Description
Reg CC can be a confusing mess for even the most seasoned compliance professionals.
At one time, financial institutions held newly deposited funds for as long as they liked, to ensure they received the money before releasing it to the depositor. In theory, that was great, but abuses prevailed. Customers didn’t know when their money was actually theirs to use, and Congress stepped in.
When that happened back in 1987, checks were still physically transported from one processing region to another, so a whole schedule was needed to establish reasonable collection times. Fast forward a few decades, and everything is different. The days of “non-local checks” are long gone, and deposits can now be processed in seconds, not days. Not only that, but funds can be deposited every which way. Who would have ever thought we’d be taking pictures of a check with a phone, or zapping funds with “an app for that”! Not Congress in 1987, that’s for sure.
Change is good, and Reg CC has (kind of) attempted to keep up, although it hasn’t been cleaned up along the way. Nope. Old, outdated and irrelevant content is still there, mucking up the works and making things confusing. You need to know what can be ignored, and what demands crystal-clear understanding.
Reg CC will drive you crazy if you don’t get a handle on it. You will get holds wrong, consumer harm will result, examiners will criticize, and your boss will become cross. You will mishandle mobile deposits and make them available more quickly than you need to, opening your institution up to unnecessary risk.
Become the noble hero of your institution, by procuring a good understanding of:
- Subpart A:
- Definitions of everything you need to know– from (a) to (hhh)!
- Subpart B:
- Next-day availability
- Availability schedule (what is left of it)
- Case-by-case holds
- Exception holds
- New Account holds
- Disclosure requirements: what, when, where, and how
- Subpart C:
- Collection of checks
- Electronic checks
- Mobile deposits!
- Responsibilities of paying and returning banks
- Subpart D:
- Substitute Checks
- Disclosure requirements under Check 21
- Appendices:
- What is garbage and what matters
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