Expedited Funds Availability Act -- Regulation CC: Part 1

Our compliance team regularly receives questions on Regulation CC's funds availability rules. Subpart B of the Federal Reserve's Regulation CC sets forth the timing rules for when various deposits must be made available for use, the exceptions to the general availability rules, and the funds availability disclosures. The funds availability rules are found between section 229.10 (Next-Day Availability), section 229.12 (Normal Availability Schedule), and section 229.19 (Miscellaneous). When funds must be made available is measured by the number of business days following the banking day on which the deposit is made. Business days are defined as Mondays through Fridays with the exception of federal holidays. A "banking day" is defined as "that part of any business day on which an office of a bank is open to the public for carrying on substantially all of its banking functions."

This blog is part one of a three-part series which will review the different deadlines for making funds available which are imposed by the regulation. Please note that while this blog provides the maximum time limits for making funds available, a credit union may make funds available in a shorter period of time. In fact, some state laws may provide for faster crediting of funds than Regulation CC requires. Section 229.20 explains that any state law or regulation that was in effect on or before September 1, 1989, and requires a shorter funds availability timeframe supersedes the Expedited Funds Availability Act and Reg CC's timing requirements.

Below is a brief overview of the cash and electronic availability rules explaining when funds are available after being deposited into an account. Part two of the Regulation CC blog series will discuss availability of checks and part three will discuss the check availability exceptions to the funds availability rules.

Availability of Cash

For deposits of funds in cash, section 229.10(a) discusses when the funds must be made available to the member. Notably, the deadline depends on whether the cash is deposited in-person to an employee of the credit union. Section 229.10(a)(1) states that cash deposited in-person to an employee of the credit union must be made available for withdrawal "not later than the business day after the banking day on which the cash is deposited," also known as "next day availability." If the cash is not deposited in-person to a credit union employee, section 229.10(a)(2) states that the funds shall be made available for withdrawal "not later than the second business day after the banking day on which the cash is deposited" (emphasis added). Finally, section 229.12(f) states that: "A [credit union] shall make funds deposited in an account at a nonproprietary ATM by cash… available for withdrawal not later than the fifth business day following the banking day on which the funds are deposited." Thus, cash deposited into a nonproprietary ATM does not need to be made available until the fifth business day after the banking day of deposit.

Here is a chart that summarizes these deadlines:

Availability of Electronic Payments

Generally, electronic payments are eligible for next day availability. Electronic payments are defined as a "wire transfer or an ACH credit transfer." Section 229.10(b)(1) states that funds received for deposit in an account by an electronic payment must be made available for withdrawal "not later than the business day after the banking day on which the bank received the electronic payment." An electronic payment is received when the credit union has received both payment in finally collected funds, the payment instructions indicating the customer accounts to be credited, and the amount to be credited to each account.

In addition to the above information, the Federal Reserve's Regulation CC Compliance Guide provides a comprehensive overview of the requirements.

Questions? Suggestions for future blog posts? Contact the Compliance Team at compliance@americascreditunions.org.