Regulation CC is a set of rules issued by the Federal Reserve Board (FRB) that pertains to the availability of funds and collection of checks. The regulation sets out the procedures and time frames for when funds from deposited checks must be made available to account holders, and when financial institutions must return or pay checks.
It also includes provisions for the handling of substitute checks, which are electronic versions of original paper checks that meet certain standards established by the FRB.
The regulation also includes the expedited funds availability schedule (EFAS) which is a set of timeframes for when funds from deposited checks must be made available to account holders. These timeframes vary depending on the type of check, the location of the depositor and the depository institution, and other factors.
The regulation also includes provisions for the handling of returned checks, including the time frame for returning checks, the fees that can be charged for returned checks, and the liability of the depositor and the financial institution for returned checks.
Regulation CC also includes provisions for the handling of disputes related to the availability of funds and the collection of checks, including procedures for resolving disputes and the liability of the financial institution for errors.
Overall, the regulation is important in ensuring that the process of depositing and clearing checks is efficient, consistent and fair for both financial institutions and account holders. It helps to prevent errors, delays and disputes in the check collection process. It’s important to note that regulations are subject to changes and updates, it’s always good to check the current version of the regulation.
Regulation CC Importance:
Regulation CC, also known as the Expedited Funds Availability Act, is a federal regulation that sets rules and standards for how quickly banks must make deposited funds available to customers. It also sets limits on the amount of time that banks can hold certain types of deposits, such as checks. This regulation is important because it helps to ensure that consumers have access to their funds in a timely manner, and also helps to prevent banks from engaging in practices that could be considered unfair or discriminatory. Additionally, it helps to ensure that banks are able to manage their funds effectively, by setting clear guidelines for when funds must be made available and when they can be held.
Some of the provisions of Reg CC include:
- Availability of Funds and Collection of Checks: Banks must make deposited funds available for withdrawal by their customers according to specific rules and schedules, and must also collect checks presented to them for payment in a timely manner.
- Holds on Deposits: Banks may place holds on deposited funds if they have reason to believe that a check will be returned unpaid, or if they suspect fraud.
- Liability for Unauthorized Transactions: Banks are liable for unauthorized transactions on a customer’s account, subject to certain limits.
- Disclosure Requirements: Banks must provide their customers with certain information about the availability of their deposited funds and the bank’s check-holding policies.
- Substitute Checks: Banks are required to accept substitute checks, which are electronic or paper copies of original checks, in the same way as original checks for check-clearing and settlement purposes.
- Expedited Funds Availability Act (EFAA) requirements: Banks must make funds from electronic deposits available to customers faster than from paper check deposits.
Electronic Check Conversion (ECC): Banks must provide notice to the consumer when a check is converted to an electronic funds transfer (EFT) and provide consumer with the option to opt-out of the ECC process.