(2) Timing o f notice.
(i) The notice shall be provided to the
depositor at the time of the deposit, un
less the deposit is not made in person to
an employee of the depositary bank, or, if
the facts upon which a determination to
invoke one of the exceptions in para
graphs (b) through (0 of this section to
delay a deposit only become known to
the depositary bank after the time of the
deposit. If the notice is not given at the
time of the deposit, the depositary bank
shall mail or deliver the notice to the cus
tomer as soon as practicable, but no later
than the first business day following the
day the facts become known to the de
positary bank, or the deposit is made,
whichever is later.
(ii) If the availability of funds is delayed
under the emergency-conditions excep
tion provided in paragraph (f) of this
section, the depositary bank is not re
quired to provide a notice if the funds
subject to the exception become available
before the notice must be sent under par
agraph (g) (2) (i) of this section.
(3) Record retention. A depositary bank
shall retain a record, in accordance with sec
tion 229.21 (g), of each notice provided pur
suant to its application of the reasonablecause 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.
Regulation CC
§ 229.13
(h) Availability o f deposits subject to
exceptions.
(1) If an exception contained in para
graphs (b) through (f) of this section ap
plies, the depositary bank may extend the
time periods established under sections
229.11 and 229.12 by a reasonable period of
time.
(2) If a depositary bank invokes an excep
tion under paragraph (e) of this section
based on its reasonable cause to doubt col
lectibility of a check that is subject to sec
tion 229.10(c) (1) (iii) or (v) or section
229.10(c) (2) to the extent that it applies to
a check drawn on a Federal Reserve Bank
or a Federal Home Loan Bank, or a cash
ier’s, teller’s, or certified check, the deposi
tary bank shall make the funds available for
withdrawal not later than a reasonable peri
od after the day the funds would have been
required to be made available had the check
been subject to sections 229.11 or 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 229.11
and 229.12, whichever is later.
(4) For the purposes of paragraphs
(h)(1), (h)(2), and (h)(3) of this section,
an extension of up to five business days for
local checks and six business days for non
local checks is a reasonable period. A long
er extension may be reasonable, but the
bank has the burden of so establishing.
37
§ 229.13
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 do
not apply to checks or other deposits that
must be accorded next-day availability (or
second-day availability, if the deposit is not
made in person to an employee of the deposi
tary bank) under section 229.10.
Many checks will not be returned to the
depositary bank by the time funds must be
made available for withdrawal under the local
and nonlocal schedules. In order to reduce
risk to depositary banks, the Board has exer
cised its statutory authority to adopt these ex
ceptions to the schedules in the regulation to
allow the depositary bank to extend the time
within which it is required to make funds
available. The exceptions provided in this sec
tion apply to the schedules for local and non
local checks during the temporary and perma
nent schedules, and, in limited cases, to the
next-day availability requirement for certain
check deposits.
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 imple
ment this statutory authority if and when cir
cumstances 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
38
Regulation CC Commentary
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 rela
tionship 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 had an established account with the de
positary bank within the 30 calendar days pri
or 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 other
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 exception.
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 in
dividual 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
relationship with the bank, however, the
§229.13
Regulation CC Commentary
joint account is subject to the new-account
exception, even if the other individual on
the account has an established account re
lationship with the bank.
available for withdrawal on the next business
day do not apply during the new-account
period.
Representation by Customer
Rules Applicable to New Accounts
During the new-account exception period, the
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 avail
able 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 payments
must be made available for withdrawal in ac
cordance 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
Treasury-check deposits must be made avail
able on the next business day after deposit,
even if the check is not deposited in person to
an employee of the depositary bank.) Funds
in excess 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) (1) (vi) and (vii) that on-us checks
and the first $100 of a day’s deposit be made
The depositary bank may rely on the repre
sentation of the customer that the customer
has no established account relationship with
the bank, and has not had any such account
relationship within the past 30 days, to deter
mine whether an account is subject to the
new-account exception.
13(b) Large Deposits
Under the large-deposit exception, a deposi
tary bank may extend the hold placed on local
and nonlocal check deposits to the extent that
the amount of the aggregate deposit on any
banking day exceeds $5,000. While the first
$5,000 of a day’s deposit is subject to the
availability provided for local or nonlocal
checks, the amount in excess of $5,000 may be
held for an additional period of time as pro
vided in section 229.13(h). When the largedeposit exception is applied to deposits com
posed of both local and nonlocal checks, the
depositary bank has the discretion to choose
the portion of the deposit to which it applies
the exception. Deposits by cash, electronic
payment, or checks that must be granted nextday (or second-day) availability under section
229.10 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 a $10,000 Treasury check and
a $9,000 local check on a Monday, $10,100
(the proceeds of the Treasury check and the
first $100 of the local check) must be made
available for withdrawal on Tuesday. An ad
ditional $4,900 of the proceeds of the local
check must be available for withdrawal in ac
cordance with the local schedule (i.e., Thurs
day under the temporary schedule), and the
remaining $4,000 may be held for an addition
al 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
39
§ 229.13
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
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
promulgate an exception to the schedule for
checks that have been returned unpaid and
redeposited. Section 229.13(c) provides such
an exception for checks that have been re
turned unpaid and redeposited by the custom
er or the depositary bank.
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 indorsement. Thus, the exception does 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
40
Regulation CC Commentary
drawal under section 229.10(c) (1) (vii) can
charge back the full amount of the check in
cluding the $100 if the check is returned un
paid, but the $100 must be made available
again if the check is redeposited.
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
repeatedly 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 become
negative if checks or other charges to the ac
count had been paid, rather than returned.
This test can be met based on separate occur
rences (e.g., checks that are returned for in
sufficient 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 con
sidered 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 over
draft resulting from an error on the part of the
depositary bank, or from the imposition of
overdraft charges for which the customer is
Regulation CC Commentary
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.
In determining whether an account is sub
ject to the repeated overdraft exception, a de
positary bank may consider overdraft activity
that occurred prior to the effective date of the
regulation.
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 a deposit of a local or
nonlocal check, a check drawn on a Federal
Reserve Bank or a Federal Home Loan Bank,
or a cashier’s, certified, or teller’s check. If the
reasonable-cause exception is invoked, the
bank must include in the notice to its custom
er, 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 deposi
tary bank could place a hold on the check or
extend 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 ac
§ 229.13
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 invok
ing this exception. In these cases, the bank
may indicate, as the reason it is invoking the
exception, that the bank has confidential in
formation 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
number of reasons for which this exception
may be invoked. The Board does not intend to
provide a comprehensive list of reasons for
which this exception may be invoked; another
reason that does not appear on the model no
tice 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 reasonable cause to doubt the collect
ibility of a check. In these cases, the bank
should disclose the primary reasons for which
41
§229.13
the exception 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 ex
ample, 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
depositary bank cannot invoke the reasonablecause 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 in
voked. A bank may assess an overdraft fee
under these circumstances, however, if it pro
vides notice to the customer, in the notice of
exception required 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
local and nonlocal checks that are affected by
such delays, if the bank exercises such dili
gence as the circumstances require. For exam
ple, if a bank learns that a check has been
delayed in the process of collection due to se
vere weather conditions or other causes be
42
Regulation CC Commentary
yond its control, an emergency condition cov
ered by this section may exist and the bank
may place a hold on the check to reflect the
delay. In cases where the emergency-condi
tions exception does not apply, as in the case
of next-day checks under section 229.10(c),
the depositary bank may not be liable for a
delay in making funds available for withdraw
al if the delay is due to a bona fide error such
as an unavoidable computer 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 ex
tends the hold on a deposit beyond the time
periods permitted in sections 229.10, 229.11,
and 229.12, it must provide a notice to its cus
tomer stating the customer’s account number,
the date of deposit, the reason the exception
was invoked, and the day funds will be avail
able for withdrawal.
The requirement that the notice state the
day the funds shall be made available may be
satisfied if the notice identifies the date the
deposit is received and information sufficient
to indicate 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 pro
vide 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.
For deposits made in person to an employee
of the depositary bank, the notice generally
must be given to the person making the depo
sit, i.e., the “depositor,” at the time of deposit.
The depositor need not be the customer hold
ing 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 lat
er than the close of the business day following
Regulation CC Commentary
the banking day on which the deposit was
made.
Notice to the customer also may be provid
ed at a later time, if the facts upon which the
determination to invoke the exception do not
become known to the depositary bank until
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 clari
fied in the regulation when a depositary 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 per
sons 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 depositary bank
experiences a computer failure and customer
accounts cannot be updated in a timely fash
ion to reflect the funds as available balances,
notices are not required if the funds are made
available before the notices must be sent.
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.
§229.13
13(h) Availability of Deposits Subject to
Exceptions
If a depositary bank invokes any exception
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
establishes that an extension of up to five busi
ness days for local checks and six business
days for nonlocal checks is reasonable. Under
certain circumstances, however, a longer ex
tension of the schedules may be reasonable. In
these cases, the burden is placed on the depos
itary 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 sec
tion, indicating the new date that the funds
will be available for withdrawal.
With respect to certain 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 reasonable-cause excep
tion by a reasonable period beyond the delay
that would have been permitted under the reg
ulation had the checks not been subject to the
next-day availability requirement. Thus, for a
check drawn on a Federal Reserve Bank or
Federal Home Loan Bank, or a cashier’s, cer
tified, or teller’s check, the additional hold is
added to the local or nonlocal schedule that
would apply based on the location of the pay
ing bank.
Five business days for local checks and six
business 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 virtu
ally all checks that are returned.
43
§229.13
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 229.11 or 229.12, whichever is later.
This provision does not apply to holds im
posed under the new-account exception. Un
der 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 lat
er than the business day on which the deposi
tary 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 fo r 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 re
spect to all funds, including cash, deposited
in the account; and
(2) Provides notice of its interest- or divi
dend-payment policy in the manner re
quired 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 deposi
tary 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 may 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 “inter
est” 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.
3 This section implements section 606 of 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 of “provisional settle
ment.” (See UCC sections 4-211 and 4-213.) 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 of a
check, and the concept of provisional settlement is no long
er useful and has been eliminated by the regulation. Ac
cordingly, this section uses the term “credit” rather than
“provisional credit,” and this section applies regardless of
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
(See 12 CFR 217.2(d).) Thus, earnings cred
its often applied to corporate accounts are not
interest 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 in
terest-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 de
layed beyond that specified in the availability
schedule, a bank may charge back interest er
roneously 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 following
deposit, and 10 percent on the second business
day following deposit, the bank can apply
these percentages to determine the day inter
est must begin to accrue on check deposits 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 policy
of a depositary bank that provides that inter
est only accrues on balances that exceed a
specified amount, or on the minimum balance
maintained in the account during a given peri
od, provided that the balance is determined
based on the date that the depositary bank
receives credit for the funds. This section is
also not intended to limit any policy providing
Regulation CC Commentary
§ 229.14
that interest accrues sooner than required by
this paragraph.
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 in
terest 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 of disclosures. A bank shall make
the disclosures required by this subpart clear
ly and conspicuously in writing. Disclosures,
other than those posted at locations where
employees 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 togeth
er and shall not contain any information not
related to the disclosures required by this sub
part. If contained in a document that sets
forth other account terms, the disclosures
shall be highlighted within the document by,
for example, use of a separate heading.
(b) Uniform reference to day of availability.
In its disclosure, a bank shall describe funds
as being available for withdrawal on “the
business day after” the day of depo
sit. 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, include information that is related to
their availability policies. For example, a bank
may inform its customers that, even when the
bank has already made funds available for
withdrawal, the customer is responsible for
any problem with the deposit, such as the re
turn of a deposited check.
The regulation does not require that the
disclosures be segregated from other account
terms and conditions. For example, banks
may include the disclosure of their specific
availability 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
uniform manner when deposited funds will be
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 simi
lar 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 with
draw funds. For example, a bank that imposes
delays of four intervening business days for
nonlocal checks must describe those checks as
being available on “the fifth business day af
ter” 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 avail
ability policies to customers that hold ac
counts that are either dormant or inactive.
The determination 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 regu
lation and no longer provides statements and
other mailings to an account for this reason,
such an account is considered dormant or in
active for purposes of this regulation.
15(b) Uniform Reference to Day of
Availability
This paragraph requires banks to disclose in a
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 delays
on a case-by-case basis or by invoking one of
the exceptions in section 229.13, provided 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 applica
ble—
(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 avail
able for withdrawal (including a descrip
tion of the bank’s business days and when a
deposit is considered received); 3a
3a No 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, will be treated as local or nonlocal checks based upon
the location of the bank by which they are payable and not
on the basis of the location of the bank whose routing num
ber 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 treat
ed as local or nonlocal, or state that special rules apply to
such checks and that the customer may ask about the avail
ability of these checks. The statement may be in the form of
an attachment or insert to the bank’s existing specific policy
disclosures. In addition, banks subject to this disclosure re
quirement must provide a similar notice concerning the
payable-through checks to existing account customers no
later than December 31, 1988. (Even though a bank need
not make a disclosure concerning payable-through checks
until December 31, 1988, the bank must characterize these
checks correctly as local or nonlocal checks under amended
section 229.2, and provide availability in accordance with
sections 229.11, 229.12, and 229.13, effective September 1,
1988.)
50
Regulation CC
(3) A description of any of the exceptions
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 para
graph (c) (1) of this section, of any case-bycase policy of delaying availability that may
result in deposited funds’ being available for
withdrawal later than the time periods stat
ed 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 withdraw
al 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 noti
fy 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 tim e o f 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 of 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 de
positary bank or the decision to extend
the time when the deposited funds will be
available is made after the time of the de
posit. 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.
§ 2 2 9 .1 6
229.2(e)(4) begins to accrue interest or divi
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.
(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 sub
sequent overdrafts (including use of a line
of credit) or return of checks or other deb
its 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 re
turned-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 customer. The notice must state that
the customer may be entitled to a refund of
overdraft or returned-check fees that are as
sessed if the check subject to the delay is
paid and how to obtain a refund.
(d) Credit-union notice of interest-payment
policy. If a bank described in section
51
§ 229.16
COM M ENTARY
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
16(a) General
bank that makes deposited funds available for
This section describes the information that
withdrawal on the business day following the
must be disclosed by banks to comply with
day of deposit need simply disclose that de
sections 229.17 and 229.18(d), which require
posited funds will be available for withdrawal
that banks furnish notices of their specific pol
on the first business day after the day of depo
icy regarding availability of deposited funds.
sit, the bank’s business days, and when depos
The disclosure provided by a bank must re
its are considered received.
flect the availability policy followed by the
On the other hand, a bank that has a policy
bank in most cases, even though a bank may
of
routinely delaying on a blanket basis the
in some cases make funds available sooner or
time when deposited funds are available for
impose a longer delay.
The disclosure must reflect the policy and withdrawal would have a more detailed dis
practice of the bank regarding availability as closure. Such blanket hold policies might be
to most accounts and most deposits into those for the maximum time allowed under the fed
accounts. In disclosing the availability policy eral law or might be for shorter periods. These
that it follows in most cases, a bank may pro banks must disclose the types of deposits that
vide a single disclosure that reflects one policy will be subject to delays, how the customer
to all its transaction account customers, even can determine the type of deposit being made,
though some of its customers may receive and the day that funds from each type of de
faster availability than that reflected in the posit will be available for withdrawal.
Some banks may have a combination of
policy disclosure. Thus, a bank need not dis
close to some customers that they receive fast next-day availability and blanket delays. For
er availability than indicated in the disclosure. example, a bank may provide next-day avail
If, however, a bank has a policy of imposing ability for all deposits except for one or two
delays in availability on any customers longer categories, such as deposits at nonproprietary
than those specified in its disclosure, those ATMs and nonlocal personal checks over a
customers must receive disclosures that reflect specified dollar amount. The bank would de
scribe the categories that are subject to delays
the longer applicable availability periods.
A bank may disclose that funds are “avail in availability and tell the customer when
able for withdrawal” on a given day notwith each category would be available for with
standing the fact that the bank uses the funds drawal, and state that other deposits will be
to pay checks received before that day. For available for withdrawal on the first business
example, a bank may disclose that its policy is day after the day of deposit. Similarly, a bank
to make funds available from deposits of local that provides availability on the second busi
checks on the second business day following ness day for most of its deposits would need to
the day of deposit, even though it may use the identify the categories of deposits which, un
deposited funds to pay checks prior to the sec der the regulation, are subject to next-day
ond business day; the funds used to pay availability and state that all other deposits
checks in this example are not available for will be available on the second business day.
Because many banks’ availability policies
withdrawal until the second business day after
deposit because the funds are not available for may be complex, banks must give a brief sum
all uses until the second business day. (See the mary of its policy at the beginning of the dis
definition of “available for withdrawal” in sec closure. In addition, the bank must describe
tion 229.2(d).)
any circumstances when actual availability
SECTION 229.16— Specific AvailabilityPolicy Disclosure
52
Regulation CC Commentary
may be longer than the schedules disclosed.
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 un
ion), 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 pro
ceeds of both local and nonlocal checks avail
able for withdrawal within the time periods
required 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 nonpro
prietary ATMs available for withdrawal un
der section 229.12(f)(1) must explain this in
the initial disclosure. In addition, the bank
must provide a list (on or with the initial dis
closure) of either the bank’s proprietary
ATMs or those ATMs that are nonproprie
tary at which customers may make deposits.
As an alternative 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 taking advantage of the cash withdrawal
§ 229.16
limitations of sections 229.11(b)(2) and
229.12(d), or the provision in section
229.19(e) allowing holds to be placed on oth
er 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 disclose that
the customer may request a copy of the bank’s
detailed schedule that would enable the cus
tomer 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 custom
ers 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
53
§229.16
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:
state that from time to time funds may be
available for withdrawal later than the 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 re
quirements of this regulation. If the bank im
poses a delay on a particular deposit that is
not longer than the availability required by
sections 229.11 or 229.12 for local and nonlo
cal 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 sections 229.11 or 229.12,
however, then it must be based on an excep
tion provided in section 229.13, and the'bank
must comply with the section 229.13 notice
requirements.
(16)(c)(2) Notice at Time of 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 beyond
the time when deposited funds are generally
available for withdrawal. The notice must
state that a delay is being imposed and indi
cate when the funds will be available. In addi
tion, 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 returned-check fees on ac
counts when a case-by-case hold has been
placed, the case-by-case hold notice provided
54
Regulation CC Commentary
to the customer must include a notice con
cerning overdraft or returned-check fees. The
notice must state that the customer may be
entitled to a refund of any overdraft or re
turned-check fees that result from the deposit
ed funds’ not being available if the check that
was deposited was in fact paid by the payor
bank, and explain how to request a refund 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 avail
able. This requirement is satisfied if the notice
provides information sufficient to indicate
when funds will be available and the amounts
that will be available at those times. For ex
ample, for a deposit involving more than one
check, the bank need not provide a notice that
discloses when funds from each individual
item in the deposit will be available for with
drawal. 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 deter
mine 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 employee
of the depositary bank, the notice generally
must be given at the time of the deposit. The
notice at the time of the deposit must be given
to the person making the deposit, that is, the
“depositor.” The depositor need not be the
customer holding the account. For other de
posits, such as deposits received at an ATM,
lobby deposit box, night depository, through
the mail, or by armored car, notice must be
mailed to the customer not later than the
close of the business day following the bank
ing day on which the deposit was made. No
tice to the customer also may be provided not
later than the close of the business day follow
ing 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 Returned-Check
Fees
If a depositary bank delays or extends the
Regulation CC Commentary
§ 229.16
time when funds from a deposited check are
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 returned-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 re
funds the fees upon the request of the custom
er when required to do so. The notice must
state that the customer may be entitled to a
refund of any overdraft or returned-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.
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 un
ions are required to describe their policy with
respect 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 ac
count, a bank shall provide a potential cus
tomer with the applicable specific availabilitypolicy disclosure 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
disclosure of other account terms and con
ditions, 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
COM M ENTARY
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
transfer from a separate account of the cus
tomer’s at the bank, the disclosure may be
mailed not later than the business day follow
ing the banking day of the request.
§ 229.17
disclose both its present policy and its policy
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 cus
tomers by including the notice with promo
tional 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 furnishing the customer with a
booklet or pamphlet that describes the terms
and conditions of the bank’s accounts general
ly. The bank, however, must then direct the
customer’s attention to the disclosures re
quired by this section 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 avail
ability 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
57
§ 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 avail
able for immediate withdrawal.
(b) Locations where employees accept con
sumer deposits. A bank shall post in a conspic
uous place in each location where its employ
ees receive deposits to consumer accounts a
notice that sets forth the time periods applica
ble to the availability of funds deposited in a
consumer account.
(c) Automated teller machines.
(1) A depositary bank shall post or pro
vide 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 availability-policy 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
§ 229.18
Regulation CC Commentary
COM M ENTARY
SECTION 229.18—Additional
Disclosure Requirements
18(a) Deposit Slips
This paragraph requires banks to include a
notice on all preprinted deposit slips. The deposit-slip notice need only state, somewhere
on the front of the deposit slip, that deposits
may not be available for immediate withdraw
al. The notice is required only on preprinted
deposit slips—those printed with the custom
er’s account number and name and furnished
by the bank in response to a customer’s order
to the bank. A bank need not include the no
tice on deposit slips that are not preprinted
and supplied to the customer—such as coun
ter deposit slips—or on those special deposit
slips provided to the customer under section
229.10(c). A bank is not responsible for en
suring that the notice appear on deposit slips
that the customer does not obtain from or
through the bank.
This paragraph applies to preprinted depo
sit slips furnished to customers on or after
September 1, 1988. A bank need not mail de
posit slips to customers to replace the custom
ers’ existing supply, and customers may con
tinue to use any slips they were sent prior to
September 1, 1988. In addition, a bank may
mail or deliver to its customers after Septem
ber 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.
see it before making their deposits. For exam
ple, the notice might be posted at the point
where the line forms for teller service in the
lobby. The notice is not required at any drivethrough teller windows nor is it required at
night depository locations, or at locations
where consumer 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 par
ty, such as the owner or operator of the ATM,
to post the notice and indemnify the deposi
tary 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.
P aragraph
(c )(2 )
r e q u ir e s
a
d e p o s ita r y
b a n k th a t o p e r a te s a n o ff -p r e m is e s A T M fr o m
w h ic h
d e p o s its
are rem oved
not
m ore
th a n
t w o t im e s a w e e k to m a k e a d is c lo s u r e o f th is
fa c t
m u st
on
th e
d is c lo s e
o ff -p r e m is e s
to
th e
ATM .
c u sto m e r
w h ic h d e p o s its m a d e a t th e A T M
The
th e
n o t ic e
days
on
w ill b e c o n
s id e r e d r e c e iv e d .
18(b) Locations Where Employees
Accept Consumer Deposits
This paragraph describes the statutory re
quirement that a bank post in each location
where its employees accept consumer deposits
a notice of its availability policy pertaining to
consumer accounts. The notice that is re
quired 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 con
sumers seeking to make deposits are likely to
18(d) Upon Request
This paragraph requires banks to provide
written notice of their specific availability pol
icy to any person upon that person’s oral or
written request. The notice must be sent with
in a reasonable period of time following re
ceipt of the request.
18(e) Changes in Policy
This paragraph requires banks to send notices
59
§229.18
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
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 avail
ability for nonlocal checks from the fifth busi
ness day after deposit to the fourth business
day after deposit—the bank need not send ad
vance notice. The bank must, however, send
notice of the change no later than 30 calendar
days after the change is implemented. A bank
is not required to give a notice when there is a
change in appendix B (Reduction of Sched
ules 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-bycase holds, banks that used the previous ver
sion of Form C-3 could use language such as
the following on account statements or in
serts: “Our disclosure on funds availability in
dicated that, in certain circumstances, funds
from deposits would not be available until the
seventh business day following the day of your
deposit. Effective September 1, 1990, that pe
riod [was/will be] reduced to five business
days.” A bank reserving the right to apply the
cash-withdrawal
limitation
in section
229.12(d) when invoking a case-by-case hold
should indicate that the period is reduced to
six, rather than five, business days.
60
Regulation CC Commentary
4
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 de
positary 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
facilities (including ATMs) are available
for customer-account withdrawals.
(c) Effect on policies of depositary bank. This
part does not—
§229.19
(1) Prohibit a depositary bank from mak
ing 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
return 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 avail
able to its customer for an electronic pay
ment for which the bank has not received
payment 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 deposit
for the time period specified in section
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 deposi
tary bank.
(d) Use of calculated availability. A deposi
tary bank may provide availability to its non
consumer accounts based on a sample of
checks that represents the average composi
tion of the customer’s deposits, if the terms
for availability based on the sample are equiv
alent to or more prompt than the availability
requirements of this subpart.
(e) Holds on other funds.
(1) A depositary bank that receives a
61
_
§ 229.19
check 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
exceeds 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
exceeds 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 of merger transaction. For purpos
es of this subpart, except for the purposes of
the new-accounts exception of section
229.13(a), and when funds are considered de
posited under section 229.19(a), 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 consum
mation 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 during regular business hours are gener
ally considered deposited when placed in the
lobby box; a bank may, however, treat depos
its to lobby boxes the same as deposits to
night depositories (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 deposit
ed 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.
§ 229.19
A lock box is a post office box used by a
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 offpremise facilities, such as night depositories 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 location of
the depositary bank at which the account is
maintained or local time of the ATM or offpremise facility). The depositary bank must
use the same method for establishing the cut
off hour for all ATMs and off-premise facili
ties used by its customers. The choice of cut
off hour must be reflected in the bank’s inter
nal 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
63
§229.19
for different types of deposits. For example, a
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 con
sidered received on the next banking day. Fur
ther, 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 pub
lic. For example, a banking office that usually
provides a full range of banking services may
close at 12:00 noon but leave a drive-in teller
window open for the limited purpose of re
ceiving deposits and making cash withdraw
als. Under those circumstances, the bank is
considered closed and may consider deposits
received after 12:00 noon as having been re
ceived 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 through
out the day, would not affect this result. A
bank may not, however, close individual teller
stations and reopen them for next day’s busi
ness before 2:00 p.m. during a banking day.
19(b) Availability at Start of Business
Day
If funds must be made available for withdraw
al on a business day, the funds must be avail
able for withdrawal by the later of 9:00 a.m.
or the time the depositary bank’s teller facili
ties, including ATMs, are available for cus
tomer 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 be64
Regulation CC Commentary
ginning at 10:00 a.m., funds must be available
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 suf
ficient 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 associat
ed 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 ac
count based on a returned check or notice of
nonpayment, or to claim a refund for any
credit provided to the customer. For example,
even if a check is returned or a notice of non
payment 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
Regulation CC Commentary
count for the full amount of the check. (See
section 229.33(d) and commentary.)
Nothing in the regulation requires a deposi
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
specific business days, if a bank does not par
ticipate 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 com
plies with this rule if the funds that are re
quired to be available for cash withdrawal at
5:00 p.m. on a particular day are available for
withdrawal at the start of business on the fol
lowing 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 re
quire 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 result,
if a bank has a policy of limiting cash with
drawals 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 su
perseded 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 believes that the rationale behind the
act’s provision that a bank’s ATM withdrawal
limit is not superseded by the requirement
that funds be made available for cash with
drawal applies on subsequent days. Nothing
in the regulation prohibits a depositary bank
§ 229.19
from establishing ATM cash-withdrawal lim
its that vary among customers of the bank, as
long as the limit is not dependent on the
length of time funds have been in the custom
er’s account, provided that the permissible
hold has expired.
A number of small banks, particularly cred
it unions, due to lack of secure facilities, keep
no cash on their premises and hence offer no
cash-withdrawal capability to their customers.
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 customer can
withdraw over the counter on a given day.
For example, some banks require advance no
tice for large cash withdrawals in order to lim
it 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, howev
er, does not authorize such policies if they are
otherwise prohibited by statutory, regulatory,
or common law.
19(d) Use of Calculated Availability
A depositary bank may provide availability to
its nonconsumer accounts on a calculatedavailability basis. Under calculated availabil
ity, a specified percentage of funds from check
deposits may be made available to the custom
er on the next business day, with the remain
ing percentage deferred until subsequent days.
The determination of the percentage of depos
ited funds that will be made available each
day is based on the customer’s typical deposit
mix as determined by a sample of the custom
er’s deposits. Use of calculated availability is
permitted only if, on average, the availability
terms that result from the sample are equiva
lent to or more prompt than the requirements
of this subpart.
65
§229.19
19(e) Holds on Other Funds
Section 607(d) of the act (12 USC 4006(d))
provides that once funds are available for
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 transaction does not involve a deposit
to an account. 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 section 4-213(1)(a)).
19(f) Employee Training and
Compliance
The act requires banks to take such actions as
may be necessary to inform fully each employ
ee 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.
66
Regulation CC Commentary
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.
19(g) Effect of Merger Transaction
After banks merge, there is often a period of
adjustment before their operations are consol
idated. 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 transac
tion, except that a customer of any bank that
is a party to the transaction that has an estab
lished 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 account 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 ac
cordance 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)(v i))
“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 avail
able 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 there
with, subpart A, preempt provisions of state
laws relating to the availability of funds.
(e) Procedures for preemption determina
tions. A request for a preemption determina
tion 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 of inconsistent law. Except as
provided in paragraph (a), the act and sub
part 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
Regulation CC Commentary
that state, including federally chartered insti
tutions. If a state law provides shorter avail
ability only for deposits in accounts in certain
categories of banks, such as commercial
banks, the superseding state law continues to
apply only to those categories of banks, rather
than to all federally insured banks in the state.
A number of states have enacted laws that
govern when banks in those states must make
funds available to their customers. The act
20(b) Preemption of Inconsistent Law
provides that any state law in effect on Sep
tember 1, 1989, that provides that funds be This paragraph reflects the statutory provision
made available in a shorter period of time that other provisions of state law that are in
than provided in this regulation, will super consistent with federal law are preempted.
sede the time periods in the act and the regu Preemption does not require a determination
lation. The conference report on the act clari by the Board to be effective.
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 20(c) Standards for Preemption
law relates to the time funds must be made
This section describes the standards the Board
available for withdrawal (H.R. Rep. No. 261,
will use in making determinations on whether
100th Cong. 1st Sess. 182 (1987)).
federal law will preempt state laws governing
Thus, if a state wishes to adopt a law gov funds availability. A provision of state law is
erning funds availability, it must do so, effec considered inconsistent with federal law if it
tive on or before September 1, 1989. Laws permits a depositary bank to make funds
adopted after that date will not supersede fed available to a customer in a longer period of
eral law, even if they provide for shorter avail time than the maximum period permitted by
ability periods than are provided under feder the act and this regulation. For example, a
al law. If a state that has a law governing state law that permits a hold of four business
funds availability in effect before September 1, days or longer for local checks permits a hold
1989, amends its law after that date, the that is longer than that permitted under the
amendment will not supersede federal law, act and this regulation, and therefore is incon
but an amendment deleting a state require sistent and preempted. State availability
ment will be effective.
schedules that provide for availability in a
If a state provides for a shorter hold for a shorter period of time than required under
certain category of checks than is provided for Regulation CC supersede the federal schedule.
under federal law, that state requirement will
Under a state law, some categories of de
supersede the federal provision. For example, posits could be available for withdrawal soon
most state laws base some hold periods on er or later than the time required by this
whether the check being deposited is drawn subpart, depending on the composition of the
on an in-state or out-of-state bank. If a state deposit. For example, the act and this regula
contains more than one check-processing re tion (§ 229.10(c) (1) (vii)) require next-day
gion, the state’s hold period for in-state checks availability for the first $100 of the aggregate
may be shorter than the federal maximum deposit of local or nonlocal checks on any
hold period for nonlocal checks. Thus, the day, and a state law could require next-day
state schedule would supersede the federal availability for any check of $100 or less that
schedule to the extent that it applies to in is deposited. Under the act and this regula
state, nonlocal checks.
tion, if either one $150 check or three $50
The act also provides that any state law checks are deposited on a given day, $100
that provides for availability in a shorter peri must be made available for withdrawal on the
od of time than required by federal law is ap next business day, and $50 must be made
plicable to all federally insured institutions in available in accordance with the local or non
68
Regulation CC Commentary
local schedule. Under the state law, however,
the two deposits would be subject to different
availability rules. In the first case, none of the
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 max
imum 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 preempt
ed. Thus, state funds-availability laws that ap
ply to funds in time and savings deposits are
not affected by the act or this regulation. In
addition, the availability schedules of several
states apply to “items” deposited to an ac
count. The term “items” may encompass de
posits, 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
§ 229.20
covered by the act would also not be preempt
ed. For example, a state law that governs
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 fundsavailability policies that apply to deposits oth
er 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 par
agraph 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 attor
ney’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 affect
ed; 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
70
Regulation CC
resulted from a bona fide error, notwith
standing the maintenance of procedures
reasonably adapted to avoid any such error.
(2) Examples. Examples of a bona fide er
ror include clerical, calculation, computer
malfunction and programming, and print
ing errors, except that an error of legal
judgment with respect to the bank’s obliga
tion under this subpart is not a bona fide
error.
(d) Jurisdiction. Any action under this sec
tion may be brought in any United States dis
trict court or in any other court of competent
jurisdiction, and shall be brought within one
year after the date of the occurrence of the
violation 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 inter
pretation 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 agen
cy or court.
§ 229.21
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 result
ed from a bona fide error and that it maintains
procedures designed to avoid such errors. For
example, a bank may make a bona fide error if
it fails to give next-day availability on a check
drawn on the Treasury because the bank’s
computer system malfunctions in a way that
prevents the bank from updating its custom
er’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 liabili
ty if they act in good faith in reliance on any
rule, regulation, model form (if the disclosure
actually corresponds to the bank’s availability
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
Regulation CC
Subject to the requirement for expeditious re
turn, a paying bank may send a returned
check to the depositary bank, or to any other
bank agreeing to handle the returned check
expeditiously under section 229.31(a). A pay
SECTION 229.30—Paying Bank’s
ing bank may convert a check to a qualified
Responsibility for Return of Checks
returned check. A qualified returned check
(a) Return o f checks. If a paying bank deter
must be encoded in magnetic ink with the
mines not to pay a check, it shall return the
routing number of the depositary bank, the
check in an expeditious manner as provided in
amount of the returned check, and a “2” in
either paragraphs (a)(1) or (a)(2) of this
position 44 of the MICR line as a return iden
section.
tifier, in accordance with the American Na
(1) Two-day/four-day test. A paying bank tional Standard Specifications for Placement
returns a check in an expeditious manner if and Location of MICR Printing, X9.13 (Sept.
it sends the returned check in a manner 1983). This paragraph does not affect a pay
such that the check would normally be re ing bank’s responsibility to return a check
ceived by the depositary bank not later than within the deadlines required by the UCC,
4:00 p.m. (local time of the depositary Regulation J (12 CFR 210), or section
bank) of—
229.30(c).
(i) The second business day following
the banking day on which the check was (b) Unidentifiable depositary bank. A paying
presented to the paying bank, if the pay bank that is unable to identify the depositary
ing bank is located in the same check bank with respect to a check may send the
processing region as the depositary bank; returned check to any bank that handled the
check for forward collection even if that bank
or
(ii) The fourth business day following does not agree to handle the check expedi
the banking day on which the check was tiously under section 229.31(a). A paying
presented to the paying bank, if the pay bank sending a returned check under this par
ing bank is not located in the same agraph to a bank that handled the check for
check-processing region as the depositary forward collection must advise the bank to
which the check is sent that the paying bank is
bank.
If the last business day on which the paying unable to identify the depositary bank. The
bank may deliver a returned check to the expeditious-return requirements in section
depositary bank is not a banking day for the 229.30(a) do not apply to the paying bank’s
depositary bank, the paying bank meets the return of a check under this paragraph.
two-day/four-day test if the returned check (c) Extension of deadline. The deadline for
is received by the depositary bank on or be return or notice of nonpayment under the
fore the depositary bank’s next banking UCC or Regulation J (12 CFR 210) is
day.
extended—
(2) Forward-collection test. A paying bank
(1) if a paying bank, in an effort to expe
also returns a check in an expeditious man
dite delivery of a returned check to a bank,
ner if it sends the returned check in a man
uses a means of delivery that would ordi
ner that a similarly situated bank would
narily result in the returned check’s being
normally handle a check—
received by the bank to which it is sent on
(i) Of similar amount as the returned
or before the receiving bank’s next banking
check;
day following the otherwise applicable
(ii) Drawn on the depositary bank; and
deadline; this deadline is extended further if
a paying bank uses a highly expeditious
(iii) Deposited for forward collection in
means of transportation, even if this means
the similarly situated bank by noon on
of transportation would ordinarily result in
the banking day following the banking
delivery after the receiving bank’s next
day on which the check was presented to
banking day; or
the paying bank.
SUBPART C—COLLECTION OF
CHECKS
72
Regulation CC
§ 229.30
(2) if the deadline falls on a Saturday that
is a banking day, as defined in the applica
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 re
turning bank, or on the next banking day,
in the case of a depositary bank, after mid
night Saturday night.
(d) Identification of returned check. A pay
ing bank returning a check shall clearly indi
cate on the face of the check that it is a re
turned 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 of 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 expeditious-re
turn 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 deposi
tary 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 of 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 de
positary banks are not located in the same
check-processing region, the check is consid
ered returned expeditiously. In certain limited
cases, however, these times are shorter than
the time it would normally take a forward-col
lection check deposited in the paying bank
and payable by the depositary bank to be col
lected. Therefore, the Board has included a
forward-collection test, whereby a check is
nonetheless considered to be returned expedi
tiously 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 re
turn the check so that the check would nor
mally 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
complete 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. Rath
er, 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 forwardcollection checks. Where the last day on
which a check could be delivered to a deposi
tary bank under this two-day/four-day test is
not a banking day for the depositary bank, a
returning bank might not schedule delivery of
forward-collection 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 expeditious. Ordinarily, this exten
sion of time will allow the returned checks to
be delivered with the next shipment of for
ward-collection checks destined for the depos
itary bank.
The times specified in this two-day/fourday test are based on estimated forward-collection times, but take into account the partic
ular difficulties that may be encountered in
handling returned checks. It is anticipated
that the normal process for forward collection
of a check coupled with these return require
ments will frequently result in the return of
§ 229.30
Regulation CC Commentary
checks before the proceeds of local and nonlo
cal checks, other than those covered by sec
tion 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 par
ticular 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 return
ing banks (see section 229.31) as their agents
to return checks to depositary banks. A pay
ing bank may rely on the availability schedule
of the returning bank it uses in determining
whether the returned check would “normal
ly” be returned within the required time un
der this two-day/four-day test, unless the pay
ing 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
collection, 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
section 229.31(a). This test allows many pay
ing banks a simple means of expeditious re
turn 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 situ
ated bank by noon on the banking day follow
ing the banking day of presentment of the re
turned check.
This test refers to similarly situated banks
to indicate a general community standard. In
the case of a paying bank (other than a Feder
al Reserve Bank), a similarly situated bank is
a bank of similar asset size, in the same com
munity, and with similar check-handling ac
tivity 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 de
positary bank by Wednesday. This would be
the same day the paying bank would deliver a
forward-collection 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
75
§ 229.30
Regulation CC Commentary
depositary bank, but could send them to a
correspondent or a Federal Reserve Bank.
The dollar amount of the returned check
has a bearing on how it must be returned. If
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), general
ly 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
forward collection, as long as the alternate
method results in delivery of the returned
3. If a paying bank ordinarily mails its for check to the depositary bank as quickly as the
ward-collection checks to its correspondent or forward collection of a check drawn on the
Federal Reserve Bank in order to avoid the depositary bank or, where the returning bank
costs of a courier delivery, but similarly situ takes a day to create a qualified returned
ated banks use a courier to deliver forward- check under section 229.31(a), one day later
collection checks to their correspondent or than the forward-collection time. If a paying
Federal Reserve Bank, the paying bank must bank returns a check on its banking day of
send its returned checks by courier to meet receipt without paying for the check, as per
the forward-collection test.
mitted under UCC section 4-302(a), and re
ceives settlement for the returned check from
4. If a paying bank normally sends its for a returning bank, it must promptly pay the
ward-collection checks directly to the amount of the check to the collecting bank
depositary bank, which is located in another from which it received the check.
Although paying banks may wish to pre
community, but similarly situated banks send
forward-collection checks drawn on the de pare qualified returned checks because they
positary bank to a correspondent or a Federal
Reserve Bank, the paying bank would not
4 This is analogous to the responsibility of collecting
have to send returned checks directly to the banks under UCC section 4-202(3).
229.31(a). (All Federal Reserve Banks agree
to handle returned checks expeditiously.)
The paying bank must deliver the returned
check to the correspondent or Federal Re
serve Bank by the correspondent’s or Federal
Reserve Bank’s appropriate cut-off hour. The
appropriate cut-off hour is the cut-off hour for
returned checks that corresponds to the cut
off 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 availability
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 cor
respondent or the Federal Reserve Bank,
mailing returned checks to the correspondent
or Federal Reserve Bank would not satisfy the
forward-collection test.
76
Regulation CC Commentary
will be handled at a lower cost by returning
banks, the one-business-day extension provid
ed to returning banks is not available to pay
ing banks because of the longer time that a
paying bank has to dispatch the check. Nor
mally, paying 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 until late in the day following pres
entment, while a returning bank may receive
returned checks late on one day and be ex
pected to dispatch them early the next
morning.
In effect, under either test, the paying bank
acts as an agent or subagent of the depositary
bank in selecting a means of return. Under
section 229.30(a), a paying bank is autho
rized 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
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 sec
tion 4-302, a paying bank is “accountable”
for the amount of a demand item other than a
documentary draft if it does not pay or return
the item or send notice of dishonor by its mid
night deadline. Under UCC sections 3-418
and 4-213(1), 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
§ 229.30
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 payablethrough 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
receives the check during forward collection,
not when the payor returns the check to the
payable-through or payable-at bank. Never
theless, 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 sub
part (§ 229.38) provides that a paying bank
is not subject to both “accountability” for
missing the midnight deadline under the UCC
and liability for missing the timeliness require
ments of this regulation. Also, a paying bank
is not responsible for failure to make expedi
tious return to a party that has breached a
presentment warranty under UCC section
4-207(1), notwithstanding that the paying
bank has returned the check. (See the com
mentary to section 229.30(a).)
This paragraph directly affects the follow
ing provisions of the UCC, and may affect
other sections or provisions:
1. Section 4—212(2), in that direct return by
the paying bank is now permitted in all ju
risdictions even though not all jurisdictions
have adopted this optional provision. Also,
the paying bank does not have to create a
draft on the depositary bank.
2. Section 4—301(4), in that instead of return
ing 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.
3. Section 4—301 (1), 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.
77
§ 229.30
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 in
dorsement 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 re
turning bank that agrees to handle the re
turned check for expeditious return to the de
positary bank under section 229.31(a). The
returning bank may be better able to identify
the depositary 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
78
Regulation CC Commentary
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
should bear the risks of less than expeditious
return. Similarly, where the inability to identi
fy the depositary bank is due to indorsements
or other information placed on the back of the
check by the depositary bank’s customer 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 return
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 para
graph is also subject to its midnight deadline
under UCC section 4—301, Regulation J, and
the exception provided in section 229.30(c).
A paying 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
depositary bank is insolvent or in other cases
as provided in section 229.35(b). Finally, a
paying bank may make a claim against a prior
collecting bank based on a breach of warranty
under UCC section 4—207.
§ 229.30
Regulation CC Commentary
30(c) Extension of Deadline
This paragraph permits extension of the mid
night deadline, but not of the duty of expedi
tious return, in two circumstances:
1. A paying bank may have a courier that
leaves after midnight 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 midnight deadline or other ap
plicable time for return. The extension 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 expeditious
means of transportation are used. For ex
ample, 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 ar
rives after the close of the depositary
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 midnight
deadline for checks received on Friday
might require the bank to return the
checks by midnight Saturday. However,
the bank may not have couriers leaving on
Saturday to carry returned checks, and
even if it did, the returning or depositary
bank to which the returned checks were
sent might not be open until Sunday night
or Monday morning 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 de
positary 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
in UCC sections 4-301 and 4-302 and section
210.12 of Regulation J (12 CFR 210.12). 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 ex
peditious return requirements in section
229.30(a) is required.
The paying bank satisfies its midnight dead
line under the UCC by dispatching returned
checks to another bank by courier, including a
courier under contract with the paying bank,
prior to expiration of the midnight deadline.
This paragraph directly affects UCC sec
tions 4-301 and 4-302 and section 210.12 of
Regulation J (12 CFR 210.12) to the extent
that this paragraph applies 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
checks directly to such a depositary bank may
79
§ 229.30
not be justified. Thus, the expedited-return re
quirement of section 229.30(a) and the notice-of-nonpayment requirement of section
229.33 do not apply to checks being returned
to banks that do not hold accounts. The pay
ing 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 return
ing a check to one of these banks would be
required to return the check to the depositary
bank, in accordance with the requirements 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 returned
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
80
Regulation CC Commentary
requirements for a notice in lieu of return.
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 return
ing and depositary banks are informed that
the notice carries value. Notice in lieu of re
turn is permitted only when a bank does not
have and cannot obtain possession of the
check or must retain possession of the check
for protest. A check is not unavailable for re
turn if it is merely difficult to retrieve from a
filing system 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 de
stroyed, including when the original returned
check has been charged back as lost or de
stroyed 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 section
4—301(1) as to the form and information re
quired of a notice of dishonor or nonpayment.
Reference in the regulation and this commen
tary to a returned check includes a notice in
lieu of return unless 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 re
quired 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 sec
tion 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
Regulation CC Commentary
§ 229.30
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 indorsement) when it is received by
the paying bank.
If there are inconsistent routing numbers,
the paying bank may rely on any routing
number designating the depositary bank. 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
manner 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 normal
ly be received 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 return
ing 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 bank
ing 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 re82
Regulation CC
turn, the returning bank may send the re
turned check to the depositary bank, or to any
bank agreeing to handle the returned check
expeditiously under section 229.31(a). The
returning bank may convert the returned
check to a qualified returned check. A quali
fied returned check must be encoded in mag
netic ink with the routing number of the de
positary bank, the amount of the returned
check, and a “2” in position 44 of the MICR
line as a return identifier, in accordance with
the American National Standard Specification
for Placement and Location of MICR Print
ing, X9.13 (Sept. 1983). The time for expedi
tious 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 con
verts a returned check to a qualified returned
check. This extension does not apply to the
two-day/four-day test specified in paragraph
(a ) (1) of this section or when a returning
bank is returning a check directly to the de
positary bank.
(b) Unidentifiable depositary bank. A return
ing bank that is unable to identify the deposi
tary 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 return
ing 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 un
der this paragraph, but that is able to identify
the depositary bank, must thereafter return
the check expeditiously to the depositary
bank.
Regulation CC
§ 229.31
(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
would settle with the sending bank for a check
received for forward collection drawn on the
depositary bank. This settlement is final 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 expeditious-re
turn 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 deposi
tary bank appearing on the returned check in
the depositary bank’s indorsement or in mag
netic ink on a qualified returned check.
83
Regulation CC Commentary
§ 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
expeditious 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 pre
sented 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
84
the paying bank, or a later time as would re
sult from unforeseen delays.
The forward-collection test is similar to the
forward-collection test for paying banks. Un
der 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 return
ing bank must accept returned checks, includ
ing 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 for
ward collection. Thus, a returning bank gen
erally must process even raw returns on an
overnight basis, unless its time limit is extend
ed 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 returning bank by the time that it would
dispatch forward-collection checks received at
a corresponding forward-collection cut-off
hour that provides for the same or faster
availability 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
Regulation CC Commentary
clearinghouse, the returning bank should ar
range to have the returned check received by
the depositary bank by Tuesday. This would
be the same day that it would deliver a for
ward-collection check drawn on the deposi
tary 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 normal
ly 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 forwardcollection checks are delivered by courier,
mailing the returned checks would not meet
the duty established by this section for return
ing 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 re
turning banks use couriers to deliver their for
ward-collection 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
community standard is established by taking
into account the dollar volume of the checks
being sent to the depositary bank, and the lo
cation of the depositary bank, and determin
ing whether similarly situated banks would
normally deliver forward-collection checks to
the depositary bank, taking into account the
particular risks associated with returned
checks. Where the community standard does
§ 229.31
not require courier delivery, other means of
delivery, including mail, are acceptable.
The expeditious-return requirement for a
returning bank in this regulation is more
stringent in many cases than the duty of a
collecting bank to act seasonably under UCC
section 4-202 in returning a check. A return
ing bank is under a duty to act as expeditious
ly in returning a check as it would in the for
ward collection of a check. Notwithstanding
its duty of expeditious return, its midnight
deadline under UCC section 4-202 and sec
tion 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 returned check. A qualified returned
check will be handled by subsequent returning
banks more efficiently than a raw return. This
paragraph gives a returning bank an extra
business day beyond the time that would oth
erwise be required to return the returned
check to convert a returned check to a quali
fied returned check. The qualified returned
check must include 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 returned check directly to the depositary
bank, this extra day is not available because
preparing a qualified returned check will not
expedite handling by other banks.
If the returning bank makes an encoding
error 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 available
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 re85
§229.31
turned check directly to the depositary bank,
it is not required to send the check to the
branch of the depositary bank that first han
dled the check. The returned check may be
sent to the 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, oth
er returning banks, or the depositary bank.
(See UCC section 4-202(3) regarding the re
sponsibility 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 requirements of this section even if the de
layed 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 expe
ditiously as a returned check.
This paragraph directly affects the follow
ing provisions of the UCC and may affect oth
er sections or provisions:
1. Section 4-212(2), in that direct return by
the returning bank is now permitted in all
jurisdictions even though not all jurisdic
tions have adopted this optional provision.
Also, the returning bank does not have to
create a draft on the depositary bank.
2. Section 4-202(2), in that time limits re
quired by that section may be affected by
the additional requirement to make an ex
peditious return.
3. Section 4—212(1), 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 pay
ing banks. In some cases a returning bank will
be unable to identify the depositary bank with
respect to a check. Returning banks agreeing
to handle checks for return to depositary
banks under section 229.31 (a) are expected to
be expert in identifying depositary-bank in
dorsements. In the limited cases where the re
86
Regulation CC Commentary
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 han
dled the check for forward collection, even if
that bank does not agree to handle the re
turned check expeditiously under section
229.31(a).
If the returning bank itself handled the
check for forward collection, it may send the
returned check to a collecting bank that was
prior to it in the forward-collection process,
which will be better able to identify the depos
itary 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 un
der 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 expeditious-re
turn requirements of section 229.31(a).
The returning bank’s return of a check un
der this paragraph is subject to the midnight
deadline under UCC section 4-202(2). (See
the definition 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 return
ing bank is able to identify the depositary
bank, the returning bank must thereafter re
turn the check expeditiously to the depositary
bank. The returning bank returns a check ex
peditiously under this paragraph if it returns
the check by the same means it would use to
return 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 depos
itary bank is unknown if such checks are com
mingled with other returned checks, or, if
such checks are sent in a separate cash letter,
§229.31
Regulation CC Commentary
by one notice 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 recov
er 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
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
handled 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
liability of prior banks under section
229.35(b).
This paragraph affects UCC section
4-212(1) in that a paying or collecting bank
does not ordinarily 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 col
lecting banks and the depositary bank’s cus
tomer under the UCC.
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 this
paragraph to impose a charge for taking up a
check. This paragraph preempts state laws to
the extent that these laws prevent returning
banks from charging fees for handling re
turned 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(0-)
31 (g) Reliance on Routing Number
This paragraph is similar to section 229.30(g)
87
§ 229.31
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).)
88
Regulation CC Commentary
Regulation CC
SECTION 229.32—Depositary Bank’s
Responsibility for Returned Checks
(a) Acceptance of 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
location consistent with the name and
address of the bank in its indorsement on
the check;
(ii) If no address appears in the indorse
ment, at a branch or head office associat
ed 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.
§ 229.32
the payment date, payment shall be made by
the next day that is a banking day for the re
turning or paying bank. These payments are
final when made.
(c) Misrouted returned checks and written
notices o f nonpayment. If a bank receives a
returned check or written notice of nonpay
ment on the basis that it is the depositary
bank, and the bank determines that it is not
the depositary bank with respect to the check
or notice, it shall either promptly send the re
turned check or notice to the depositary bank
directly or by means of a returning bank
agreeing to handle the returned check expedi
tiously 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.
(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 return
ing or paying bank on or as of the payment
date. If the payment date is not a banking day
for the returning or paying bank or the depos
itary bank is unable to make the payment on
89
§ 229.32
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 un
der section 229.33. (These locations differ
from locations at which a depositary bank
must accept electronic notices.) It is derived
from UCC section 3-504(2), which specifies
that presentment 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 returned 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 address is
“New York, New York,” each branch in
New York City must accept returned
checks.
(ii) If no address appears in the depositary
90
Regulation CC Commentary
bank’s indorsement, the depositary bank
must accept returned checks at any branch
or head office associated with the depositary
bank’s routing number. The offices associat
ed with the routing number of a bank are
found in a publication of Rand McNally,
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
returning 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
Regulation CC Commentary
229.31(c), under this regulation a paying or
returning bank does not obtain credit for a
returned check by charge-back but by, in ef
fect, 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 re
mittance 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 section 4—107,
which permits the bank to establish a cut-olf
hour, generally not earlier than 2:00 p.m., and
treat checks received after that hour as being
received 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
holiday or because the time when the deposi
tary 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 return
ing 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 establish
ing additional controls or for other reasons,
the banks involved desired a separate settle
§ 229.32
ment for returned checks, a separate net-set
tlement agreement could be established.
The bank sending the returned check to the
depositary bank may agree to accept payment
at a later date if, for example, it does not be
lieve 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, without
a charge for the check, the bank incorrectly
receiving the check would have to return the
check, without a charge, to the bank from
which it came. The bank to which the re
turned 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
91
§ 229.32
affect a bank’s
229.35(b).
Regulation CC Commentary
duties
under
section
32(d) Charges
This paragraph prohibits a depositary bank
from charging the equivalent of a presentment
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, howev
er, no fee may be charged.
92
Regulation CC
SECTION 229.33—Notice of
Nonpayment
(a) Requirement. If a paying bank deter
mines not to pay a check in the amount of
$2,500 or more, it shall provide notice of non
payment such that the notice is received by
the depositary bank by 4:00 p.m. (local time)
on the second business day following the
banking day on which the check was present
ed 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 bank
ing day constitutes timely notice. Notice may
be provided by any reasonable means, includ
ing 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 pay
ing 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 custom
er, 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 informa
tion, it shall include the information required
by this paragraph to the extent possible, 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
§ 229.33
pears in the indorsement or if the number is
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 re
ceived 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.
§ 229.33
COM M ENTARY
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 no
tice, however, must meet the content require
ments of this section. The paying bank must
send a notice of nonpayment if it decides 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 nonpayment is
received by the depositary bank by 4:00 p.m.
local time on the second business day follow
ing presentment. A bank identified by routing
number as the paying bank is considered 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 definition
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 warrants that it has returned or will re
turn 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 deposi
tary bank within the time limits for notice, the
94
Regulation CC Commentary
return of the check will not satisfy the notice
requirement. In determining whether the re
turned check will satisfy the notice require
ment, the paying bank may rely on the avail
ability 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 availabil
ity 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 time
ly 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 requirements,
but not both. (See section 229.38(b).) A pay
ing bank is not responsible for failure to give
notice of nonpayment to a party that has
breached a presentment warranty under UCC
section 4-207(1), notwithstanding that the
p a y in g
bank
m ay
have
r etu r n e d
th e
ch eck .
(See UCC sections 4—207(1) 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 addition, 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-
Regulation CC Commentary
§ 229.33
tions specified in section 229.32(a). In the
case of telephone notices, the bank may not
refuse to accept notices at the telephone num
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 Na
tional 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 re
quirement of section 229.13(g) if the deposi
tary bank invokes the reasonable-cause excep
tion 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).
95
§ 229.34
Regulation CC
SECTION 229.34— Warranties by
Paying Bank and Returning Bank
finance charges and expenses related to the re
turned check, if any.
(a) Warranties. Each paying bank or return
ing bank that transfers a returned check and
receives a settlement or other consideration
for it warrants to the transferee returning
bank, to any subsequent returning 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 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.
(d) Tender of defense. If a returning bank is
sued for breach of a warranty under this sec
tion, it may give a prior returning bank or the
paying bank written notice of the litigation,
and the bank notified may then give similar
notice to any other prior returning bank or
the paying bank. If the notice states that the
paying or returning bank notified may come
in and defend, and that if the paying or re
turning bank notified does not do so, it will in
any action against it by the paying or return
ing bank giving the notice be bound by any
determination of fact common to the two liti
gations, then unless after seasonable receipt of
the notice the paying or returning bank noti
fied does come in and defend, it is so bound.
(b) Warranty of notice of 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) Damages. Damages for breach of these
warranties shall not exceed the consideration
received by the paying or returning bank, plus
96
Regulation CC Commentary
COM M ENTARY
SECTION 229.34— Warranties by
Paying Bank and Returning Bank
34(a) W arranty 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 re
turn, the original check has not been and will
not be returned for payment (see the com
mentary to section 229.30(f)). The warranty
does not include a warranty that the bank
complied with the expeditious-return require
ments of sections 229.30(a) and 229.31(a).
These warranties do not apply to checks
drawn on the United States Treasury, to Post
al Service money orders, or to checks drawn
on a state or a unit of general local govern
ment that are not payable through or at a
bank (see section 229.42).
§ 229.34
34(c) Damages
This paragraph adopts for the new warranties
in section 229.34(a) and (b) the warranty
damages of UCC section 4-207(3).
34(d) Tender of Defense
This paragraph adopts for this regulation the
vouching-in provisions of UCC section 3-803.
34(b) W arranty of Notice of
Nonpayment
This paragraph provides for warranties for
notices of nonpayment. This warranty does
not include a warranty that the notice is accu
rate and timely under section 229.33. The re
quirements of section 229.33 that are not cov
ered 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
nonpayment. This paragraph imposes liability
on a paying bank that gives notice of nonpay
ment and then subsequently returns the
check. (See the commentary on section
229.33(a).)
97
§ 229.35
SECTION 229.35— Indorsements
(a) Indorsement standards. A bank (other
than a paying bank) that handles a check dur
ing forward collection or a returned check
shall legibly indorse the check in accordance
with the indorsement standard set forth in ap
pendix 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
applies whether or not a bank has placed its
indorsement 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
COM M ENTARY
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 ei
ther the leading or trailing edge of the check
to place indorsements in this area. The stan
dard does not require that the entire deposi
tary 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 commonly
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 purple
§ 229.35
ink is not feasible, such as where a bank uses
the same equipment to apply both depositarybank and subsequent collecting-bank indorse
ments, and the equipment has only one source
of ink. The standard requires subsequent col
lecting banks to use an ink color other than
purple for their indorsements. The standard
also requires the depositary bank’s indorse
ment to include its nine-digit routing number
set off by arrows, the bank’s name and loca
tion, and the indorsement date, and permits
the indorsement to include other identifying
information.
The standard does not include the fraction
al routing number for depositary banks; how
ever, a bank may include its fractional routing
number or repeat its nine-digit routing num
ber 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 in
clude information that can be confused with
required 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 pri
or indorsement is not necessary. (See UCC
sections 3-417(1) (a) and 4-207(1), and offi
cial comment 2 to UCC section 4-207.) Use
of guarantee language in indorsements, such
as “P.E.G.” (“prior endorsements guaran
teed”), may result in reducing the type size
used in bank indorsements, thereby making
them more difficult to read. Use of this lan
99
§ 229.35
guage may make it more difficult for other
banks to identify the depositary bank. Subse
quent collecting-bank indorsements may not
include this language.
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 indorsement
may not be in purple ink. No content require
ments have been adopted for the returningbank indorsement.
If the bank maintaining the account into
which a check is deposited agrees with anoth
er 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 indorse
ment 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 print
ed with a carbon band across the back that
allows 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 deposi
tary-bank 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
100
Regulation CC Commentary
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
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 deposi
tary-bank 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 unreada
ble 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
issuance 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 col
lecting 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
indorsements 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
Regulation CC Commentary
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-return chain including
the paying bank. Because each bank in the
collection-and-return chain could recover
from a prior bank, any loss would fall on the
first collecting bank that received the check
from the depositary bank. To avoid circuity of
actions, 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-collec
tion process controls over priority in the re
turn 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 return
ing 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 pri
or 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. Re
covery may be made by charge-back or by
other means. This right of recovery is also
permitted even where nonpayment of the
check is the result of the claiming bank’s neg
ligence such as failure to make expeditious re
turn, but the claiming bank remains liable for
its negligence 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 par
§ 229.35
agraph to a prior bank from which recovery 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 identi
fying 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
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 pro
vide 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 un
der UCC sections 4—213(1) and 4—302. Nor
does this paragraph affect a collecting bank’s
accountability under UCC sections 4-211(2)
and (3) and 4—213(3). A collecting bank be
comes accountable upon receipt of final settle
ment as provided in the foregoing UCC sec
tions. The term “final settlement” in sections
229.31(c), 229.32(b), and 229.36(d) is in
tended to be consistent with the use of the
term “final settlement” in the UCC (e.g.,
UCC sections 4-211, 4-212, and 4-213). (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 indorsement
standard in section 229.35(a) and appendix
D.
This paragraph affects the following provi
sions of the UCC and may affect other
provisions:
1. Section 4—212(1), in that the right to re
covery is not based on provisional settle
ment, and recovery may be had from any
prior bank. Section 4—212(1) would con
tinue to permit a depositary bank to recov
er a provisional settlement from its cus
tomer. (See section 229.33(d).)
2. Section 3-414 and related provisions (such
as sections 3-502, 3-503(2), and 3-508),
101
§ 229.35
in that such provisions would not apply as
between banks, or as between the deposi
tary bank and its customer.
35(c) Indorsement by Bank
This section protects the rights of a customer
depositing a check in a bank without requir
ing the words “pay any bank,” as required by
the UCC. (See UCC section 4-201(2).) Use
of this language in a depositary bank’s in
dorsement will make it more difficult for other
banks to identify the depositary bank. The in
dorsement standard in appendix D prohibits
such material in subsequent collecting bank
indorsements. The existence of a bank in
dorsement 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 correspon
dent 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 deposi
tary bank’s indorsement, checks will be re
turned to the depositary bank. If the indorsing
bank does not apply the depositary bank’s in
dorsement, by agreement with the depositary
bank it may apply its own indorsement as the
depositary-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
102
Regulation CC Commentary
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 varying the ef
fect of provisions of subpart C under section
229.37.
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
purposes of the expeditious-return and noticeof-nonpayment requirements of this subpart.
(b) Receipt at bank office or processing cen
ter. A check is considered received by the pay
ing 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 iden
tified on the check by name and address.
§ 229.36
This provision shall be effective February 1,
1991, and after that date banks that use
payable-through arrangements must re
quire their customers to use checks that
meet the requirements of this provision. A
bank is responsible for damages under sec
tion 229.38 of this part to the extent that a
check payable by it and not payable
through another bank is labelled as provid
ed in this section.
(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 of 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 depositary
bank, and the depositary bank’s customer.
(e) Issuance of 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
througn bank.
103
§ 229.36
COM M ENTARY
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
presentment of checks to promote early return
or notice of nonpayment to the depositary
bank, and clarifies the law as to the effect of
presentment by routing number. This para
graph differs from section 229.32(b) because
presentment 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. 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
104
Regulation CC Commentary
of the check. (See also UCC section
4—204(3).) If a bank designates different loca
tions for the presentment of forward-collec
tion 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 forward-collection 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 publication
of Rand McNally, Key to Routing Numbers,
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 magnetic ink
(or on the basis of the fractional-form routing
number if the magnetic ink characters are ob
literated) on the check, rather than the print
ed name or address. The definition of a paying
bank in section 229.2 (z) includes a bank des
ignated 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 another, the rout
ing number is that of the payable-through
bank, not that of the payor bank. As the payor
bank has selected the payable-through bank as
the point through which presentment 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 associat
ed with the routing number may be a process
ing center.
In some cases, a paying bank may have sev
eral offices in the city associated with the rout
ing number. In such a case, it would not be
reasonable or efficient to require the present
ing 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 normally de
Regulation CC Commentary
liver all checks to one location. In cases where
checks are delivered to a branch other than
the branch on which they may be drawn,
computer and courier communication among
branches should permit the paying bank to de
termine 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 ad
dress, delivery may be made at any office of
the paying bank. This provision is consistent
with UCC section 3-504(2), which states that
presentment 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 p a r t i c u l a r o f f i c e , d e l i v e r y m a y b e m a d e
at any office consistent with the address. For
example, if the address is “San Francisco, Cal
ifornia,” each office in San Francisco must ac
cept presentment. The designation of an ad
dress on the check is generally in the control
of the paying bank.
This paragraph may affect UCC section
3-504(2) (c) to the extent that the UCC re
quires presentment to occur at a place speci
fied 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 in
formation from the check is transmitted to the
paying bank electronically. Presentment takes
place when the paying bank receives the elec
tronic transmission. This process has the
§ 229.36
potential to improve the efficiency of check
processing, but use of truncation has been lim
ited, partly because of uncertainties about
whether the UCC permits it without the
agreement of all parties. This paragraph al
lows truncation by agreement with the paying
bank; however, such agreement may not prej
udice the interests of prior parties to the
check. For example, a truncation agreement
may not extend the paying bank’s time for re
turn. 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 re
turn of checks are final. In addition, this para
graph 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 section 4-213(b) or
(d), because a paying bank has the right to
recover settlement from a returning or deposi
tary 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 “return
ing bank” in section 229.2(cc).)
105
§ 229.36
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 rout
ing number of the bank by which the check is
payable and the legend “payable through” fol
lowed by the name and location of the pay
able-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 information is
deemed conspicuous if it is printed in a type
size not smaller than six-point type and if it is
contained in the title plate, which is located in
the lower left quadrant of the check. The re
quired 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 suffers 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 pay
able through another bank is labelled as pro
vided in this section. For example, 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 includes the name, address,
and four-digit routing symbol of another
branch. These checks would not be payable
through another bank and should not be la
belled 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 suffers a loss, such as lost
interest or liability under subpart B, due to
106
Regulation CC Commentary
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.
Regulation CC
§ 2 2 9 .3 7
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 manifestly
unreasonable.
107
§ 229.37
COM M ENTARY
SECTION 229.37—Variations 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 docu
ments. To achieve consistency, the official
comment to UCC section 4—103(1) (which in
turn follows UCC section 1-201(3)) should
be followed in construing this section. For ex
ample, as stated in official comment 2 to sec
tion 4—103, owners of items and other inter
ested parties are not affected by agreements
under this section unless they are parties to
the agreement or are bound by adoption, rati
fication, estoppel, or the like. In particular,
agreements varying this subpart that delay the
return of a check beyond the times required
by this subpart may result in liability under
section 229.38 to entities not party to the
agreement. This section is consistent with the
limits on truncation agreements in section
229.36(c).
The Board has not followed UCC section
4-103(2), which permits Federal Reserve reg
ulations and operating letters, clearinghouse
rules, and the like to apply to parties that have
not specifically 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 return
ing 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 in
dorser in the area of the depositary bank
indorsement. (See section 229.38(d).)
108
Regulation CC Commentary
d. A paying bank may require its customer to
assume the paying bank’s liability for de
layed or missent checks where the delay or
missending is caused by markings placed
on the check by the paying bank’s custom
er that obscured a properly placed indorse
ment of the depositary bank. (See section
229.38(d).)
e. 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).)
f. A bank may agree to accept returned
checks without the indorsement of a prior
bank. (See section 229.35(a).)
The Board expects to review the types of
variation by agreement that develop under
this section and will consider whether it is
necessary to limit certain variations.
Regulation CC
SECTION 229.38—Liability
(a) Standard o f care; liability; measure of
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 par
ty 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 liable
for the insolvency, neglect, misconduct, mis
take, 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 paying
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, Regu
lation J (12 CFR 210), or section 229.30(c)
in connection with a single nonpayment of a
check, the paying bank shall be liable under
either section 229.30(a) or such other provi
sion, 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 of
check. (1) A paying bank, or in the case of
a check payable through the paying bank
§ 229.38
and 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 accord
ance 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 for 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-pro
cessing 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
paragraph (c) of this section.
(e) Timeliness of 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 condi
tions, 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.
109
§ 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 sub
part may be brought in any United States dis
trict court, or in any other court of competent
jurisdiction, 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 inter
pretation thereof by the Board, regardless of
whether the rule, regulation, or interpretation
is amended, rescinded, or determined by judi
cial or other authority to be invalid for any
reason after the act or omission has occurred.
110
Regulation CC
Regulation CC Commentary
COM M ENTARY
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(1).
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 sections 4-103(5) and
4-202(3). 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 oc
curred, and must first attempt to collect from
its customer. (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
returning bank’s liability would not be re
duced 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
affect a paying bank’s liability to its customer.
§ 229.38
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 dif
ferent time. This paragraph clarifies that the
paying bank could be liable for failure to meet
either standard, but not for failure to meet
both. The regulation intends to preserve the
paying bank’s “accountability” for missing its
midnight or other deadline under the UCC
(e.g., sections 4-213 and 4—302), provisions
that are not incorporated in this regulation,
but may be useful in establishing the time of
final payment 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 exercise
ordinary care, and if a paying or returning
bank is delayed in returning the check be
cause additional time is required to identify
111
§ 229.38
the depositary bank or find its routing
number, the paying or returning bank’s lia
bility to the depositary bank would be re
duced or eliminated.
2. If the depositary bank uses the standard
indorsement, 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 because
the delay was not due to its negligence.
Nonetheless, the collecting bank may be li
able 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 materi
al, and a paying or returning bank is de
layed 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 depositary bank to the extent that
the printing, carbon band, or other materi
al 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 remains
clear of other matter that may obscure bank
indorsements. Because bank indorsements are
usually applied by automated equipment, it is
not possible to avoid pre-existing matter on
the back of the check. For example, bank in
dorsements are not required to avoid a carbon
band or printed, stamped, or written terms or
notations on the back of the check. Accord
ingly, this provision places responsibility on
the paying bank or depositary bank, as appro112
Regulation CC Commentary
priate, for keeping the back of the check clear
for bank indorsements during forward collec
tion and return.
The paying bank, or in the case of a check
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 custom
er. (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 re
spect 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
returned 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 pay
ing bank on the day the payable-through bank
received it. The location of the bank by which
a check is payable for purposes of the twoday/four-day test may be determined from
the location or the first four digits of the rout
ing 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 responsi
bility for the time required for the forward
collection of a check to the payable-through
bank.
Generally, liability under paragraph
(d) (2) will be limited in amount. Under sec-
Regulation CC Commentary
tion 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 deposi
tary bank by 4:00 p.m. on the second business
day following the banking day on which the
check is presented to the paying bank. Even if
a payable-through check in the amount of
$2,500 or more is not returned through the
payable-through bank as quickly as would
have been required had the check been re
ceived by the bank by which it is payable, the
depositary bank should not suffer damages
unless it has not received timely notice of non
payment. Thus, ordinarily the bank by which
a payable-through 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 com
parative negligence purposes, and the contri
bution to damages under paragraphs (d)(1)
and (d) (2) is treated in the same way as the
degree of negligence under paragraph (c) of
this section.
§ 229.38
corporate traditional bank collection stan
dards 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.
38(h) Reliance on Board Rulings
This provision shields banks from civil liabili
ty if they act in good faith in reliance on any
rule, regulation, or interpretation of the
Board, even if it were subsequently deter
mined to be invalid. Banks may rely on the
commentary to this regulation, which is is
sued as an official Board interpretation, as
well as on the regulation itself.
38(e) Timeliness of Action
This paragraph excuses certain delays. It
adopts the standard of UCC section 4-108(2)
with the addition of “failure of equipment”
and “interruption of computer facilities” as
causes of delay.
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 dam
ages for delays in the return of checks where
no actual damages are incurred would only
encourage litigation and provide little or no
benefit to the check-collection system. In view
of the provisions of paragraph (a), which in-
113
§ 229.39
SECTION 229.39—Insolvency of Bank
(a) Duty of 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) Finality of 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.
114
Regulation CC
Regulation CC Commentary
COM M ENTARY
SECTION 229.39— Insolvency of Bank
§ 229.39
such as a settlement by a paying bank that
becomes final by expiration of the midnight
deadline.
These provisions cover situations where a
bank becomes insolvent during collection or
return, and are derived from UCC section
4—214. 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.
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 return
ing 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) Finality of Settlement
This paragraph provides that insolvency does
not interfere with the finality of a settlement,
115
§ 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 consum
mation of the merger transaction.
116
Regulation CC
Regulation CC Commentary
§ 229.40
COM M ENTARY
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
consummation 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 ex
peditious return (§ 229.30).
2. The returning bank’s responsibility for
expeditious 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
returned checks (§ 229.32(a)).
5. Where the depositary bank must accept
notice of nonpayment (§ 229.33(c)).
6. Where a paying bank must accept pre
sentment of checks (§ 229.36(b)).
117
§ 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.
118
Regulation CC
Regulation CC Commentary
§ 229.41
COM M ENTARY
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 reg
ulation. Thus, this regulation is not a com
plete replacement for state laws relating to the
collection or return of checks.
119
§ 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 mon
ey 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.
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 gov
ernment 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 re
quirements 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. govern
ment on banks.
121
Appendix A
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
identified 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.
Regulation CC
First Federal Reserve District
(Federal Reserve Bank of Boston)
Head Office
01101
0113
0114
0115
21102
2113
2114
2115
Windsor Locks Office
0111
0116
0117
0118
0119
02113
2111
2116
2117
2118
2119
22113
Lewiston Office
0112
2112
Second Federal Reserve District
(Federal Reserve Bank of New York)
Head Office
Buffalo Branch
0210
0220
0215
0216
0260
2215
2216
2260
0223
Cranford Office
Jericho Office
0214
0219
2214
2219
2280
0212
0270
2212
2220
2223
Utica Office
0213
22131
1The first two digits identify the Federal Reserve Dis
trict. Thus 01 identifies the First Federal Reserve District
(Boston), and 12 identifies the Twelfth District (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
of the Federal Reserve Bank of New York and therefore
have Second District routing numbers. Their checks, how
ever, 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.
122
Regulation CC
Appendix A
Third Federal Reserve District
(Federal Reserve Bank of Philadelphia)
Head Office
0310
0311
0312
0313
0319
0360
2310
2311
2312
2313
2319
2360
Charlotte Branch
0530
0531
2530
2531
Columbia Office
0532
0539
2532
2539
Charleston Office
0515
0519
2515
2519
Fourth Federal Reserve District
(Federal Reserve Bank of Cleveland)
Head Office
0410
0412
2410
2412
Pittsburgh Branch
0430
0432
0434
0433
2430
2432
2433
2434
Cincinnati Branch
0420
0421
0422
0423
2420
2421
2422
2423
Columbus Office
0440
0441
0442
2440
2441
2442
Fifth Federal Reserve District
(Federal Reserve Bank of Richmond)
Head Office
0510
0514
2510
2514
Baltimore Branch
0520
0521
0522
0540
0550
0560
0570
2520
2521
2522
2540
2550
2560
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
2570
123
Appendix A
Regulation CC
Seventh Federal Reserve District
Ninth Federal Reserve District
(Federal Reserve Bank of Chicago)
(Federal Reserve Bank of Minneapolis)
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
Head Office
0910
0911
0912
0913
0914
0915
0918
0919
2910
2911
2912
0960
2913
2914
2915
2918
2919
2960
Helena Branch
0920
0921
0929
2920
2921
2929
Tenth Federal Reserve District
(Federal Reserve Bank of Kansas City)
Eighth Federal Reserve District
(Federal Reserve Bank of St. Louis)
Head Office
0810
0812
0815
0819
0865
2810
2812
2815
2819
2865
Little Rock Branch
0820
0829
2820
2829
Louisville Branch
0813
0830
0839
0863
2813
2830
2839
2863
Memphis Branch
0840
0841
0842
0843
2840
2841
2842
2843
124
Head Office
1010
1011
1012
1019
3010
3011
3012
3019
Oklahoma City
Branch
1030
1031
1039
3030
3031
3039
Denver Branch
1020
1021
1022
1023
1070
3020
3021
3022
3023
3070
Omaha Branch
1040
1041
1049
3040
3041
3049
Appendix A
Regulation CC
Eleventh Federal Reserve District
(Federal Reserve Bank of Dallas)
Head Office
1110
1111
1113
1119
3110
3111
3113
3119
El Paso Branch
1120
1122
1123
1163
3120
3122
3123
3163
Houston Branch
1130
1131
1
1J 1
3130
1111
J 1J 1
San Antonio Branch
1140
1149
J3140
1T V
J1 114
* rQ
y
Twelfth Federal Reserve District
(Federal Reserve Bank of San Francisco)
Head Office
1210
1211
1212
1213
3210
3211
3212
3213
Los Angeles Branch
1220
1221
1222
1223
1224
3220
3221
3222
3223
3224
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
U.S. Treasury Checks and Postal Money
Orders
U.S. Treasury Checks
0000 0050 5
0000 0051 8
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
125
Appendix B -l
Regulation CC
A P P E N D I X B - l — R e d u c tio n o f
S c h e d u le s fo r C e r ta in N o n lo c a l C h e c k s
U n d e r th e T e m p o r a r y S c h e d u le
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 withdraw
al not later than the number of business days
following the banking day on which funds are
deposited, as specified below.
Number of business days
following the banking day
Federal Reserve Office__________________________________________________________________funds are deposited_______
Boston
D e p o s ita r y b a n k s ( 0 1 1 0 , 2 1 1 0 ) to:
5 b u s in e s s d a y s
0210
0310
2260
0260
0360
2310
0280
0710
2360
2710
Windsor Locks
N one
Lewiston
N one
New York
D e p o s ita r y b a n k s ( 0 2 1 0 , 0 2 6 0 , 2 2 6 0 , 0 2 1 5 , 2 2 1 5 , 0 2 1 6 , 2 2 1 6 ) to:
0214
0280
2214
4 b u s in e s s d a y s
2219
0219
D e p o s ita r y b a n k s ( 0 2 1 0 , 0 2 6 0 , 2 2 6 0 , 0 2 1 5 , 2 2 1 5 , 0 2 1 6 , 2 2 1 6 ) to:
0110
0730
2110
2750
0212
0740
2212
2810
0213
0750
2213
2820
0220
0810
2220
2830
0270
0820
2360
2840
0310
0830
2410
2910
0360
0840
2420
2920
0410
0910
2430
2960
0420
0920
2440
3010
0430
0960
2510
3020
0440
1010
2519
3030
0510
1020
2520
3040
0519
1030
2530
3110
0520
1040
2539
3120
0530
1110
2610
3130
0539
1120
2620
3140
0610
1130
2630
3210
0620
1140
2640
3220
0630
1210
2650
3223
0640
1220
2660
3230
0650
1223
2710
3240
0660
1230
2720
3250
0710
1240
2730
0720
1250
2740
126
5 b u s in e s s d a y s
Regulation C C
Appendix B-l
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Jericho
D e p o s ita r y b a n k s ( 0 2 1 4 , 2 2 1 4 , 0 2 1 9 , 2 2 1 9 , 0 2 8 0 ) to:
0210
0260
4 b u s in e s s d a y s
2260
D e p o s ita r y b a n k s ( 0 2 1 4 , 2 2 1 4 , 0 2 1 9 , 2 2 1 9 , 0 2 8 0 ) 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
10 4 0
2110
2212
2213
2215
2216
2220
2360
2410
2420
2430
2440
2510
2519
2520
2530
11 1 0
11 2 0
1130
1140
1210
2539
2610
2620
2630
2640
1220
1223
1230
1240
1250
2650
2660
2710
2720
2730
5 b u s in e s s d a y s
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
127
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Cranford
D e p o s ita r y b a n k s (0 2 1 2 , 0 2 7 0 , 2 2 1 2 ) to:
0210
0260
4 b u s in e s s d a y s
0280
2260
2110
2213
2214
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
D e p o s ita r y b a n k s ( 0 2 1 2 , 2 2 1 2 , 0 2 7 0 ) to:
0110
0213
0214
0215
0216
0219
0220
0310
0720
0730
0740
0750
0810
0360
0410
0820
0830
0840
0910
0920
0420
0430
0960
1010
0440
0510
0519
0520
0530
0539
0610
0620
1020
1030
0630
0640
0650
0660
0710
128
5 b u s in e s s d a y s
2215
2216
2219
2220
2360
2410
2420
3010
3020
3030
3040
1040
1110
1120
1130
1140
1210
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
1220
1223
2640
2650
3223
3230
1230
1240
1250
2660
2710
2720
3240
3250
3110
3120
3130
3140
3210
3220
R e g u la tio n C C
A p p e n d ix B - l
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Buffalo
4 b u s in e s s d a y s
D e p o s ita r y b a n k s (0 2 2 0 , 2 2 2 0 , 0 2 2 3 , 2 2 2 3 ) to:
0210
0212
0260
0270
0280
2212
2260
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 0 2 2 0 , 2 2 2 0 , 0 2 2 3 , 2 2 2 3 ) 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
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
2630
2640
3210
3220
3223
2650
2660
3230
3240
2710
2720
2730
3250
2740
129
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Utica
D e p o s ita r y b a n k s ( 0 2 1 3 , 2 2 1 3 ) to:
0210
0212
0260
0270
4 b u s in e s s d a y s
0280
2212
2260
D e p o s ita r y b a n k s ( 0 2 1 3 , 2 2 1 3 ) to:
0110
0214
0215
0730
0740
0750
0216
0219
0220
0310
0360
0410
0810
0820
0830
0840
0910
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
0720
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
1220
1223
1230
1240
1250
2110
5 b u s in e s s d a y s
2214
2215
2216
2750
2810
2510
2519
2520
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
2530
2539
2610
3120
3130
3140
2620
2630
2640
2650
2660
2710
2720
2730
2740
3210
3220
3223
2219
2220
2360
2410
2420
2430
2440
3230
3240
3250
Philadelphia
D e p o s ita r y b a n k s (0 3 1 0 , 2 3 1 0 , 0 3 6 0 , 2 3 6 0 ) to:
0110
0210
0220
0260
0640
0650
2110
2220
0660
2260
2410
0410
0710
0720
0420
0730
2420
2430
0430
0440
0740
2440
0750
0810
2510
2519
0520
0830
0840
2520
2530
0530
0539
0910
0960
2539
2610
0610
0620
1010
1020
1040
2620
2630
2640
0510
0519
0630
130
5 b u s in e s s d a y s
2650
2660
2710
2720
2730
2740
2750
2810
2830
2840
2910
2960
3010
3020
3040
Regulation CC
Appendix B -l
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Cleveland
D e p o s ita r y b a n k s (0 4 1 0 , 2 4 1 0 ) 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
12 4 0
12 5 0
2110
5 b u s in e s s d a y s
2220
2260
2310
2360
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2630
2640
2650
2660
2710
2720
2730
2740
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
2750
2810
Cincinnati
D e p o s ita r y b a n k s ( 0 4 2 0 , 2 4 2 0 ) to :
0110
0210
0220
0260
0280
0310
0360
0410
0430
0440
0441
5 b u s in e s s d a y s
0442
0510
0519
0730
0740
0749
0750
0810
0813
0830
0839
0840
0863
0910
0960
1010
10 2 0
2110
2220
2260
2310
2360
2410
2430
2440
24 4 1
2442
2510
2519
2520
2530
0520
10 3 0
2539
2749
2750
2810
2813
2830
2839
2840
2863
2910
2960
3010
3020
3030
3040
3110
0530
0539
10 4 0
1110
2610
2620
3130
3140
0610
0620
1130
11 4 0
12 1 0
2630
2640
2650
3210
3220
12 2 0
1223
2660
2710
12 3 0
12 4 0
2720
2730
3230
3240
3250
12 5 0
2740
0630
0640
0650
0660
0710
0720
3223
131
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Columbus
D e p o s ita r y b a n k s ( 0 4 4 0 , 2 4 4 0 ) to:
5 b u s in e s s d a y s
0110
0210
0220
0260
0280
0730
0740
0750
0810
0820
1250
2110
2220
2260
2310
0310
0360
0830
0840
2360
2410
0410
0420
0430
0510
0519
0520
0530
0539
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
2420
2430
2510
2519
1210
1220
1223
1230
1240
2650
2660
2710
2720
2730
0610
0620
0630
0640
0650
0660
0710
0720
2520
2530
2539
2610
2620
2630
2640
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Pittsburgh
D e p o s ita r y b a n k s ( 0 4 3 0 , 2 4 3 0 ) to:
5 b u s in e s s d a y s
0110
0210
0220
0260
0280
0310
0360
0410
0420
0440
0510
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1250
2110
2220
2260
2310
2360
2410
2420
2440
2510
2519
0519
0520
1020
1030
2520
2530
0530
0539
1040
1110
2539
2620
0610
0620
0630
1120
1130
1140
2610
2630
0640
1210
0650
0660
1220
1223
1230
1240
0710
0720
132
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
Regulation CC
Appendix B -l
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Richmond
D e p o s ita r y b a n k s (0 5 1 0 , 2 5 1 0 ) to:
5 b u s in e s s d a y s
1140
2110
2220
2260
2310
2360
2410
2630
2640
2650
2660
2710
0730
0740
0750
0810
0820
2420
2430
2440
2515
2740
2750
2810
2820
2830
0830
2520
2840
0520
0840
0521
0910
0960
10 1 0
2521
2522
2910
2960
2530
2531
3010
3020
3030
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0515
0519
0522
0530
0620
0630
0640
0650
0660
0710
0720
2519
2720
2730
0531
10 2 0
2539
0539
10 3 0
2550
3040
0550
0560
0570
0610
10 4 0
11 1 0
11 2 0
11 3 0
2560
2570
2610
2620
3110
3120
3130
3140
2660
27.10
2720
2730
2740
2750
2810
2830
2840
2910
2960
3010
3020
3040
3240
Baltimore
D e p o s ita r y b a n k s ( 0 5 2 0 , 2 5 2 0 ) to :
5 b u s in e s s d a y s
0110
0210
0640
0650
2110
2220
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0530
0539
0660
0710
0720
0730
0740
0750
0810
0830
0840
0910
0960
1010
1020
2260
2310
0610
0620
0630
1040
1240
2360
2410
2420
2430
2440
2510
2530
2539
2610
2620
2630
2640
2650
133
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Charlotte
D e p o s ita r y b a n k s ( 0 5 3 0 , 2 5 3 0 ) to:
0110
0210
0220
0660
0710
5 b u s in e s s d a y s
1140
2110
2220
2260
2310
2360
2410
2420
0260
0280
0310
0360
0720
0730
0740
0750
0810
0410
0420
0430
0440
0820
0830
0840
0910
2430
2440
2510
0510
0520
0960
1010
2520
2539
0539
0610
0620
0630
0640
0650
1020
1030
1040
1110
1120
1130
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
D e p o s ita r y b a n k s (0 5 3 9 , 2 5 3 9 ) to:
0110
0210
5 b u s in e s s d a y s
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0660
0710
0720
0730
0740
0750
0810
0820
0830
0840
0910
0960
1010
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
0520
0530
1020
1030
2610
0610
1040
2620
2630
0620
0630
1110
1120
2640
2650
0640
0650
1130
1140
2710
134
2660
2720
2730
2740
2750
2810
2820
2830
2840
2910
2960
3010
3020
3030
3040
3110
3120
3130
3140
Regulation CC
Appendix B -l
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Charleston
D e p o s ita r y b a n k s ( 0 5 1 9 , 2 5 1 9 ) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0630
0640
0650
0660
0710
0720
0730
0740
0750
5 b u s in e s s d a y s
1240
2110
2220
2260
2310
2360
2410
2420
2430
2640
2650
2660
2710
2720
2730
2740
2750
2810
0430
0810
2440
2830
0440
0830
2510
2840
0510
0840
2520
2910
0520
0910
0960
2530
2539
2960
3010
1010
1020
2610
2620
3020
3040
1040
2630
3240
2110
2220
2260
2310
2740
2750
2810
2820
2360
2410
2830
2840
2910
2960
0530
0539
0610
0620
Atlanta
D e p o s ita r y b a n k s (0 6 1 0 , 2 6 1 0 ) 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
10 4 0
11 1 0
1120
11 3 0
11 4 0
1210
1220
1223
1240
5 b u s in e s s d a y s
2420
2430
2440
2510
2519
2520
2530
2539
2620
2630
2640
2650
2660
2710
2720
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3240
2730
135
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Birmingham
D e p o s ita r y b a n k s (0 6 2 0 , 2 6 2 0 ) to:
0651
4 b u s in e s s d a y s
2651
D e p o s ita r y b a n k s (0 6 2 0 , 2 6 2 0 ) to:
0110
0210
0220
0260
0730
0740
0280
0310
0360
0820
0830
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0630
0640
0650
0660
0710
0720
0750
0810
0840
0910
0920
0960
1010
1020
1030
5 b u s in e s s d a y s
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
2520
2530
2539
2610
3040
3110
3120
3130
2630
2640
3140
3210
3220
3223
3230
3240
3250
1040
1110
1120
1130
1140
1210
1220
2650
2660
1223
1230
1240
2710
2720
2730
Jacksonville
D e p o s ita r y b a n k s (0 6 3 0 , 2 6 3 0 ) to:
0110
0210
0220
0260
0280
0310
0360
0660
0710
0720
0730
0740
0750
0810
0410
0820
0830
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0640
0650
136
5 b u s in e s s d a y s
1140
2110
2220
2260
2310
2360
2410
2420
2430
2710
2720
2730
2740
2750
2810
2820
2830
2840
2910
0840
2440
0910
0920
2510
2519
2520
2920
2960
2530
2539
3020
3030
2610
3040
3110
0960
1010
1020
1030
3010
1040
1110
2620
2640
3120
1120
1130
2650
2660
3130
3140
Regulation CC
Appendix B -l
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Miami
D e p o s ita r y b a n k s (0 6 6 0 , 2 6 6 0 ) to:
0260
0280
0310
0360
0410
0420
0430
0750
0810
0820
0830
0840
0910
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
0440
0920
2519
3010
0510
0960
2520
3020
0519
0520
1010
1020
2530
2610
3030
3040
0530
0610
1030
1040
2620
2630
3110
3120
0620
0630
0640
1110
1120
2640
2650
3130
3140
11 3 0
11 4 0
2710
2720
0110
0210
0220
0650
0710
0720
0730
0740
5 b u s in e s s d a y s
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
Nashville
0613
4 b u s in e s s d a y s
2613
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 0 6 4 0 , 2 6 4 0 ) to:
0530
0539
0610
0620
0630
2530
2630
0650
0660
0840
2539
2610
2620
2650
2660
2840
137
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
New Orleans
D e p o s ita r y b a n k s ( 0 6 5 0 , 2 6 5 0 ) to :
0110
0740
0210
0220
0260
0280
0750
0810
0820
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0710
0720
0730
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
1140
1210
5 b u s in e s s d a y s
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
1220
12 2 3
1230
1240
2630
2640
2710
2720
2730
2740
1250
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Chicago
D e p o s ita r y b a n k s ( 0 7 1 0 , 2 7 1 0 ) to :
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
0530
1040
1110
0539
0610
0620
0630
0640
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
2510
2519
3020
3030
2520
2530
3040
3110
3120
1120
2610
3130
1130
2620
2630
2640
3140
3210
3223
2650
2660
3230
3240
2720
2730
3250
1140
1210
1220
1223
1230
0720
1240
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2539
0650
0660
138
5 b u s in e s s d a y s
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Detroit
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 0 7 2 0 , 2 7 2 0 ) 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
1250
2110
2220
2260
2310
2360
2410
2420
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
0910
0920
2430
0960
1010
1020
2440
2510
2519
1030
1040
1110
2520
2530
2539
1120
1130
1140
1210
2610
2620
2630
2640
3210
3220
1220
2650
3223
1223
1230
1240
2660
3230
3240
3250
2710
2730
3120
3130
3140
Des Moines
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 0 7 3 0 , 2 7 3 0 ) to:
0110
0210
0720
0740
1250
2110
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
0530
0539
0610
0620
0630
0640
0650
0660
0710
1120
1130
1140
2539
2610
2620
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
1210
2630
2640
1220
2650
1223
1230
1240
2660
3230
2710
2720
3240
3250
3220
3223
139
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Indianapolis
D e p o s ita r y b a n k s ( 0 7 4 0 , 2 7 4 0 ) 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
5 b u s in e s s d a y s
1250
2110
2730
2750
2220
2260
2810
2820
2310
2360
2410
2830
2840
2910
2920
0910
0920
0960
1010
1020
1030
1040
2420
2430
2440
2510
2519
2520
2530
1110
1120
1130
1140
2539
2610
2620
2630
2640
2650
2660
1210
1220
1223
1230
1240
2710
2720
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
3220
3223
3230
3240
3250
Milwaukee
D e p o s ita r y b a n k s ( 0 7 5 0 , 2 7 5 0 ) to :
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0720
0730
0740
0810
0820
0830
0840
0910
0920
0960
1010
1020
5 b u s in e s s d a y s
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2740
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
2520
3040
3110
1030
1040
2530
2539
2610
0539
1110
1120
2620
0610
0620
1130
1140
2630
2640
0630
0640
0650
1210
1220
1223
2650
2660
2710
0660
0710
1240
1250
2720
2730
0520
0530
140
3120
3130
3140
3210
3220
3223
3230
3240
3250
R e g u la tio n C C
A p p e n d ix B - l
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
St. Louis
D e p o s ita r y b a n k s ( 0 8 1 0 , 2 8 1 0 ) to:
0110
0210
0220
0660
0710
0720
0260
0280
0310
0360
0410
0730
0740
0750
0820
5 b u s in e s s d a y s
1240
2110
2220
2260
2310
2360
2410
2710
2720
2730
2740
2750
2820
2830
2840
0830
2420
0840
2430
0910
0960
2440
2510
2910
2960
3010
0510
0519
10 1 0
10 2 0
2519
2520
3020
3030
0520
0530
10 3 0
1040
1110
1120
1130
1140
1220
1223
2530
3040
3110
3120
3130
3140
3220
3223
3240
0420
0430
0440
0539
0610
0620
0630
0640
0650
2539
2610
2620
2630
2640
2650
2660
Little Rock
D e p o s ita r y b a n k s (0 8 2 0 , 2 8 2 0 ) to:
0110
5 b u s in e s s d a y s
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0720
0730
0740
0750
0810
0830
0840
0910
0920
0960
1010
1020
1030
1040
1110
1120
1130
11 4 0
0630
12 1 0
2630
2640
0640
1220
2650
3220
3223
0650
0660
1223
1230
2660
2710
3230
3240
0710
1240
2720
3250
0210
0220
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2730
2740
2750
2810
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3130
3140
3210
141
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Louisville
D e p o s ita r y b a n k s ( 0 8 3 0 , 2 8 3 0 ) to:
0110
0210
0620
0630
0220
0260
0640
0650
0660
0710
0720
0730
0740
0750
0810
0840
0910
0960
1010
1020
1040
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
5 b u s in e s s d a y s
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
D e p o s ita r y b a n k s ( 0 8 4 0 , 2 8 4 0 )
5 b u s in e s s d a y s
0110
0210
0650
0660
2110
2220
2710
2720
0220
0710
0260
0280
0310
0360
0410
0720
0730
0740
0750
0810
0820
0910
0960
1010
1020
1030
1040
2260
2310
2360
2410
2420
2430
2440
2510
2519
2730
2740
2750
2810
2820
2910
2960
3010
3020
2520
2530
2539
2610
2620
3030
3040
3110
3120
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
142
1110
1120
1130
2630
2640
1140
1240
2650
2660
3130
3140
3240
A p p e n d ix B - l
R e g u la tio n C C
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Minneapolis
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 0 9 1 0 , 2 9 1 0 , 0 9 6 0 , 2 9 6 0 ) 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
2660
2710
2720
2730
2740
2750
2810
2820
2830
2840
3010
3020
3030
3040
3110
3120
3130
3140
3240
Helena
N one
Kansas City
0865
4 b u s in e s s d a y s
2865
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 1 0 1 0 , 3 0 1 0 ) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1020
1030
0530
1040
1110
0539
0610
1120
1130
0620
0630
1140
0520
0640
0650
0660
0710
1210
12 2 0
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2610
2620
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3020
3030
3040
3110
3120
3130
3140
2630
2640
3210
3220
2650
3223
1223
2660
12 3 0
12 4 0
2710
2720
3230
3240
3250
143
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Denver
D e p o s ita r y b a n k s (1 0 2 0 , 3 0 2 0 ) to:
0110
0210
0220
0260
0280
0410
0420
0720
0730
0740
0750
0810
0820
0830
0840
0910
0430
0440
0920
0960
0510
0519
1010
1030
0520
0530
0539
0610
0620
0630
0640
0650
1040
1110
0660
0710
0310
0360
5 b u s in e s s d a y s
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3030
3040
1120
1130
2539
2610
2620
3110
3120
3130
3140
1140
1210
2630
2640
3210
3220
1220
1223
2650
2660
3223
3230
1230
1240
2710
2720
3240
3250
Oklahoma City
D e p o s ita r y b a n k s ( 1 0 3 0 , 3 0 3 0 ) to :
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0440
0510
0960
1010
0519
1020
1040
5 b u s in e s s d a y s
1250
2110
2220
2260
2310
2360
2410
2420
2430
2730
2740
2750
2810
2820
2830
2840
2910
2920
2440
2510
2519
2960
3010
2520
3020
3040
0520
0530
1110
2530
2539
0539
0610
1120
1130
2610
2620
0620
0630
1140
1210
2630
2640
0640
0650
0660
1220
1223
1230
2650
2660
2710
3240
0710
1240
2720
3250
144
3110
3120
3130
3140
3210
3220
3223
3230
A p p e n d ix B - l
R e g u la tio n C C
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Omaha
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 1 0 4 0 , 3 0 4 0 ) to:
0110
0210
0220
0260
0280
0310
0720
0730
0740
0750
0810
0820
0360
0410
0840
2420
2910
0420
0910
0430
0440
0920
0960
2430
2440
2920
2960
0510
0519
1010
1020
2520
3020
3030
0520
1030
2530
3110
0530
1110
2539
3120
0539
1120
2610
3130
0610
1130
2620
3140
0620
0630
1140
1210
2630
2640
3210
3220
0640
0650
1220
1223
2650
2660
3223
3230
0660
0710
1230
12 4 0
2710
2720
3240
3250
0830
1250
2110
2220
2260
2310
2360
2410
2510
2519
2730
2740
2750
2810
2820
2830
2840
3010
Dallas
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 1 1 1 0 , 3 1 1 0 ) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
10 1 0
10 2 0
10 3 0
10 4 0
11 2 0
11 3 0
11 4 0
12 1 0
2730
2740
2220
2260
2310
2360
2410
2420
2430
2440
2510
2519
2520
2530
2539
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
2610
3120
3130
2620
2630
2640
3140
3210
3220
3223
0650
1223
2650
2660
0660
12 3 0
2710
3230
3240
0710
12 4 0
2720
3250
12 2 0
1250
2110
145
Appendix B -l
Regulation CC
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
Houston
D e p o s ita r y b a n k s ( 1 1 3 0 , 3 1 3 0 ) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0539
0610
0620
0630
0640
0650
0660
0710
5 b u s in e s s d a y s
0720
0730
0740
0750
0810
0820
0830
1250
2110
2220
2260
2310
2360
2410
0840
2420
2430
2440
2510
0910
0920
0960
1010
1020
1030
1040
1110
1120
1140
2519
2520
2530
2539
2610
1223
1230
2620
2630
2640
2650
2660
2710
1240
2720
1210
1220
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
3020
3030
3040
3110
3120
3140
3210
3220
3223
3230
3240
3250
San Antonio
D e p o s ita r y b a n k s (1 1 4 0 , 3 1 4 0 ) to:
5 b u s in e s s d a y s
0110
0210
0220
0260
0280
0310
0360
0410
0420
0720
0730
0740
0750
0810
0820
0830
0840
0910
1250
2110
2220
2260
2310
2360
2410
2420
2430
0430
0440
0920
2440
0960
0510
0519
1010
1020
1030
2510
2519
0520
2520
2530
0530
0539
1040
1110
2539
2610
0610
1120
1130
2620
2630
1210
1220
1223
1230
2640
0620
0630
0640
0650
0660
0710
146
1240
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
Regulation CC
Appendix B -l
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
El Paso
5 b u s in e s s d a y s
D e p o s ita r y b a n k s ( 1 1 2 0 , 3 1 2 0 ) to:
0110
0210
0220
0260
0280
0310
0360
0410
0420
0430
0440
0510
0519
0520
0530
0720
0730
0740
0750
0810
0820
0830
0840
0910
0920
0960
1010
1020
1030
1040
0539
0610
0620
0630
0640
0650
1110
1130
1140
0660
0710
1230
1240
1210
1220
1223
1250
2110
2220
2260
2310
2360
2410
2420
2430
2440
2510
2730
2740
2750
2810
2820
2830
2840
2910
2920
2960
3010
2519
2520
3020
3030
2530
2539
3040
3110
2610
2620
3130
3140
2630
2640
2650
2660
3210
3220
3223
3230
2710
2720
3240
3250
San Francisco
5 b u s in e s s d a y s
D e p o s ita r y b a n k s (1 2 1 0 , 3 2 1 0 ) to:
1220
1223
3220
3223
Los Angeles
D e p o s ita r y b a n k s (1 2 2 0 , 1 2 2 3 , 3 2 2 0 , 3 2 2 3 ) to:
1210
5 b u s in e s s d a y s
3210
Portland
D e p o s ita r y b a n k s (1 2 3 0 , 3 2 2 0 ) to:
1250
5 b u s in e s s d a y s
3250
Salt Lake City
N one
Seattle
D e p o s ita r y b a n k s (1 2 5 0 , 3 2 5 0 ) to:
1230
5 b u s in e s s d a y s
3230
147
Appendix B-2
Regulation CC
A PPEN D IX 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 withdraw
al not later than the number of business days
following the banking day on which funds are
deposited, as specified below.
Number of business days
following the banking day
funds are deposited
Federal Reserve Office
New York
D e p o s ita r y b a n k s ( 0 2 1 0 , 0 2 6 0 , 0 2 8 0 , 2 2 6 0 ) to:
0214
0219
2214
0260
2260
3 b u s in e s s d a y s
2219
Jericho
0210
3 b u s in e s s d a y s
Cranford
0210
3 b u s in e s s d a y s
0260
Utica
0210
0280
3 b u s in e s s d a y s
2613
Kansas City
0865
148
2260
3 b u s in e s s d a y s
Nashville
0613
0280
3 b u s in e s s d a y s
2865
Regulation CC
APPENDIX C—Model Forms, Clauses
and Notices
This appendix contains model disclosure
forms, clauses, and notices to facilitate com
pliance with the disclosure requirements of
the regulation. Although use of these forms,
clauses, and notices is not required, banks us
ing them properly to make disclosures re
quired by the regulation are deemed to be in
compliance.
Model Specific-Policy Disclosure Forms
Next-day availability
C -l
Next-day availability and section
C-2
229.13 exceptions
Next-day availability, case-by-case
C-3
holds to statutory limits, and section
229.13
exceptions
(temporary
schedule)
Holds to statutory limits on all de
C-4
posits (temporary schedule)
Holds to statutory limits on all de
C-5
posits (temporary schedule, includes
chart)
C-6
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 de
C -l
posits (permanent schedule)
Model Clauses
C-8
Holds on other funds (check
cashing)
C-8A
Holds on other funds (other
account)
C-9
Appendix B availability (nonlocal
checks)
C-10
Automated teller machine deposits
(permanent schedule, extended hold)
Cash-withdrawal limitation (tempo
C -l 1
rary schedule)
C -l 1A Cash-withdrawal limitation (tempo
rary
schedule,
clearinghouse
member)
C -l IB Cash-withdrawal limitation (perma
nent schedule)
Credit union interest-payment policy
C-12
Model Notices
C -l 3
Exception hold notice
C -l 3A Reasonable-cause hold notice
C-14
Case-by-case hold notice
Appendix C
C-15
Notice at locations where employees
accept consumer deposits
C-15 A Notice at locations where employees
accept consumer deposits (case-bycase holds)
C-16
Notice at automated teller machines
C-17
Notice at automated teller machines
(delayed receipt)
C-18
Deposit-slip notice
C-19
Payable-through checks
C-19A Payable-through checks
C - l—Next-Day Availability
YOUR ABILITY TO WITHDRAW
FUNDS
at [bank name and location]
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 Sat
urdays, Sundays, and federal holidays. If you
make a deposit before [time o f day] on a busi
ness day that we are open, we will consider
that day to be the day of your deposit. Howev
er, 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 busi
ness day we are open.
C-2—Next-Day Availability and Section
229.13 Exceptions
YOUR ABILITY TO WITHDRAW
FUNDS
at [bank name and location]
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.
149
Appendix C
For determining the availability of your de
posits, every day is a business day, except Sat
urdays, Sundays, and federal holidays. If you
make a deposit before [time of day] on a busi
ness day that we are open, we will consider
that day to be the day of your deposit. Howev
er, if you make a deposit after [time of day]
or on a day we are not open, we will consider
that the deposit was made on the next busi
ness 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 [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, tell
er’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
150
Regulation CC
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 second
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-3—Next-Day Availability, Case-byCase Holds to Statutory Limits, and
Section 229.13 Exceptions (Permanent
Schedule)
YOUR ABILITY TO WITHDRAW
FUNDS
at [bank name and location]
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 Sat
urdays, Sundays, and federal holidays. If you
make a deposit before [time of day] on a busi
ness day that we are open, we will consider
that day to be the day of your deposit. Howev
er, if you make a deposit after [time of day]
or on a day we are not open, we will consider
that the deposit was made on the next busi
ness 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
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 deposit is
Regulation CC
not made directly to one of our employees, 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, tell
er’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 second
business day after the day of your deposit.
Funds from all other check deposits will be
Appendix C
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 of 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 of 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 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 dif
ferent states or check-processing regions] )
151
Appendix C
Regulation CC
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.
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:
Personal Check
19
Pay to the
$
(Bank Name
and Location)
1 123456789 1
0000000000 000
Name of Company
Address, City, State
19
Pay to the
S
.Routing number
152
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 nonlocal
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 available on the
first business day after the day of your deposit,
not $100 from each category of check.
Funds you deposit by check may be delayed
for a longer period under the following
circumstances:
Business Check
0000000000 000
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.
Longer Delays May Apply
.Routing number
(Bank Name
and Location
000000000 I 123456789 |
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.
• 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.
Regulation CC
• 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, tell
er’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 second
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.
Appendix C
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 of 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 of 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 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 dif
ferent 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:
C-5—Holds to Statutory Limits on All
Deposits (Permanent Schedule, Includes
Chart)
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.
• 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
153
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
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:
Personal Check
19
Pay to the
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.
$
(Bank Name and
Location)
[ 123456789 |
Longer Delays May Apply
0000000000 000
.Routing number
Business Check
Special Rules for New Accounts
Name of Company
Address, City, State
19____
Pay to the
$
(Bank Name and
Location)
000000000
| 123456789 |
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 from the check will be available. 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.
154
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, tell
er’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 second
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.
Appendix C
Regulation CC
Firstfour digits
from routing number
[lo c a l n u m b e r s ]
Whenfunds are available
Whenfunds are
available if a
deposit is made
on a Monday
$ 1 0 0 o n th e first b u s in e s s d a y a fte r th e d a y o f y o u r
T u esd a y
d e p o s it.
R e m a in in g fu n d s o n th e s e c o n d b u s in e s s d a y a fter
W ed n esd ay
th e d a y o f y o u r d e p o s it.
A ll o th e r n u m b e r s
$ 1 0 0 o n th e first b u s in e s s d a y a fte r th e d a y o f y o u r
T u esd a y
d e p o s it.
R e m a in in g fu n d s o n th e fifth b u s in e s s d a y a fter
M o n d a y o f th e
th e d a y o f y o u r d e p o s it.
f o llo w in g w e e k
C-6— Holds on All Deposits, but for
Less Time Than the Statutory Limits,
and Case-by-Case Holds to the Statutory
Limits (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 of 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 of 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 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 dif
ferent 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 money
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.
155
Appendix C
Regulation CC
Other Check Deposits
available on Tuesday. The remaining $600 is
available on [day].
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
$
(Bank Name and
Location)
| 123456789 |
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 [number] business day after the day of
your deposit.
For example, if you deposit a $700 nonlocal
check on a Monday, $100 of the deposit is
available on Tuesday. The remaining $600 is
available on [day].
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.
0000000000 000
.Routing number
Business Check
Longer Delays May Apply
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.
Otherwise, 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 num
ber), not the routing number on the bottom of
the check, to determine if these checks are lo
cal or nonlocal. Our policy is to make funds
from local and nonlocal checks available as
follows.1
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 deposit 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. 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
[number] 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
• 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.
Name of Company
Address, City, State
19___
Pay to the
$
(Bank Name and
Location)
000000000
| 123456789 |
0000000000 000
.Routing number
156
Regulation CC
• 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, tell
er’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 second
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-7—Holds to Statutory Limits on All
Deposits (Permanent 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
Appendix C
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 of 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 of 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 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 dif
ferent states or check-processing regions] )
I f y o u m a k e t h e d e p o s it in p e r s o n t o o n e o f
o u r e m p lo y e e s , fu n d s fr o m
th e fo llo w in g d e
p o s it s a r e a ls o a v a ila b le o n t h e fir s t b u s in e s s
d a y a fte r th e d a y o f y o u r d e p o s it:
• 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.
157
Appendix C
Regulation CC
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:
Personal Check
19
Pay to the
$
(Bank Name and
Location)
[ 123456789 1
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 nonlocal
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.
0000000000 000
Longer Delays May Apply
.Routing number
Funds you deposit by check may be delayed
for a longer period under the following
circumstances:
Business Check
Name of Company
Address, City, State
19
Pay to the
$
dollars
(Bank Name and
Location)
000000000
| 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.
Otherwise, 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 num
ber), not the routing number on the bottom of
the check, to determine if these checks are lo
cal 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
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. Nonlocal checks. The first $100 from a de158
• 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, tell
er’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
Regulation CC
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 second
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)
Appendix C
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
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.
[A list of ATMs where you can make de
posits but that are not owned or operated by
us is enclosed.]
C-8A—Holds on Other Funds (Other
Account)
C - l l —Cash-Withdrawal Limitation
(Temporary Schedule)
or
[All ATMs that we own or operate are
identified as our machines.]
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 depo
sit 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 5:00p.m.] on
the third business day after the day of your
deposit. All of the remaining funds will be
C-9—Appendix B Availability
available for cash withdrawal on the fourth
(Nonlocal Checks)
business day after the day of your deposit.
For example, if you deposit a local check of
3. Certain other checks. We can process non
local checks drawn on financial institutions in $700 on a Monday, $100 of the deposit is
certain areas faster than usual. Therefore, available on Tuesday to pay checks to others
funds from deposits of checks drawn on insti and to withdraw in cash. The rest is available
tutions in those areas will be available to you to pay checks on Thursday. At or after [time
more quickly. Call us if you would like a list no later than 5:00p.m. ] on Thursday you may
withdraw another $400 of the deposit in cash,
of the routing numbers for these institutions.
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.
159
Appendix C
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 af
ter 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 withdrawal
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 re
maining funds will be available for cash with
drawal 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
160
Regulation CC
to others and to withdraw in cash. The rest is
available to pay checks on Thursday. At or
after [time no later than 5:00p.m. ] on Thurs
day 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 -l IB—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
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 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 5:00p.m.] on Wednesday
you may withdraw another $400 of the depo
sit in cash, and you may withdraw the rest in
cash on Thursday.
Appendix C
Regulation CC
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 oth
ers. All of the remaining funds will be avail
able 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 depo
sit 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
Amount of deposit:
[amount]
We are delaying the availability of
$[amount being held] from this deposit.
These funds will be available on the [number]
business 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 of procedure for obtaining
refund].)
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 of
that month. If we receive the deposit after the
tenth of the month, you begin earning interest
on the deposit as of the first of the following
month. For example, a deposit made on June
7 earns interest from June 1, while a deposit
made on June 17 earns interest from July 1.
C-13 A—Reasonable-Cause Hold Notice
NOTICE OF HOLD
Account number:
[number]
Date of deposit:
[date]
Amount of deposit:
[amount]
We are delaying the availability of the funds
you deposited by the following check:
[description o f check, such as amount and
drawer]
C-13—Exception Hold Notice
NOTICE OF HOLD
Account number:
[number]
Date of deposit:
[date]
These funds will be available on the [number]
business day after the day of your deposit.
The reason for the delay is explained below:
___
We received notice that the check is
being returned unpaid.
161
t
Regulation CC
Appendix C
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
alterations 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 in
dicates 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 for obtaining
refund].)
[description
refund].)
of procedure for
obtaining
C-15—Notice at Locations Where
Employees Accept Consumer Deposits
(Permanent Schedule)
FUNDS-AVAILABILITY POLICY
Description of Deposit
When Funds Can Be
Withdrawn by Cash or
Check
D ir e c t d e p o s its
T h e d a y w e r e c e iv e th e
C a sh ; w ir e tra n sfers;
c a s h ie r ’s, cer tifie d ,
te lle r ’s, o r g o v e r n m e n t
c h e c k s; c h e c k s o n
[bank name] ( u n le s s
T h e first b u s in e s s d a y
a fte r th e d a y o f d e p o s it
d e p o s it
[any limitation related
to branches in different
check-processing
regions]) , a n d th e first
$ 1 0 0 o f a d a y ’s
d e p o s it s o f o th e r
ch eck s
L ocal ch eck s
T h e s e c o n d b u s in e s s
d a y a fter th e d a y o f
d e p o s it
N o n lo c a l c h e c k s
T h e fifth b u s in e s s d a y
a fter th e d a y o f d e p o s it
C-14— Case-by-Case Hold Notice
NOTICE OF HOLD
Account number:
[number]
Date of deposit:
[date]
Amount of deposit:
[amount]
We are delaying the availability of
%[amount being held] from this deposit.
These funds will be available on the [number]
business day after the day of your deposit.
(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,
162
C-15 A—Notice at Locations Where
Employees Accept Consumer Deposits
(Case-by-Case Holds) (Permanent
Schedule)
FUNDS-AVAILABILITY POLICY
Our general policy is to allow you to with
draw funds deposited in your account on the
[number] business day after the day we re
ceive your deposit. Funds from electronic de
posits will be available on the day we receive
the deposit. In some cases, we may delay your
ability to withdraw funds beyond the [num
ber] business day. Then, the funds will gener
ally be available by the fifth business day after
the day of deposit.
Regulation CC
Appendix C
C-16— Notice at Automated Teller
Machines
AVAILABILITY OF DEPOSITS
Funds from deposits may not be available for
immediate withdrawal. Please refer to your
institution’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 de
posit may be delayed as a result.
C-18— Deposit-Slip Notice
Deposits may not be available for immediate
withdrawal.
163
Appendix C
COMMENTARY
Regulation CC Commentary
the regulation only if its disclosures corre
spond to the bank’s availability policy.
APPENDIX C
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 disclo
sure 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
alternative 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 exten
sive, however, as to affect the substance, clari
ty, or meaningful sequence of the forms.
Acceptable changes include, for example—
• 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 custom
er 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 practices, as well as state and federal laws
regarding the time periods for availability of
specific types of checks. A bank using a model
form will be in compliance with the act and
164
Models C—1 Through C-7 Generally
These forms are models for the specific avail
ability-policy disclosure described in section
229.16 of the regulation. The forms accommo
date a variety of availability policies, ranging
from policies of next-day availability to holds
on a blanket basis up to the maximum time
allowed in the regulation. Models C-3 and
C-6 reflect the additional disclosures dis
cussed in section 229.16(b) and (c) for banks
that have a policy of extending availability
times on a case-by-case basis.
As already noted, there are several places in
the forms where information must be inserted.
This information includes the bank’s name
and cut-off times, limitations relating to nextday availability, and the first four digits of
routing numbers for local banks. In disclosing
when funds will be available for withdrawal,
the bank must insert the ordinal number
(such as first, second, etc.) of the business day
the funds will become available.
Models C -l through C-7 generally do not
reflect any optional provisions of the regula
tion, or those that apply only to certain banks.
Instead, disclosures for these provisions are
included in the model clauses (models C-8
through C -l2). A bank using one of the mod
el forms should also consider whether it must
incorporate one or more of the model clauses.
While section 229.10(b) of the regulation
requires next-day availability for electronic
payments, Treasury regulations (31 CFR
210) and ACH association rules require that
preauthorized credits (“direct deposits”) be
made available on the day the bank receives
the funds. Model Forms C -l through C-7 re
flect these rules. Wire transfers, however, are
not governed by Treasury or ACH rules, but
banks generally make funds from wire trans
fers available on the day received or on the
business day following receipt. Banks should
ensure that their disclosures reflect the avail*ability given in most cases for wire transfers.
Banks that have used earlier versions of the
model forms or clauses (such as those forms
that gave Social Security benefits and payroll
Regulation CC Commentary
payments as examples of preauthorized cred
its available the day after deposit) are protect
ed from civil liability under section 229.21(e).
Banks are encouraged, however, to use cur
rent versions of the forms when reordering or
reprinting supplies of forms.
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 exceptions
in section 229.13 of the regulation.
Model C-2
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 depos
its on a case-by-case basis up to the maximum
time periods allowed under the regulation. 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.”
Appendix C
Model C-5
A bank may use this form when its policy is
the same as that outlined in model C -l. The
only difference between model C -l 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 de
scription in the former.
Model C-6
A bank may use this form when its policy is to
delay availability based on the deposit catego
ries (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 statuto
ry 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 - l 2 Generally
These model clauses must be incorporated
into a bank’s specific availability-policy disclo
sure 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-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-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
165
Appendix C
account into which the deposit is made, as dis
cussed in section 229.19(e).
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 con
clusion 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’ abili
ty 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
titled “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-11B
This clause may be used to disclose cash-with166
Regulation CC Commentary
drawal limitations under the permanent
schedule in section 229.12. Banks using model
C-7 to disclose availability under the perma
nent schedule may substitute this clause for
the sections titled “Local Checks” and “Non
local Checks.” This clause should not be used
in making disclosures under the temporary
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 inter
est is the same for cash and check deposits.
Models C-13 Through C-18 Generally
These forms are models for various notices re
quired 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 impos
es 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-13 A 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 giv
en for invoking the exception. If a hold is be
ing placed on more than one check in a depo
sit, each check must be described separately,
Regulation CC Commentary
and if different reasons apply, each reason
must be indicated. Banks may disclose of the
reason for their doubting collectability by
checking the appropriate reason on the form.
If the “Other” category is checked, the reason
must be given.
Appendix C
Model C-18
This form satisfies the notice requirements of
section 229.18(a) for deposit slips.
Model C-14
This form satisfies the notice required under
section 229.16(b)(2) when a bank with a
case-by-case hold policy imposes a delay on a
deposit. This notice does not require a state
ment 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 im
poses overdraft fees after invoking a case-bycase 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
deposits). Model C-15 is based on an avail
ability policy that is the same as the perma
nent schedule in the regulation and the policy
reflected in models C-5 and C-7. Model
C-15 A may be used by a bank with a case-bycase availability policy.
Model C-16
This form satisfies the ATM notice require
ment of section 229.18(c)(1).
Model C-l 7
This form satisfies the ATM notice require
ment of section 229.18(c)(2) when receipt of
deposits at off-premises ATMs is delayed un
der 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 adjust
ed accordingly.
167
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 re
ceipt of notification of large-dollar re
turned 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 num
ber (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 of the
check looking at it from the front. The trailing edge is de
fined as the left side of the check looking at it from the
front. See American National Standards Committee on Fi
nancial Services Specification for the Placement and Loca
tion o f MICR Printing, X 9.13.
168
Regulation CC
•
s ta y in g c le a r o f th e a r e a o n th e b a c k o f th e
ch eck
fr o m
3 .0
in c h e s
fr o m
th e
le a d in g
e d g e o f t h e c h e c k t o th e t r a ilin g e d g e o f
th e c h e ck .
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 “de
posited 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)). Un
der Regulation CC, deposits of cash that are
not made in person to an employee of the de
positary bank must be made available by the
second business day after the banking day of
deposit (§ 229.10(a)(2)). Therefore, this
provision of the UCC may call for the avail
ability of certain cash deposits in a shorter
time than provided in Regulation CC.
This provision of the UCC, however, is sub
ject 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 re
quirements may not be varied by agreement.)
UCC section 4—213(5) supersedes the Regu
lation CC provision in section 229.10(a)(2),
but a depositary bank may not agree with its
customer 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 Expedit
ed 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 spec
ifies those provisions of the California funds-
Appendix F
availability 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 (at 9-660).)
California has four separate sets of regula
tions establishing maximum availability
schedules. The regulations applicable to com
mercial banks and branches of foreign banks
located in California (Cal. Admin. Code tit.
10, §§ 10.190401-10.190402) were promul
gated by the superintendent of banks. The reg
ulations applicable to savings banks and sav
ings and loan associations (Cal. Admin. Code
tit. 10, §§ 106.200-106.202) were adopted by
the savings and loan commissioner. The regu
lations applicable to credit unions (Cal. Ad
min. 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
4—213(4) (a), under which the appropriate
state regulatory agency for each depository in
stitution 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 Finan
cial Code section 867 also establishes avail
ability periods for funds deposited by cashier’s
check, certified check, teller’s check, or depos
itory check under certain circumstances. Fi
nally, California Financial Code section 866.2
establishes disclosure requirements.
The Board’s determination with respect to
these California laws and regulations govern
ing the funds-availability requirements appli
cable to depository institutions in California
are as follows.
Commercial Banks and Branches of Foreign
Banks
Coverage
The California State Banking Department
regulations, which apply to California state
commercial banks, California national banks,
and California branch offices of foreign banks,
provide that a depositary bank shall make
169
Appendix F
funds deposited into a deposit account avail
able for withdrawal as provided in Regulation
CC with certain exceptions. The funds-availability 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 Cal
ifornia 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 business
day after deposit. In addition, California law
1The 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 of “paying bank” and “bank”
include savings institutions and credit unions as well as
commercial banks and branches of 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.
170
Regulation CC
provides that all other depositary banks must
make deposited checks drawn on a nonlocal
in-state commercial bank or foreign bank
branch available by the fifth business day after
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, de
posits 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 pro
vides that, as of September 1, 1990, nonlocal
checks must be made available for withdrawal
by the fifth business day after the banking day
of deposit. 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 peri
2 Appendix B-l of 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.
Regulation CC
ods 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
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 remit
tance purposes. To the extent that the state
second-day availability requirement applies to
cashier’s and teller’s checks issued to a non
customer of the bank for other than remit
tance purposes, the state two-day requirement
supersedes the federal local and nonlocal
schedules.
Availability at start of 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 pre
empt state law.
Exceptions to the availability schedules.
Under the state preemption standards of Reg
ulation CC (see section 229.20(c) and accom
panying commentary), for deposits subject to
the state availability schedules, a state excep
tion may be used to extend the state availabil
ity schedule up to the federal availability
schedule. Once the deposit is held up to the
federal availability schedule limit under a
state exception, the depositary bank may fur
ther extend the hold under any federal excep
tion that can be applied to the deposit. If no
state exceptions exist, then no exception holds
may be placed on deposits covered by state
schedules. Thus, to the extent that California
law provides for exceptions to the California
schedules that supersede Regulation CC,
those exceptions may be applied in order to
Appendix F
extend the state availability schedules up to
the federal availability schedules or such later
time as is permitted by a federal exception.
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.
Section 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 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 availabil171
Regulation CC
Appendix F
ity schedules may apply to savings, time, and
other accounts not defined as “accounts” un
der Regulation CC in certain circumstances.)
Availability 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
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 remit
tance purposes. To the extent that the state
second-day availability requirement applies to
cashier’s and teller’s checks issued to a non
customer of the bank for other than remit
tance purposes, the state two-day requirement
supersedes the federal local and nonlocal
schedules.
Temporary and permanent schedules. Other
than the provisions of section 867 discussed
above, California law incorporates the Regu
lation CC availability requirements with re
spect to deposits to accounts covered by Reg
ulation CC. Because the state requirements
are consistent with the federal requirements,
the California regulation is not preempted by,
nor does it supersede, the federal law.
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 fed
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.
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:
Availability
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
172
Industrial
Credit Union Loan Company
$ 1 0 0 o r le ss c h e ck s;
U .S . T r e a s u r y
c h e c k s; s t a t e /
lo c a l g o v e r n m e n t
ch eck s
1st d a y
1st d a y
O n -u s , c a s h ie r ’s,
c e r tifie d , te lle r ’s,
d e p o s ito r y c h e c k s
2nd day
2nd day
I n -s ta te c h e c k s
6 th d ay
6 th d a y
O u t -o f- s ta t e c h e c k s
1 0 th d a y
1 2 th d a y
Note. These time periods are stated in terms of avail
ability for withdrawal not later than the Xth business day
following the banking day of deposit to facilitate compari
son with Regulation CC. State regulations are stated in
terms of availability at the start of the business day subse
quent to the number of days specified in the regulation.
Regulation CC
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 trans
fers, share draft accounts, and all savings de
posits and share accounts, other than time de
posits”
(California
Financial
Code
§ 886(b)). The federal preemption of state
funds-availability laws only applies to “ac
counts” subject to Regulation CC, which gen
erally includes transaction accounts. Thus,
the California funds-availability regulations
continue to apply 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 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 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 pay
ment of money even though it is not negotia
ble . . . ” (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 sec
tion 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
Appendix F
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
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 Cal
ifornia Financial Code, which requires deposi
tory institutions to make funds deposited by
cashier’s check, teller’s check, certified
checks, or depository check available for with
drawal on the second business day following
deposit, if certain conditions are met. This re
quirement became effective January 1, 1988.
The Regulation CC next-day-availability
requirement 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
regulations, 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
173
Appendix F
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
requirement for cashier’s and teller’s checks
applies only to those checks issued for remit
tance purposes. To the extent that the state
second-business-day-availability requirement
applies to cashier’s and teller’s checks issued
for other than remittance purposes, the state
two-day requirement supersedes the federal
local and nonlocal schedules.
Next-day availability. Credit unions and in
dustrial loan companies in California are re
quired to give next-day availability to items
drawn by the state of California or any of its
departments, agencies, or political subdivi
sions. California 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 avail
ability 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, general
ly, 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.
California 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 avail
ability schedule preempts the state schedule,
174
Regulation CC
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
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 accord
ance 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 Regulation CC schedule, deposits are con
sidered 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 re
quires that preprinted deposit slips and ATM
deposit envelopes contain a conspicuous sum
mary of the general policy. Finally, the law
requires a depository institution to provide
specific notice of the time the customer may
withdraw funds deposited by check or similar
instrument into a deposit account if the funds
are not available for immediate withdrawal.
Section 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 ac
counts. California Financial Code section
866.2 requires disclosures that differ from
those required by Regulation CC, and there-
Regulation CC
Appendix F
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
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expedit
ed 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 spec
ifies those provisions of the Connecticut
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 169].
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:
Availability
O n -u s c h e c k s
2nd day
I n -s ta te c h e c k s
4 th d a y
O u t-o f-s ta te c h e c k s
6 th d a y
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 feder
al 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 govern
ing 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 pro
vides that certain checks that are nonlocal un
der 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 non
local checks). Accordingly, the Connecticut
law supersedes Regulation CC with respect to
nonlocal checks (other than checks covered
by appendix B -l) deposited in “accounts”
until the federal permanent availability sched
ules 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
175
Appendix F
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 avail
ability 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).
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 avail
ability 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 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 accord
ance with section 229.13(g) of Regulation
CC.
Regulation CC
The Connecticut disclosure rules would con
tinue to apply to accounts, such as savings
and time accounts, not governed by the Regu
lation 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 Expedit
ed Funds Availability Act and subpart B, and,
in connection therewith, subpart A, of Regu
lation CC, preempt provisions of Illinois law
relating to the availability of funds. Section
4—213(5) of the Uniform Commercial Code
as adopted in Illinois (Illinois Revised Stat
utes chapter 26, paragraph 4-213(5), enacted
July 26, 1988) provides that—
T im e p e r io d s a fte r w h ic h d e p o s its m u s t b e a v a ila b le
fo r w ith d r a w a l s h a ll b e d e te r m in e d b y th e p r o v i
s io n s o f th e fe d e r a l E x p e d ite d F u n d s A v a ila b ility
A c t ( T it l e V I o f th e C o m p e t it iv e E q u a lity B a n k in g
A c t o f 1 9 8 7 ) a n d th e r e g u la tio n s p r o m u lg a te d b y
th e F e d e r a l R e s e r v e B o a r d fo r th e im p le m e n ta tio n
o f th a t A c t .
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
Disclosures
The Connecticut statute (Conn. Gen. Stat.
§ 36-9v(b)) requires written notice to depos
itors 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
requirements concerning funds availability
that relate to “accounts” that are inconsistent
with the federal requirements. The state re
quirements are different from, and therefore
inconsistent 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 “accounts” as defined by Regulation CC.
176
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expedit
ed 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 169].
Regulation CC
In 1985, Maine adopted a statute governing
funds availability (title 9-B MRSA
§ 241(5)), which requires Maine financial in
stitutions to make funds deposited in a trans
action account, savings account, or time ac
count 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 set
ting forth time limitations and disclosure re
quirements governing funds availability.
The superintendent of banking issued regu
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
institution must be made available for with
drawal in accordance with the act and Regu
lation 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 require
ments. Funds-availability policies for accounts
not subject to Regulation CC must be dis
closed in accordance with the state regulation
(Regulation 18-IV(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 ac
counts 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 “ac
counts” under Regulation CC, in certain
circumstances.
Availability Schedules and Disclosures
The Maine regulation incorporates the Regu
lation CC availability and disclosure require
ments with respect to deposits to accounts
covered by Regulation CC. Because the state
Appendix F
requirements are consistent with the federal
requirements, the Maine regulation is not pre
empted by, nor does it supersede, the federal
law.
Massachusetts
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expedit
ed Funds Availability Act (“the act”) and
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 Reg
ulation CC to the Massachusetts funds-avail
ability law. (See also the Board’s preemption
determination regarding the Uniform Com
mercial Code, section 4-213(5), pertaining to
availability of cash deposits [page 169].
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 avail
ability 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
177
Appendix F
schedules may apply to savings, time, and oth
er accounts not defined as “accounts” under
Regulation CC, in certain circumstances.
Availability Schedules
The Massachusetts definition of “local origi
nating depository institution” (local paying
bank in Regulation CC terminology) requires
that in-state checks that are nonlocal checks
under Regulation CC be made available in
accordance with the Regulation CC local
schedule. The Massachusetts law supersedes
Regulation CC under the temporary and per
manent 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 Reg
ulation CC and savings and other accounts
not governed by the federal regulation. Be
cause the state requirements are consistent
with the federal requirements, the Massachu
setts regulation is not preempted by, nor does
it supersede, the federal law. The Massachu
setts disclosure rules would continue to apply
to accounts not governed by the Regulation
CC disclosure requirements.
New Jersey
Regulation CC
ing the Uniform Commercial Code, section
4—213(5), pertaining to availability of cash
deposits [page 169].)
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 char
tered commercial bank, savings bank, or sav
ings and loan association) to provide written
disclosure to all holders of and applicants for
deposit accounts which describes the institu
tion’s funds-availability policy. Institutions
must also disclose to their customers any sig
nificant changes to their availability policy.
Regulation CC preempts state disclosure
requirements concerning funds availability
that relate to “accounts” that are inconsistent
with the federal requirements. The state re
quirements are different from, and therefore
inconsistent with, the federal disclosure rules
(§ 229.20(c)(2)). Thus, the New Jersey stat
ute (N.J.A.C. §§ 3:1-15.1 et seq.) is preempt
ed by Regulation CC to the extent that these
disclosure provisions apply to “accounts” as
defined by Regulation CC. The New Jersey
disclosure 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
person for personal or family purposes, which
are not governed by the Regulation CC disclo
sure requirements.
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expedit
ed 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 regard178
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 Expedit
ed Funds Availability Act (“the act”) and
subpart B (and in connection therewith, sub
part A) of Regulation CC, preempt provisions
Regulation CC
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 169].
In 1987, New Mexico adopted a statute
governing funds availability (N.M. Stat. Ann.
§ 58-3-4 (1978, Supp. 1987)), which re
quires New Mexico financial institutions to
make funds deposited into retail accounts
available for withdrawal after a reasonable pe
riod of time. Section 4A of the New Mexico
statute establishes the time frames within
which financial institutions must make funds
deposited by checks or share drafts available
for withdrawal if the checks or share drafts
are drawn and payable on demand at other
financial institutions located in the continental
United States. Section 4B of the statute de
fines terms and specifies availability for checks
deposited in branch offices of certain financial
institutions, 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 in
dividual 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 with
in continental United States must be made
available at the beginning of the seventh busi
ness day after deposit.
Exceptions to the schedules are provided
for documentary drafts, accounts which have
Appendix F
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.
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”
as that term is defined in Regulation CC that
is not held by an individual or household.
Regulation CC does not affect the New Mexi
co 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 institu
tions. The term “financial institution” corre
sponds generally to the term “bank” in Regu
lation 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 Reserve Banks or
Federal Home Loan Banks, or U.S. Postal
Service money orders. No portion of the New
Mexico statute supersedes Regulation 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 finan
cial institution located in the same municipali
ty as the depositary bank and checks and
share drafts drawn and payable on demand at
179
Appendix F
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)).1 New Mexico is served by
two Federal Reserve check-processing re
gions, 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
nonlocal under Regulation CC. Under the
temporary schedule in Regulation CC, the
proceeds of local checks must be available for
withdrawal 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 ar
rangement. Under the temporary schedule in
Regulation CC, the proceeds of nonlocal
checks must be made available for withdrawal
at the opening of the seventh business day fol
lowing deposit. No time-period adjustment is
provided. New Mexico law supersedes this
time-period 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 financial
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 tem
porary schedules in Regulation CC. The New
Mexico statute also provides for availability
of checks and share drafts drawn and pay
able on demand at financial institutions lo
cated in the continental United States, ex
cluding Alaska, Hawaii, Puerto Rico, and
1 It is not clear from the New Mexico statute whether
days stated in the schedules include the day of deposit. For
the purposes of this interpretation, it is assumed that the
stated days do include the day of deposit. References to
days included in the New Mexico schedules have also been
revised to reflect Regulation CC terminology.
180
Regulation CC
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 nonlo
cal 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
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-daywithdrawal requirement (N.M. Stat. Ann.
§ 58—3—4A (1) ) and the time-period adjust
ment for nonlocal checks subject to the fifthday-withdrawal requirement (N.M. Stat.
Ann. § 58-3-4A(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 indorse
ments; (4) a check or share draft in a face
amount greater than the average balance of
the depositor’s account for the prior 12
months or the average balance since the ac
count 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
Regulation CC, but holds may be placed un
der 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 Mexi
co law a bank is authorized to establish its
own banking days except that it must observe
certain holidays (N.M. Stat. Ann. §§ 58-5-6
and 58-5-7). This definition is preempted by
the Regulation CC definitions of “business
day” and “banking day.” Thus, for determin
ing the permissible hold under the New Mexi
co schedules that supersede the Regulation
CC schedule, deposits are considered made on
the specified number of “business days” fol
lowing the “banking day” of deposit.
Disclosures
The New Mexico law does not contain fundsavailability disclosure requirements applicable
t o a c c o u n t s s u b j e c t t o R e g u l a t i o n 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 Expedit
ed Funds Availability Act (“the act”) and
subpart B (and in connection therewith,
subpart A) of Regulation CC, preempt the
provisions of New York law concerning the
availability of funds. This preemption deter
mination addresses the relation of the act and
Regulation CC to the New York funds-availability law. (See also the Board’s preemption
determination regarding the Uniform Com
mercial Code, section 4—213(5), pertaining to
availability of cash deposits [page 169].
In 1983, the New York State Banking De-
Appendix F
partment, pursuant to section 14-d of the
New York Banking Law, issued regulations
requiring that funds deposited in an account
be made available for withdrawal within spec
ified time periods, and provided certain excep
tions to those availability schedules. Part 34 of
the New York State Banking Department’s
general regulations established time frames
within which commercial banks, trust compa
nies, and branches of foreign banks
(“banks”); and savings 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 rules, however, continue to apply to
checks deposited to accounts, as defined in
Regulation 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 d e p o s i t s , New York institutions could
elect to comply with either the state or federal
availability 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 defined
in section 229.2(a) of Regulation CC. The
New York law continues to apply to deposits
to savings accounts and time deposits 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
181
Appendix F
“accounts” under Regulation CC, in certain
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 definition
of “item” in New York law to be consistent
with the definition of “check” in Regulation
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.
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 avail
ability required for nonlocal checks under sec
tion 229.11(c) of Regulation CC, although
they are not necessarily shorter than the
schedules for nonlocal checks set forth in sec
tion 229.11(c)(2) and appendix B-l of Regu
lation CC. Thus, these state schedules super
sede 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
nonlocal check under Regulation CC and the
applicable state schedule is less than the appli
cable 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, effec
tive 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
Regulation CC schedule for nonlocal checks
is not shortened under section 229.12(c)(2)
and appendix B-2 of Regulation CC. In addi
tion, the New York schedule for savings insti
tutions supersedes the Regulation CC time182
Regulation CC
period adjustment for withdrawal by cash or
similar means in the permanent schedule, to
the extent that the in-state checks are defined
as nonlocal under Regulation CC, and the
Regulation CC schedule for nonlocal checks
is not shortened under section 229.12(c)(2)
and appendix 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 ap
ply only with respect to deposits of in-state
nonlocal checks that are subject to the state
availability schedule. For these deposits, the
depositary bank may invoke a state exception
and place a hold on the deposit up to the fed
eral availability-schedule limit for that type of
deposit. Once the federal availability-schedule
limit is reached, the depositary bank may fur
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 accord
ance 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 Expedit
ed 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 the
availability of funds. This preemption deter
mination specifies those provisions in the
Rhode Island funds-availability law that su-
Regulation CC
Appendix F
persede the act and Regulation CC. (See also
the Board’s preemption determination regard
ing the Uniform Commercial Code, section
4-213(5), pertaining to availability of cash
deposits [page 169].
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:
Commercial
Banks
Thrift
Institutions
Treasury checks,
Rhode Island gov
ernment checks,
first-indorsed
2nd
2nd
In-state, cashier’s
checks less than
$2,500
On-us checks
2nd
2nd
2nd
3rd
In-state clearinghouse
checks
3rd
4th
5th
6th
7th
9th
7th
10th
In-state nonclearing
house checks
1st or 2nd Federal
Reserve District
checks (out-ofstate)
Other checks
Note. These time periods are stated in terms of avail
ability for withdrawal not later than the Xth business day
following the banking day of 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 of 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 avail
ability of funds deposited in “personal trans
action accounts,” a term not defined in the
statute. The federal law would continue to ap
ply 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 Regu
lation CC (§ 229.2(k)).
Availability Schedules
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
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 defini
tion 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 institu
tion located in the First or Second Federal
Reserve District (outside of Rhode Island)
available on the seventh business day follow
ing deposit. To the extent that this provision
applies to checks payable by institutions locat
ed outside the Boston check processing re
gion, it provides for availability in the same
time as required for nonlocal checks under the
183
Appendix F
temporary federal 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.
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 federal
availability schedule preempts the state sched
ule, only the federal exceptions will apply. For
deposits that are covered by the state avail
ability schedule, the state exceptions may be
used to extend the state availability schedule
to meet the federal availability schedule. Once
the deposit is held up to the federal availabil
ity-schedule limit under a state exception, the
depositary bank may further extend the hold
under any federal exception that can be ap
plied to the deposit. Thus, if the state and fed
eral availability schedules are the same for a
particular deposit, both a state and a federal
exception must be applicable to that deposit in
order to extend the hold beyond the schedule.
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.
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 “banking
day” of deposit.
184
Regulation CC
Disclosures
The Rhode Island statute requires written
notice to depositors of an institution’s checkhold policy and requires a notice on deposit
slips. Regulation CC preempts state disclo
sure requirements concerning funds availabil
ity that relate to accounts that are inconsist
ent with the federal requirements. The state
requirements are different from, and there
fore inconsistent with, the federal rules
(§ 229.20(c)(2)). Thus, Regulation CC
preempts the Rhode Island disclosure re
quirements concerning funds availability.
Wisconsin
Background
The Board has been requested, in accordance
with section 229.20(d) of Regulation CC (12
CFR 229), to determine whether the Expedit
ed Funds Availability Act (the act) and sub
part B (and in connection therewith, subpart
A) of Regulation CC preempt the provisions
of Wisconsin law concerning availability of
funds. This preemption determination speci
fies those provisions of the Wisconsin fundsavailability law that are not preempted by the
act and Regulation CC. (See also the Board’s
preemption determination regarding the Uni
form Commercial Code, section 4—213(5),
pertaining to availability of cash deposits
[page 169].)
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 locat
ed in Wisconsin must be made available for
withdrawal by the second day following depo
sit. (The law governing commercial banks de
termines 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
Regulation CC
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 respect
to the rules governing commercial banks, as
“any account with a bank and includes a
checking, time, interest or savings account”
(Wisconsin Statutes section 404.104(1)(a)).
The statutes relating to the funds-availability
requirements applicable to savings and loan
associations and credit unions do not define
the term “account.” The federal preemption
of state funds-availability requirements ap
plies only to “accounts” subject to Regulation
CC, which generally consist of transaction ac
counts. 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 not “ac
counts” under Regulation CC. (Note, howev
er, 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 “ac
counts” 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 govern
ing 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
requires 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
Appendix F
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 schedule for in-state nonlocal checks su
persedes the federal schedule to the extent
that it applies to an item payable by a Wiscon
sin bank that is defined as a nonlocal check
under Regulation CC and is not subject to re
duced schedules under section 229.11(c)(2)
and appendix B-l.
Permanent schedule. Under the federal per
manent 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
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)(1); 215.136(2)(b); and
186.117 (2) (a)). Regulation CC requires
next-day availability for these checks if they
are (1) deposited in an account of a payee of
the check, (2) deposited in a depositary bank
located 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 condi
tion to next-day availability. Under the federal
law, if a state or local government check is not
deposited in person to an employee of the de
positary bank, but meets the other conditions
set forth in section 229.10(c)(l)(iv), the
funds must be made available for withdrawal
not later than the second business day follow
ing deposit. The Wisconsin statute supersedes
Regulation CC to the extent that the state law
does not permit the use of a special deposit
185
Appendix F
slip as a condition to receipt of second-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 collectibili
ty (Wisconsin Statutes §§ 404.213(4m)(b);
215.136(2); and 186.117(2)). The state avail
ability 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 avail
ability 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 ap
plied 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
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
Regulation CC definition of those terms. For
determining the permissible hold under the
Wisconsin schedules that supersede the Regu
lation CC schedule, deposits are considered
available for withdrawal on the specified num
ber 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 con
sidered deposited under Wisconsin law in ac
cordance with the rules set forth in section
229.19(a) of Regulation CC.
Disclosures
The Wisconsin statute does not require disclo186
Regulation CC
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 Statutes
§§ 404.213(4m)(b);
215.136(2);
and
186.117(2)).
Regulation CC preempts state disclosure
requirements concerning funds availability
that relate to “accounts” that are inconsistent
with the federal requirements. The state re
quirement is different from, and therefore in
consistent with, the federal disclosure rules
(§ 229.20(c)(2)). Thus, the Wisconsin stat
ute is preempted by Regulation CC to the ex
tent that the state notice requirement applies
to “accounts” as defined by Regulation CC.
The Wisconsin requirement would continue
to apply to accounts, such as savings and time
accounts, not governed by the Regulation CC
disclosure requirements.
Expedited Funds Availability Act
12 U S C 4001 et seq.; 101 Stat. 635; Pub. L. 1 0 0 -8 6 (A u g u st 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
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 de
posit account or other similar transaction ac
count 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 Reserve
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 deposito
ry institution.
(6) The term “certified check” means any
check with respect to which a depository insti
tution certifies that—
(A) the signature on the check is genuine;
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 negotiable
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 Federal Re
serve System.
(9) The term “check processing region”
means the geographical area served by a Fed
eral 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, fami
ly, 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 includes
an office, branch, or agency of a foreign bank
located in the United States.
(13) The term “local originating depository
institution” means any originating depository
institution which is located in the same check
processing region as the receiving depository
institution.
(14) The term “noncash item” means—
(A) a check or other demand item to
which a passbook, certificate, or other doc
ument is attached;
187
§602
(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 regulations
of the Board.
(15) The term “nonlocal originating deposi
tory institution” means any originating depos
itory institution which is not a local deposito
ry institution.
(16) The term “proprietary ATM” means an
automated teller machine which is—
(A) located—
(i) at or adjacent to a branch of the re
ceiving depository institution; or
(ii) in close proximity, as defined by the
Board, to a branch of the receiving de
pository 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 in
stitution 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 deposi
tory institution which—
(A) is located in the same geographic area
as that served by a check clearinghouse as
sociation; 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 insti
tution 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 Vir
gin Islands.
(24) The term “unit of general local govern
ment” means any city, county, town, town188
Regulation CC (Statutory Provisions)
ship, 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—
(i) is drawn by a unit of general local
government;
(ii) is deposited in a receiving deposi-
Regulation CC (Statutory Provisions)
tory institution which is located in the
same State as such unit of general local
government and is staffed by individu
als 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 government;
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 par
agraph (3) of this subsection, 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 depository institution
and the business day on which the funds
involved are available for withdrawal.
(2) Subject to paragraph (3) of this sub
section, 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
pository institution and the business day on
which such funds are available for
withdrawal.
§603
(3) (A) Except as provided in subpara
graph (B), funds deposited in an account
in a depository institution by check (oth
er 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 un
der 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 with
drawal under this paragraph shall be in
addition to the amount available under
subsection (a)(2)(D ).
(4) This subsection shall apply with re
spect to funds deposited by check in an ac
count at a depository institution on or after
September 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, sub
sections (a)(2), (d), and (e) of this sec
tion, and section 604, not more than 2
business days shall intervene between the
business day on which funds are deposit
ed in an account at a depository institu
tion 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),
funds deposited in an account in a de
pository institution by check drawn on
189
§603
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
otherwise 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 subpara
graph (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 re
spect to funds deposited by check in an ac
count at a depository institution after Au
gust 31, 1988, and before September 1,
1990, except as may be otherwise provided
under subsection (b)(4).
Regulation CC (Statutory Provisions)
of law, any time period established under
subsection (b), (c), or (e) shall be extend
ed by 1 business day in the case of any de
posit which is both—
(A) deposited in an account at a deposi
tory institution which is located in Alas
ka, Hawaii, Puerto Rico, or the Virgin
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 be
tween the business day a deposit de
scribed 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 avail
able for withdrawal.
(B) A deposit is described in this subparagraph 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)).
(C) This paragraph shall apply with re
spect to funds deposited at a nonproprie
tary automated teller machine after Au
gust 31, 1988, and prior to the expiration
of the 2-year period beginning on the
(d) Time period adjustments. (1) Notwith
date of enactment of the Cranston-Gonzalez National Affordable Housing Act.
standing any other provision of law, the
(2) (A) Not more than 1 business day
Board shall, by regulation, reduce the time
shall intervene between the business day
periods established under subsections (b),
on which a deposit described in para
(c), and (e) to as short a time as possible
graph (1)(B) (i), (ii), or (iii) is made
and equal to the period of time achievable
at a nonproprietary automated teller ma
under the improved check clearing system
chine (for deposit in an account at a de
for a receiving depository institution to rea
pository institution) and the business day
sonably expect to learn of the nonpayment
on which funds from such deposit are
of most items for each category of checks.
(2)
Notwithstanding any other provision
available for withdrawal.
190
§ 604
Regulation CC (Statutory Provisions)
(B) Not more than 4 business days shall
intervene between the business day a de
posit described in paragraph (l)(B )(iv)
is made at a nonproprietary automated
teller machine (for deposit in an account
at a depository institution) and the busi
ness day on which funds from such depo
sit are available for withdrawal.
(C) For the purpose of this paragraph, a
check is drawn on a local originating de
pository institution if that depository
institution is located in the same check
processing region as the receiving non
proprietary ATM.
(D) This paragraph shall apply with re
spect to funds deposited at a nonproprie
tary automated teller machine on or after
the expiration of the 2-year period begin
ning on the date of enactment of the
Cranston-Gonzalez National Affordable
Housing Act.
(3) 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.
(4) 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,
report to the Congress regarding such soft
ware and hardware and regarding the po
tential for improving the processing of au
tomated teller machine deposits.
(f) Check return; notice of 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
issued under any such subsection.
[12 USC 4002. As amended by act of Nov. 28, 1990 (104
Stat. 4424).]
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 respect
to any deposit in such account during the 30day 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 depo
sit in such account;
(C) any funds deposited in such account
by cashier’s check, certified check, teller’s
check, depository check, or traveler’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 trans
fer, on the business day after the business
day on which such funds are received for
d e p o s it.
(2) In the case of any funds deposited in
such account by a check (other than a
check described in subparagraph (C) or
(D) of paragraph (1)), the availability for
withdrawal of such funds shall not be sub
ject to the provisions of section 603(b),
603(c), or paragraphs (1) and (2) of sec
tion 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 par
agraph (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.
191
§604
(b) Large or redeposited checks; repeated
overdrafts. The Board may, by regulation, es
tablish reasonable exceptions to any time limi
tation established under subsection (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
overdrawn repeatedly.
(c) Reasonable cause exception. (1) In ac
cordance with regulations which the Board
shall prescribe, subsections (a)(2)(F),
(b), (c), and (e) of section 603 shall not
apply with respect to any check deposited
in an account at a depository institution if
the receiving depository institution has rea
sonable cause to believe that the check is
uncollectible from the originating deposito
ry institution. For purposes of the preced
ing sentence, reasonable cause to believe re
quires 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 subsec
tion may be based on any class of checks or
persons.
(3) If the receiving depository institution
determines that a check deposited in an ac
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
192
Regulation CC (Statutory Provisions)
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) Emergency conditions. Subject to such
regulations as the Board may prescribe, sub
sections (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) Prevention of fraud losses. (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 experi
encing 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
fication of checks involved in such fraud
is necessary to diminish the volume of
such fraud.
(2) No regulation prescribed or order is
sued under paragraph (1) shall remain in
effect for more than 45 days (excluding Sat
urdays, 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
Urban Affairs of the Senate.
(B) Each report under subparagraph
(A) shall contain—
Regulation CC (Statutory Provisions)
(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
regulation or order; and
(iii) specific examples of the checkrelated fraud giving rise to such regula
tion or order.
(f) Notice of exception; availability within rea
sonable time. (1) If any exception contained
in this section (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 day the funds shall be made
available for withdrawal; 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 receiving
depository institution, but shall not ex
ceed a reasonable period of time as deter
mined by the Board.
(2) The notice required under paragraph
(1)(A) with respect to a deposit to which
an exception contained in this section ap
plies 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 insti
tution shall immediately provide such
notice in writing to the depositor.
(B) In the case of any other deposit
(other than a deposit described in subparagraph (C)), the receiving depository
institution 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 insti
tution in accordance with regulations of
the Board.
(3) If the facts upon which the determina
§605
tion of the applicability of an exception con
tained in subsection (b) or (c) to any depo
sit only become known to the receiving de
pository 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 business day following the day such
facts become known to the depository
institution.
[12 USC 4003.]
SECTION 605— Disclosure of Funds
Availability Policies
(a) Notice for new accounts. Before an ac
count is opened at a depository institution, the
depository institution shall provide written
notice 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) Preprinted deposit slips. All preprinted
deposit slips that a depository institution fur
nishes to its customers shall contain a
summary notice, as prescribed by the Board in
regulations, that deposited items may not be
available for immediate withdrawal.
(c) Mailing of notice. (1) In the first regular
ly scheduled mailing to customers occur
ring after the effective date of this section,
but not more than 60 days after such effec
tive date, each depository institution shall
send a written notice containing the specific
policy of such depository institution with
respect to when a customer may withdraw
funds deposited into such customer’s ac
count, unless the depository institution has
provided a disclosure which meets the re
quirements of this section before such effec
tive 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
193
§605
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) Posting of notice. (1) Each depository in
stitution shall post, in a conspicuous place
in each location where deposits are accept
ed by individuals employed by such deposi
tory institution, a specific notice which de
scribes the time periods applicable to the
availability of funds deposited in a consum
er 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 of interest payment policy. If a de
pository institution described in section
606(b) begins the accrual of interest or divi
dends at a later date than the date described
in section 606(a) with respect to all funds,
including cash, deposited in an interest-bear
ing account at such depository institution, any
notice required to be provided under subsec
tions (a) and (c) shall contain a written de
scription of the time at which such depository
institution begins to accrue interest or divi
dends on such funds.
(f) Model disclosure forms. (1) The Board
shall publish model disclosure forms and
clauses for common transactions to facili
tate compliance with the disclosure require
ments of this section and to aid customers
by utilizing
readily understandable
language.
(2) A depository institution shall be
deemed to be in compliance with the re
quirements of this section if such institu
tion—
194
Regulation CC (Statutory Provisions)
(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, Unit
ed States Code.
[12 USC 4004.]
SECTION 606— Payment of Interest
(a) In general. Except as provided in subsec
tion (b) or (c) and notwithstanding any oth
er 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) (1) (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 re
quiring the payment of interest or dividends
on funds deposited by a check which is re
turned unpaid.
[12 USC 4005.]
Regulation CC (Statutory Provisions)
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 of 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 of depository institutions.
No provision of this title shall be construed
as—
(1) prohibiting a depository institution
from 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 provision
al credit.
(d) Prohibition on freezing certain funds in an
account. 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.
(e) Employee training on and compliance with
the requirements o f this title. Each depository
institution shall—
(1) take such actions as may be necessary
fully to inform each employee (who per
§ 609
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) In general. 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 un
der this title (as in effect on September 1,
1989) shall—
(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 depo
sit in an account shall be available for with
drawal; and
(2) apply to all federally insured depository
institutions located within such State.
(b) Override of certain state laws. 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.
[12 USC 4007.]
SECTION 609—Regulations and
Reports by Board
(a) In general. After notice and opportunity
to submit comment in accordance with sec
tion 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 eva
sion of such provisions; and
(3) to facilitate compliance with such
provisions.
195
§609
Regulation CC (Statutory Provisions)
(b) Regulation relating to improvement of
determines, pursuant to the study under
check processing system. In order to improve
subsection (f), that such a process is feasi
the check processing system, the Board shall
ble; and
consider (among other proposals) requiring,
(9) originating depository institutions be
by regulation, that—
permitted to return unpaid checks directly
(1) depository institutions be charged
to, and obtain reimbursement for such
based upon notification that a check or sim
checks directly from, the receiving deposi
ilar instrument will be presented for
tory institution.
payment;
(c) Regulatory responsibility of Board for
(2) the Federal Reserve banks and deposi
payment system.
tory institutions provide for check
(1) In order to carry out the provisions of
truncation;
this title, the Board of Governors of the
(3) depository institutions be provided in
Federal Reserve System shall have the re
centives to return items promptly to the de
sponsibility to regulate—
pository institution of first deposit;
(A) any aspect of the payment system,
(4) the Federal Reserve banks and deposi
including the receipt, payment, collec
tory institutions take such actions as are
tion, or clearing of checks; and
necessary to automate the process of re
(B) any related function of the payment
turning unpaid checks;
system with respect to checks.
(5) each depository institution and Federal
(2) The Board shall prescribe such regula
Reserve bank—
tions as it may determine to be appropriate
(A) place its endorsement, and other
to carry out its responsibility under para
notations specified in regulations of the
graph (1).
Board, on checks in the positions speci
fied in such regulations; and
(d) Reports. (1)(A) The Board shall trans
(B) take such actions as are necessary
mit a report to both Houses of the Con
to—
gress not later than 18, 30, and 48
(i) automate the process of reading
months after the date of the enactment of
endorsements; and
this title.
(ii) eliminate unnecessary endorse
(B) Each such report shall describe—
ments;
(i) the actions taken and progress
(6) within one business day after an origi
made by the Board to implement the
nating depository institution is presented a
schedules established in section 603,
check (for more than such minimum
and
amount as the Board may prescribe)—
(ii) the impact of this title on consum
(A) such originating depository institu
ers and depository institutions.
tion determines whether it will pay such
(2) (A) The Board shall transmit a report
check; and
to both Houses of the Congress not later
than 2 years after the date of the enact
(B) if such originating depository insti
ment of this title regarding the effects the
tution determines that it will not pay
such check, such originating depository
temporary schedule established under
institution directly notify the receiving
section 603(c) have had on depository
depository
institution
of
such
institutions and the public.
determination;
(B) Such report shall also assess the po
tential impact the implementation of the
(7) regardless of where a check is cleared
schedule established in section 603(b)
initially, all returned checks be eligible to be
will have on depository institutions and
returned through the Federal Reserve
System;
the public, including an estimate of the
risks to and losses of depository institu
(8) Federal Reserve banks and depository
tions and the benefits to consumers. Such
institutions participate in the development
report shall also contain such recommen
and implementation of an electronic clear
dations for legislative or administrative
inghouse process to the extent the Board
196
Regulation CC (Statutory Provisions)
action as the Board may determine to be
necessary.
(3) Not later than 6 months after section
603 (b) takes effect, the Comptroller Gener
al of the United States shall transmit a re
port to the Congress evaluating the imple
mentation and administration of this title.
(e) Consultation. In prescribing regulations
under subsections (a) and (b), the Board
shall consult with the Comptroller of the Cur
rency, the Board of Directors of the Federal
Deposit Insurance Corporation, the Federal
Home Loan Bank Board, and the National
Credit Union Administration Board.
(f) Electronic clearinghouse study. (1) The
Board shall study the feasibility of modern
izing and accelerating the check payment
system through the development of an elec
tronic clearinghouse process utilizing exist
ing telecommunications technology to
avoid the necessity of actual presentment of
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 ti
tle, including regulations prescribed by and
orders issued by the Board of Governors of
the Federal 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, by the Comptroller
of the Currency;
(B) member banks of the Federal Re
§610
serve System (other than national
banks), by the Board of Governors of the
Federal Reserve System; and
(C) banks insured by the Federal Depo
sit Insurance Corporation (other than
members of the Federal Reserve Sys
tem), 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, by the
National Credit Union Administration
Board with respect to any Federal credit
union or insured credit union.
(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 subsec
tion, a violation of any requirement im
posed 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
provision of law specifically referred to in
subsection (a) of this section, each of the
agencies 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 require
ments imposed under this title is specifically
committed to some other Government
agency under subsection (a) of this section,
the Board of Governors of the Federal
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 authori
ty of the Board under section 605(d)(2)
or 609(c),
197
§610
has failed to comply with any requirement
imposed by this title or by the Board under
this title, the Board may issue an order pro
hibiting 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
noncomplying depository institution or per
son (including any activity or transaction
involving the receipt, payment, collection,
and clearing of checks and any related func
tion of the payment system with respect to
checks).
Regulation CC (Statutory Provisions)
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.
(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 actual damages
awarded;
(d) Procedural rules. The authority of the
(2) the frequency and persistence of fail
Board to prescribe regulations under this title
ures
of compliance;
does not impair the authority of any other
(3)
the
resources of the depository
agency designated in this section to make
institution;
rules regarding its own procedures in enforc
(4) the number of persons adversely affect
ing compliance with requirements imposed
ed;
and
under this title.
(5) the extent to which the failure of com
[12 USC 4009. As amended by act of Aug. 9, 1989 (103
pliance was intentional.
Stat. 438).]
SECTION 611— Civil Liability
(a) Civil liability. Except as otherwise pro
vided in this section, any depository
institution which fails to comply with any re
quirement imposed under this title or any reg
ulation prescribed under this title with respect
to any person other than another depository
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
198
(c) Bona fide errors. (1) A depository insti
tution may not be held liable in any action
brought under this section for a violation of
this title if the depository institution dem
onstrates by a preponderance of the evi
dence that the violation was not intentional
and resulted from a bona fide error, not
withstanding the maintenance of proce
dures 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) Jurisdiction. Any action under this sec
tion may be brought in any United States dis
trict court, or in any other court of competent
jurisdiction, within one year after the date of
the occurrence of the violation involved.
(e) Reliance on Board rulings. 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 inter
pretation thereof by the Board of Governors
of the Federal Reserve System, notwithstand
§613
Regulation CC (Statutory Provisions)
“ (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
evidences of transaction accounts, as defined
by section 19(b)(1) (12 U.S.C. 461(b)(1))
from other depository institutions, as defined
(f) Authority to establish rules regarding loss in section 19(b)(1) (12 U.S.C. 461(b)(1))
es and liability among depository institutions. or from any office of any Federal Reserve
The Board is authorized to impose on or allo bank without regard to any Federal or State
cate among depository institutions the risks of law restricting the number or the physical lo
loss and liability in connection with any as cation or locations of such depository
pect of the payment system, including the re institutions.”.
ceipt, payment, collection, or clearing of
checks, and any related function of the pay (b) Effective date. The amendment made by
ment system with respect to checks. Liability subsection (a) shall take effect on the date of
under this subsection shall not exceed the enactment of this title.
amount of the check giving rise to the loss or [12 USC 248a note.]
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.
SECTION 613— Effective Dates
[12 USC 4010.]
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.
SECTION 612—Parity in Clearing
(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:
(a) Except as provided in subsection (b),
this title shall take effect on the date of the
enactment of this title.
(b) Sections 603, 604, 605, 606, 610, and 611
shall take effect on September 1, 1988.
[12 USC 4001 note.]
199
@FedFRASER