What is REG CC
Posted on June 15, 2009 | What at mybiginfo.com | What is REG CC | | View all What | |
REG CC Act
The Expedited Funds Availability Act (EFAA), enacted in 1987, addresses the issue of delayed availability of funds by banks. The EFAA requires banks to (1) make funds deposited in transaction accounts available to their customers within specified time frames, (2) pay interest on interest-bearing transaction accounts not later than the day the bank receives credit, and (3) disclose their funds-availability policies to their customers. The EFAA is implemented by Regulation CC.
Regulation CC is divided into three subparts. Subpart A defines terms and outlines enforcement authority. Subpart B specifies schedules within which banks must make funds available for withdrawal, exceptions to the schedules, disclosure of funds-availability policies, and payment of interest. Subpart C contains rules to speed the collection and return of checks.
Additional disclosures are required on deposit slips, at ATMs, and when the policy is changed in any way.
The Expedited Funds Availability Act (EFA or EFAA) was enacted in 1987 by the United States Congress for the purpose of standardizing hold periods on deposits made to commercial banks and to regulate institutions’ use of deposit holds. It is also referred to as Regulation CC or Reg CC, after the Federal Reserve regulation that implements the act. The law is codified in Title 12, Chapter 41 of the US Code and Title 12, Part 229 of the Code of Federal Regulations.
Regulation CC stipulates four types of holds that a bank may place on a check deposit at its discretion. Each has its own qualifications and it is legal for the bank to place any type where the requirements are met, although bank policy may instruct that the type of hold placed be the one that holds the most funds the longest that can be applied legally.
Furthermore, each type of hold has varying availability schedules based on whether the check is local or non-local. All checks whose routing transit number falls under the same Federal Reserve “check processing office” as the bank receiving the check, as listed in Appendix A of Part 229 (Regulation CC), are considered local; all others are non-local. Check processing offices are no longer tied to the Federal Reserve Bank (or branch) serving the area; their regions may even cross Reserve District boundaries. The Federal Reserve has been combining check processing offices since 2003; they expect to have no more than four such offices nationwide by 2010.
Enforcement of the REG CC
Under the act, enforcement is divided by the type of institution, respective to each type’s mandated oversight authority:
* For national banks, and federal branches and agencies of foreign banks, the act is enforced by the Office of the Comptroller of the Currency;
* For members of the Federal Reserve System who are not national banks, and for offices, branches, and agencies of foreign banks located in the United States (who are not federal branches and agencies of foreign banks), the provisions are enforced by the Board of Governors of the Federal Reserve;
* In the case of banks insured by the Federal Deposit Insurance Corporation who are not members of the Federal Reserve System, and insured state branches of foreign banks, enforcement falls to the Board of Directors of the FDIC;
* The Director of the Office of Thrift Supervision is responsible for enforcing the provisions of the act in the case of savings associations whose deposits are insured by the FDIC;
* Federal credit unions or credit unions insured by the National Credit Union Share Insurance Fund are subject to enforcement of the act by the National Credit Union Administration Board.
Awards for damages are limited under the regulation, including not more than $1000 in addition to actual damages for individual actions, and not more than the lesser of $500,000 or 1% of the net worth of the bank, in addition to actual damages, for class actions.
Regulation CC
Sec. 229.1 Authority and purpose; organization.
(a) Authority and purpose. This part is issued by the Board of Governors of the Federal Reserve System (Board) to implement the Expedited Funds Availability Act (12 U.S.C. 4001-4010 ) (the EFA Act) and the Check Clearing for the 21st Century Act (12 U.S.C. 5001-5018) (the Check 21 Act).
(b) Organization. This part is divided into subparts and appendices as follows–
(1) Subpart A contains general information. It sets forth–
(i) The authority, purpose, and organization;
(ii) Definition of terms; and
(iii) Authority for administrative enforcement 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 withdrawal, including availability schedules. Subpart B of this part also contains rules regarding exceptions to the schedules, disclosure of funds availability policies, payment of interest, liability of banks for failure to comply 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 return of checks, the manner in which the paying bank and returning banks must return checks to the depositary bank, notification of nonpayment by the paying bank, indorsement and presentment of checks, same-day settlement for certain checks, the liability of banks for failure to comply with subpart C of this part, and other matters.
(4) Subpart D of this part contains rules relating to substitute checks. These rules address the creation and legal status of substitute checks; the substitute check warranties and indemnity; expedited recredit procedures for resolving improper charges and warranty claims associated with substitute checks provided to consumers; and the disclosure and notices that banks must provide.
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