Disclosing Your Availability Policy | Determining Funds Availability
Delaying Funds Availability | Applying Funds Availability Rules

This guide is intended to help financial institutions comply with Regulation CC, Availability of Funds and Collection of Checks. Many institutions—in fact, 11 percent of those examined in 1998—have been cited for one or more violations of the regulation. Here are the four requirements that caused the most compliance problems that year:

• Providing exception notices about funds availability; including all required information
• Making funds from certain checks, including local and nonlocal checks, available for withdrawal within the times prescribed by the regulation
• Providing next-day availability on $100 of deposits not otherwise subject to next-day availability
• Following special procedures for large deposits.

    By highlighting the rules in these areas and giving examples illustrating application of the rules, this guide may answer your institution's questions about Regulation CC.

Regulation CC requires that financial institutions provide customers who have a transaction account with disclosures stating when their funds will be available for withdrawal; many institutions use the model disclosure statements included in Regulation CC. A common error is providing customers with a policy disclosure that does not reflect the practices followed by your institution in most cases. You can monitor whether your disclosed policy reflects your practices by comparing specific instances of deposit transactions with your institution’s disclosure statements to see if they are the same. If they are not, your institution must either change its practices or change its disclosure statements to reflect its practices. Verification should be done each time your institution’s funds availability practices are changed. Remember, while you are confirming that your disclosure statements match your practices, you should also verify that your practices conform to the regulation.

    Your institution is required to establish procedures to ensure that it complies with the requirements of Regulation CC and to provide a copy of these procedures to all employees who perform duties affected by the regulation. For example, employees who issue hold notices should be instructed on when to hold funds and how to notify customers that funds are being held.

    Your employees should also be instructed about providing availability disclosures. Such disclosures must be provided to customers before they open a new account. If the availability terms on an existing account are to be changed, a new disclosure should be provided to consumer customers 30 days before the change is implemented or, if the change will improve the availability of funds to the customer, no later than 30 days after the change becomes effective.

    Your institution must post, in each location where employees accept consumer deposits, a notice of your availability policy pertaining to consumer accounts. The notice must specifically state the availability periods for the various types of deposits that may be made to consumer accounts. The notice need not be posted at each teller window, but it must be posted in a place where consumers seeking to make deposits are likely to see it before making their deposits. For example, the notice might be posted at the point where the line forms for teller service in the lobby. The notice is not required at drive-through teller windows or at night depository locations, but it is required at all automated teller machines.

    Regulation CC requires that financial institutions include a notice of funds availability on the front of all preprinted deposit slips. The notice need state only that deposits may not be available for immediate withdrawal. The notice is required only on deposit slips that are preprinted with the customer’s name and account number and furnished by your institution in response to a customer’s order. It need not appear on deposit slips that are not preprinted—such as counter deposit slips—or on special deposit slips used to secure next-day availability for state and local government, cashier’s, certified, or teller’s checks. In addition, your institution is not responsible for ensuring that the notice appears on deposit slips that the customer does not obtain from or through you.

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Regulation CC states when deposits of various types must be made available to your customers, measured in business days following the banking day on which the deposit is made. Business days are defined as Mondays through Fridays except most federal holidays. A banking day is any business day (up to the bank’s cut-off hour) when your institution is open for substantially all of its banking activities. All references to the number of days to funds availability in this guide indicate maximum time limits for making funds available; your institution may provide earlier availability of funds if it chooses and may extend the time when funds are available up to periods set by Regulation CC on a case-by-case basis.

    The following types of deposits must be made available on the first business day following the banking day of deposit (“next-day availability”):

1. Cash deposited in person to one of your employees.

2. Electronic payments received by your institution for deposit in an account — An electronic payment is considered received (deposited) when your institution has received both payment in collected funds and information on the account and the amount to be credited. (Under other rules, funds for most electronic deposits are made available on the day of deposit.)

3. U.S. Treasury checks deposited in an account held by a payee of the check — Unlike deposit types listed in 4 through 8 below, which pertain to deposits made in person, Treasury checks deposited at an ATM owned by your institution (a “proprietary” ATM) must be accorded next-day availability.

4. U.S. Postal Service money orders deposited in person to one of your employees and into an account held by a payee of the check.

5. Federal Reserve Bank and Federal Home Loan Bank checks deposited in person to one of your employees and into an account held by a payee of the check.

6. State or local government checks deposited in person to one of your employees and into an account held by a payee of the check, if your institution is in the same state as the payor of the check. (Note: If the customer desires next-day availability of funds from these checks, you may require use of a special deposit slip.)

7. Cashier’s, certified, or teller’s checks deposited in person to one of your employees and into an account held by a payee of the check. (Note: If the customer desires next-day availability of funds from these checks, you may require use of a special deposit slip.)

8. Checks drawn on an account held by your institution (“on-us checks”) deposited in person to one of your employees or at on-premises ATMs or night depositories, if the branch or branches involved are in the same state or check-processing region.

9. Deposits that include some checks of types not listed above — The first $100 (or the total amount of the deposit if it is less than $100) of non-“next-day” checks must be made available the next day.

    Exceptions: When deposits of types 1, 4, 5, 6, and 7 are not made in person (for example, when they are made at one of your ATMs), the funds must be made available by the second business day. Deposits, cash or check, made at an ATM that you do not own (a “nonproprietary” ATM) must be made available by the fifth business day.

    For checks of types not discussed above, funds generally must be made available in accordance with a schedule specified in Regulation CC. That schedule varies depending on whether the check is considered “local” or “nonlocal.”

• A check is considered “local” if your institution is located in the same check-processing region as the paying institution. Funds from local checks must be made available by the second business day following the day of deposit.

• A check is considered “nonlocal” if your institution is not located in the same check-processing region as the paying institution. Funds from nonlocal checks must be made available by the fifth business day following the day of deposit.

    There are several minor exceptions to the two- and five-day availability rules. They involve, for example, certain checks deposited outside the continental United States and cash withdrawals from certain checks. A detailed explanation can be found in section 229.12 of Regulation CC.

    But remember—no matter whether the check is local or nonlocal, the first $100 of a deposit that is not already subject to next-day availability must be made available by the first business day following the day of deposit. This does not apply to deposits at nonproprietary ATMs and to deposits subject to certain exception holds. Further explanation can be found in section 229.13 of Regulation CC.

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For certain types of deposits, Regulation CC permits financial institutions to delay, for a “reasonable period of time,” the availability of funds. A “reasonable” time period is generally defined as one additional business day (making a total of two business days) for on-us checks, five additional business days (total of seven) for local checks, and six additional business days (total of eleven) for nonlocal checks; your institution may impose longer exception holds, but you may have the burden of proving that they are “reasonable.”

    If you decide to hold funds beyond the period specified in your institution’s general availability policy, you must give the customer a notice at the time of the deposit explaining why the funds are being held and when they will be available. If the deposit is not made in person to an employee of your institution or if you decide to extend the time when deposited funds will be made available after the deposit has been made, you must mail or deliver the notice to the customer not later than the first business day after the banking day on which the deposit is made.

    Deposits of cash and electronic payments are not eligible for exception holds. The six types of deposits that are eligible are

• Large deposits (greater than $5,000) — Any amount exceeding $5,000 may be held. Your institution must make the first $5,000 of the deposit available for withdrawal according to your availability policy and the remainder within the “reasonable” time frames discussed above.

• Redeposited checks — May be held unless the check was returned because an endorsement was missing or because the check was postdated. In such a case, if the deficiency has been corrected, the check may not be held as a redeposited check.

• Deposits to accounts that are repeatedly overdrawn — An account may be considered repeatedly overdrawn and items may be held if
  1. On six or more banking days during the previous six months the account had a negative balance, or would have had a negative balance had checks and charges been paid, or
  2. On two or more banking days during the previous six months the account balance was negative in the amount of $5,000 or more, or would have been had checks and charges been paid.

• Reasonable cause to doubt the collectibility of a check — Doubtful collectibility may exist for postdated checks, checks dated more than six months earlier, and checks that the paying institution has said it will not honor. The general criterion for doubting collectibility is “the existence of facts that would cause a well-grounded belief in the mind of a reasonable person” that the check is uncollectible. The reason for your belief that the check is uncollectible must be included in your notice to the customer.

• Checks deposited during emergency conditions that are beyond the control of your institution — Such checks may be held until conditions permit you to provide availability of the funds. Examples of emergency conditions are natural disasters, communications malfunctions, and other situations that prevent your institution from processing checks as it normally does.

• Deposits into accounts of new customers (open for less than 30 days) — Next-day availability applies only to cash, electronic payments, and the first $5,000 of any other next-day items; the remaining amount from next-day items must be available by the ninth business day. You may choose any availability schedule for deposits of local, nonlocal, and on-us checks into the accounts of these new customers.

For more information, contact the regional office of your federal supervisory agency: Federal Reserve, Office of the Controller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation.

For examples illustrating rules for withdrawals by check, see Applying Funds Availability Rules.

Regulations