How You Should Respond to Reg CC and the New RuleĪs the Federal Reserve recognized the primarily all-electronic nature of check processing, one final rule took effect July 1, 2018. Substitute Checks: The final section of Reg CC details the conditions when certified duplicate copies of checks should be issued and how consumers should be notified of that issuance.Collection of Checks: The third section of Reg CC allocates how paying and returning banks are responsible for bounced checks, how and when they must notify their customers of nonpayment, and how checks must specifically be endorsed in order to be accepted by financial institutions.A vailability of Funds and Disclosure of Funds Availability Policies: This section spells out exactly when banks must make funds available to consumers, when they must start accruing interest on interest-bearing accounts, and how and when banks must disclose fund availability to their customers.General: This introductory section describes which federal banking regulatory agencies are responsible for maintaining Reg CC compliance, how key terms are defined in the regulations, and what the purpose of the regulations are. It’s split up into four subparts, each outlining a different set of check-related regulations. The Federal Reserve’s implementation of the EFAA is known as Regulation CC (Reg CC). What Reg CC Means for Financial Institutions They also could indiscriminately place holds on checks. Banks and financial institutions were not required to notify their customers when funds became available for withdrawal. Prior to the EFAA, financial institutions could create and follow their own deadlines for check processing. “The Expedited Funds Availability Act (EFAA) of the late 1980s created protocols for financial institutions, including disclosure requirements and timeframes for funds availability” The legislation created protocols for financial institutions, including disclosure requirements for available funds and time frames for fund availability. To standardize how and when banks process checks, Congress passed the Expedited Funds Availability Act (EFAA) in the late 1980s.
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