Regulation CC Revisions

Change is inevitable. Just ask the parent of a two-year-old. The latest change that Bankers will deal with is based upon inflation. The Board and the Bureau (Agencies) are amending Regulation CC, which implements the Expedited Funds Availability Act, to implement a statutory requirement in the Act to adjust the dollar amounts for inflation.  This rule is effective July 1, 2020.

The substantive changes in dollar amounts are:

  1. Instead of the $200.00 wherever it appears, it will be $225.00.  This amount appears first in 229.10 (c) (1) then (vii), 229.12 12 (d) and the third is 229.13
  2. Instead of the $400. listed in 229.12(d), the new figure will be $450.00. (The Bank is allowed to extend by one business day that time that funds deposited in an account are available by cash or similar means. 
  3. Instead of the $5,000 listed in 229.13 (a), 229.13(b) and 229.13 (d), you will have to provide $5,525 when invoking those exception holds.
  4. Lastly, civil liability figures have gone up from $1,000 to $1,100 and from $500,000. up to $552,500.

In addition to the amounts raised because of inflation; the Availability Schedule has been amended to include certain deposits in Alaska, Hawaii, Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam and the U.S. Virgin Islands.

The Commentary to the Regulation has also been changed.  The first substantive change is in regards to the $225 next day available rule. The example put forth is, in the case where a $1,000 Treasury Check and a $1,000 local check are deposited on a banking day, then $1,225 of the deposit must be made available next day.

What do you need to do?

As of July 1st, provide $225.00 next day availability on a case by case hold on local/nonlocal checks; provide $5,525 in two-day availability for exception holds placed instead of the $5000 that is provided today and instead of the $400 available for withdrawal by cash or similar means is increased to $450.

The Policy and Procedures, as well as the disclosure must be amended to reflect the increases in amounts.

If the hold notices are automated, the program(s) must be changed to reflect the new requirements.

Training should be provided to all employees in anticipation of the changes on July 1st.

Since this is a change for the customers, a change in terms notice must be provided.  Your institution can send out the entire fund’s availability notice, highlighting the changes on the form. The Bank may send the change in terms via electronic means or the changes in the monthly statements.  The change in terms notice must be sent 30 days before the change goes into effect; or 30 days after implementation if the change expedites funds availability.

The regulation is set to adjust every five years to reflect any changes to the inflation rate.

Remember, you do have several arrows in your quiver to be used in deciding whether to hold a check or not.  The first is to refuse the deposit, the second is to not place any hold on the item, the third is to put the funds into a Savings account, which is not covered by the Regulation, the fourth is to get supervisory help in the decision process and fifth ( I am showing my age here), you can send the item for collection.