CHOCOLATE BAYOU COMMUNITY FEDERAL CREDIT UNION (CBCFCU)
Expedited Funds Availability Policy
The intent of this Board of Directors approved policy is to comply with all sections of the Federal Reserve Board’s Regulation CC which implements the Expedited Funds Availability Act. Regulation CC, establishes time limits for holds on deposits by check, cash and wire transfer. Additionally, they establish rules regarding the prompt collection and return of checks through the banking system.
CBCFCU acknowledges that administrative enforcement of the regulation is governed by NCUA.
The funds availability rules only apply to certain accounts – transactions accounts (such as share draft accounts) or savings/share accounts that do not comply with the monthly transaction limits imposed by Regulation D (monetary reserve requirements). Checks put into share accounts that do comply with the Reg D reserve restrictions and other non-transactions accounts at depository institutions are not subject to Reg CC rules.
Is one which the account holder is permitted to make unlimited transfers or withdrawals by negotiable or transferable instrument, payment order of withdrawal, telephone transfer, electronic payments to third persons others. This will include third party payments at an automated teller machine (ATM) or remote service unit or other electronic device.
Means the first bank to which a check is transferred even though it is also the paying bank or the payee. A check deposited in an account is deemed to be transferred to the bank holding the account into which the check is deposited, even though the check is physically received and indorsed first by another bank.
A “business day” is defined under Reg CC as a calendar day other than a Saturday or a Sunday,
January 1, the third Monday in January, the third Monday in February, the last Monday in May, July
4, the first Monday in September, the second Monday in October, November 11, the fourth Thursday
in November, or December 25. If January 1, July 4, November 11, or December 25 fall on a Sunday,
the next Monday is not a business day. On the other hand, a “banking day” means that part of any
business day on which an office of a bank or credit union is open to the public for carrying on
substantially all of its banking functions.
There are no longer “nonlocal checks” (even though the Fed has yet to amend its regulations and model form language). With all checks classified as “local,” funds availability has been accelerated throughout the United States.
Remotely Created Check:
A check that is not created by the paying institution and that does not bear a signature applied by the person on whose account the check is drawn. For example, a remotely created check is a check authorized by a consumer over the telephone that is not created by the paying institution and bears a legend on the signature line, such as “Authorized by Drawer”.
Your Ability to Withdraw Funds
Our policy is to make funds from your cash and check deposits available to you on the first business day after the day we receive your deposit. Electronic direct deposits will be available on the day we receive the deposit. Once they are available, you can withdraw the funds in cash and we will use the funds to pay checks that you have written.
For determining the availability of your deposits, every day is a business day, except Sundays, and federal holidays. If you make a deposit before posted closing time on a business day that we are open, we will consider that day to be the day of your deposit. However, if you make a deposit after the posted closing time or on a day we are not open, we will consider that the deposit was made on the next business day we are open.
Longer Delays May Apply
In some cases, we will not make all of the funds that you deposit by check available to you on the first business day after the day of your deposit. Depending on the type of check that you deposit, funds may not be available until the second business day after the day of your deposit.
The first $200 of your deposits may be available on the first business day. If we are not going to make all of the funds from your deposit available on the first business day, we will notify you at the time you make your deposit. We will also tell you when the funds will be available. If your deposit is not made directly to one of our employees, or if we decide to take this action after you have left the premises, we will mail you the notice by the day after we receive your deposit. If you will need the funds from a deposit right away, you should ask us when the funds will be available.
In addition, funds you deposit by check may be delayed for a longer period, available on the 7 business day under the following circumstances:
- We believe a check you deposit will not be paid.
- You deposit checks totaling more than $5,000 on any one day.
- You redeposit a check that has been returned unpaid.
- You have overdrawn your account repeatedly in the last six months.
- There is an emergency, such as failure of computer or communications equipment.
- Extension of schedule by one business day for certain deposits in Alaska, Hawaii, Puerto Rico and US Virgin Islands.
- Evidence suggests forgery or fraud.
- Extensions of schedule by one business day for check deposited on or payable at or through a paying bank not located in the same state as the depositary bank.
We will notify you if we delay your ability to withdraw funds for any of these reasons, and we will tell you when the funds will be available.
Notice of Hold
If the credit union decides to impose a case-by-case hold, the notice must be given at the time of deposit unless the deposit is not made in person to a credit union employee or unless the institution decides after the deposit is made to delay availability of the funds. If the notice is not given at the time of deposit, it must be sent by the next business day after the day of deposit. If for some reason the credit union fails to deliver notice at the time of the transaction, the credit union will refund any return check fees or overdraft fees assessed. The notice will include:
- Statement that the credit union is holding the funds;
- Reason for the hold;
- Member’s name and account number;
- Date and amount of deposit; and
- Date the funds will be available.
- Statement of how to obtain a refund of retained share draft fees or overdraft fees if the notice is not given at the time of the transaction, and share draft is paid.
Notice may be delivered by fax or e-mail if the member agrees to receive such information in this manner and if it can be downloaded and printed.
“Reasonable” Additional Holds
In Section 229.13(h) of the regulation, the credit union may exercise their authority to place reasonable holds. There are six exceptions to the general availability rules that are explained here. A credit union can extend the time period it will hold a check “by a reasonable period of time”. Section 229.13(h) and the Commentary defines “reasonable time” as one extra business day for cashier’s, teller’s, certified checks, and “on us” checks otherwise subject to next day availability, five (5) extra business days for checks subject to second business day availability (meaning up to 7-day-holds), and six (6) extra business days for checks deposited in nonproprietary ATMs (which would provide the possibility of holding checks deposited into nonproprietary ATMs the longest possible hold period of 11 days). To extend a hold beyond the dates the Fed has laid out in this section of the Expedited Funds Availability Act, “the burden is placed on the [credit union] to establish that a longer period is reasonable.”
Certain Check Deposits
The following are generally made available the next business day after the day of deposit unless there is an exception:
US Treasury checks deposited into the payee’s account.
Funds received for deposit in an account by an electronic payment (wire transfer or ACH credit) shall be made available for withdrawal the next business day after the day of receipt. An electronic payment is considered received when the credit union receives both the payment in finally collected funds and also receives information on the account and amount to be credited.
However, a pre-authorized direct deposit must be available the same day the funds are collected.
Under Expedited Funds Availability, the Credit Union Has Authority To
- Shorten the withdrawal time periods allowed underExpedited Funds Availability Act hold periods.
- Accept or reject a check for deposit.
- Revoke a settlement made by the credit union or charge back the member’s account.
- Open or not open its facilities and branches at its discretion.
- Limit the cash withdrawals on any one day from accounts if the limitation is:
- not dependent on the length of time funds have been deposited;
- applied without discrimination to all members; anrelated to security requirements.
- For non-consumer accounts, use a sample of deposits to calculate availability if, on average, availability is as prompt as Expedited Funds Availability Act requirements.
Funds that are to be made available on a business day must be available by the later of 9:00 a.m. local time or when the credit union’s teller facilities are available for member withdrawals.
Special Rules for New Accounts
If you are a new member, the following special rules will apply during the first 30 days your account is open.
Funds from electronic direct deposits to your account will be available on the day we receive the
deposit. Funds from deposits of cash, wire transfers, and the first $5,000 of a day’s total deposits of cashier’s, certified, teller’s, travelers, and federal, state and local government checks will be available on the first business day after the day of your deposit if the deposit meets certain conditions. For example:
- the checks must be payable to you (and you may have to use a special deposit slip). The excess over $5,000 will be available on the ninth business day after the day of your deposit. If your deposit of these checks (other than a U.S. Treasury check) is not made in person to one of our employees, the first $5,000 will not be available until the second business day after the day of your deposit.
- Funds from all other check deposits will be available on the 9th “business” day after the day of your deposit.
Disclosures shall be made clearly and conspicuously in writing in a form the member may keep. However, the credit union may provide the disclosures in an electronic format that displays text and is in a form the member may keep or retain and agrees to such means of disclosure.
- The disclosures must be grouped together and separated from other unrelated
- Credit Union will post its availability policy at a conspicuous place in every location where deposits are accepted
- The disclosure shall state and summarize the credit union’s funds availability policy.
- The disclosure shall be given to the member prior to account opening.
- The credit union will provide a copy of its funds availability policy to any member who requests a copy.
- The disclosure shall describe categories of deposits or checks for which the credit union delays availability of funds.
- The disclosure shall describe the credit union’s business days and the time a deposit is considered to be received.
- The disclosure shall describe any exceptions that may be invoked as well as when the funds will generally be available. It shall state that the credit union will provide a notice to the member if an exception hold is invoked.
- If the credit union makes funds available from deposits at non-proprietary ATMs, the disclosure must describe how a member can differentiate between a proprietary and a non-proprietary ATM. At this time the credit union does not allow deposit to be made through ATMs.
- The credit union may make funds available sooner than required by Regulation CC, the credit union may provide for longer delays on a case-by-case basis by providing the following information in its initial disclosure:
- a statement that the time for availability of deposits may be extended insome cases and the latest time that funds will be available for withdrawal,
- a statement that the credit union will notify the member if funds will be heldfor longer time periods.
- a statement that members should ask if they need to know when a particulardeposit will be available.
Additional Compliance Requirements
- When CBCFCU uses deposit slips, they shall contain a statement that funds may not be available for immediate withdrawal.
- CBCFCU shall post notices at each location where member deposits are received that sets forth the time periods applicable to availability of funds deposited in an account.
- Upon request, CBCFCU shall provide any person with their specific availability disclosure.
- Before changing its availability policy, CBCFCU shall provide a notice of change to all affected account holders at least 30 days prior to the change. If the change expedites the availability of funds, notice may be given within 30 days after the change takes place.
- Funds are considered deposited at CBCFCU when:
- Received at a staffed facility.
- Received by the credit union if mailed.
- Removed from a night depository box.
It is the policy of CBCFCU to comply with Subpart C, Substitute Checks of the Expedited Funds Availability Act as it relates to:
- Paying Bank’s Responsibility for Return of Checks, Section 229.30, Return of Checks: A “paying credit union” that decides not to pay a check, must return the check in an expeditious manner under either the “two-day” test or the “forward-collection” test
- Returning Bank’s Responsibility for Return of Checks, Section 229.31, Return of Checks: The standards for return of checks under this section are similar to those for paying credit unions in section 229.30(a) above. This section requires a bank to return a check expeditiously under the two-day test or the forward-collection test described above.
- Depositary Bank’s Responsibility for Returned Checks, Section 229.32, Acceptance of Returned Checks: A depositary bank should accept returned checks and written notices of nonpayment:
- Notice of Nonpayment, Section 229.33, Requirement: If a paying credit union decides not to pay a check equal to or greater than $2,500, it must provide a notice of nonpayment to the depositary bank prior to 4:00 p.m. on the second business day following the business day the check was received
- Warranties, Section 229.34, Warranties: Each paying or returning institution that transfers a returned check and receives a settlement or other consideration for it, warrants to the transferee returning institution, to any subsequent returning institution, to the depositary institution, and to the owner of the check that meet certain criteria.
Transfer and Presentment Warranties with Respect to a Remotely Created Check:
A financial institution that transfers or presents a remotely created check and receives a settlement or other consideration warrants to the transferee institution, any collecting institution, and the paying institution that the person on whose account the remotely created check is drawn authorized the issuance of the check in the amount stated on the check and authorized payment to the payee stated on the check.
- Endorsements, Section 229.35, Endorsement Standards. Financial institutions are required to use a standard form of endorsement when indorsing checks during the forward-collection and return process. The standard provides for endorsements by all collecting and returning banks, with unique requirements for depositary institutions. These standards are designed to facilitate faster handling of returned checks and the identification of the depositary institution. The standards include requirements for the location, content, and ink color of the endorsement.
- Presentment and Issuance of Checks, Section 229.36, Payable-through and Payable-at Checks: A check payable at or through a paying institution is considered drawn on that institution.
- Variation by Agreement, Section 229.37
- The effect of the provisions of Subpart C may be varied by agreement, except that no agreement may disclaim the responsibility of an institution for its own lack of good faith or failure to exercise ordinary care, or can limit the measure of damages for such lack of care or failure. The parties may agree upon the standards by which such responsibility is to be measured so long as the standards are not manifestly unreasonable.
- Liability, Section 229.38, Standard of Care, Liability, Measure of Damages: All institutions must exercise ordinary care and act in good faith in complying with the requirements of this subpart. An institution that fails to exercise ordinary care or act in good faith may be liable to the depositary institution, the depositary institution’s customer or member, the owner of the check, or another party to the check. The measure of damages for failure to exercise ordinary care is the amount of the loss incurred, up to the amount of the check, reduced by the amount of the loss that party would have incurred even if the institution had exercised ordinary care.
It is the policy of CBCFCU to comply with Subpart D, Substitute Checks of the Expedited Funds Availability Act as it relates to:
- General Provisions Governing Substitute Checks, Section 229.51
- Legal Equivalence of an original check, Section 229.52.
- Substitute Check Warranties, Section 229.52.
- Substitute Check Indemnity Claim, Section 229.53
- Expedited Re-credit for Consumers, Section 229.54
- Expedited Re-credit for Financial Institutions, Section 229.55
- Consumer Awareness, Section 229.57, disclosure and distribution of Substitute Check Policy
- Mode of Delivery of Information, Section 229.58
- Relation to Other Law, Section 229.59
- Variation by Agreement, Section 229.60
Failure to Comply With the Regulation
CBCFCU shall comply with the Civil Liability and Record Retention, Section 229.21 of the Expedited Funds Availability
- Act and is aware of the following liability for:Actual damages.
- Additional amounts of not less than $100 or more than $1,000
- Class Action damages of not more than $500,000 or 1 percent of the institution’s net worth,
- whichever is less.
- Reasonable court costs and attorney’s fees as determined by the court.
Administrative Enforcement, Section 229.3 Covers compliance with Regulation CC is enforced by the NCUA for federal credit unions and federally insured state-chartered credit unions.
Records and other evidence of compliance with the Expedited Funds Availability Act shall be retained for at least two years. The credit union is required to keep records until a final disposition if notified of an investigation or enforcement proceeding involving records relating to funds availability.
CBCFCU understands the importance of exercising ordinary care and acting in good faith in complying with Standard of Care, Liability and Measure of Damages. If any institution fails to exercise ordinary care or act in good faith may be liable to the depositary institution, the depositary institution’s customer or member, the owner of the check, or another party to the check. The measure of damages for failure to exercise ordinary care is the amount of the loss incurred, up to the amount of the check, reduced by the amount of the loss that party would have incurred even if the institution had exercised ordinary care.