Expedited Funds Availability Act -- Regulation CC: Part 2
This blog is part two of a three-part series which reviews the different deadlines for making funds available under Regulation CC's funds availability rules. Specifically, 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. In our previous blog (Regulation CC: Part 1), we discussed the cash and electronic availability rules for when funds are available after being deposited into an account. Today's blog will review the different rules for when check funds must be made available.
It is important to note that remote deposit capture (RDC) does not seem to fit within the strict reading of Regulation CC's definitions of a check deposit. Consequently, the funds availability rules for checks, found in Subpart B of Regulation CC, do not apply to RDC checks. Instead, it would be a credit union's contract or state law that governs RDC availability. Of course, if a credit union's RDC agreement indicates the credit union will follow Regulation CC's funds availability schedule, it would be contractually bound to follow Regulation CC. With that said, let's dive into checks that are subject to Subpart B. Stay tuned for part three of this blogs series which will discuss the check availability exceptions.
Next Day Availability for Checks
Certain check funds must be made available on the "next day." This refers to the first business day after the banking day on which the deposit is received. The rules for next day availability are found in section 229.10.
Section 229.10(c) provides that only certain checks will receive "next day availability." If a check qualifies for "next-day availability," then the credit union will be required to make the entirety of the check funds available on the next business day after the banking day of deposit, unless one of the exceptions under section 229.13 is invoked.
As mentioned above, not all checks qualify for next-day availability. Section 229.10(c)(1) provides the list of checks that can qualify for next-day availability, and many of those checks will only receive next-day availability if specific conditions are met. Here is a chart that discusses the types of checks and conditions that must be satisfied for next-day availability to apply:
| Type of Check | Conditions that must be met | Citation |
| U.S. Treasury Checks | Must be deposited into an account held by a payee of the check. |
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| U.S. Postal Service Money Orders | Must be deposited: (1) Into an account held by a payee of the money order; and (2) In-person to an employee of the credit union. |
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| Checks Drawn on a Federal Reserve Bank or Federal Home Loan Bank | Must be deposited: (1) Into an account held by a payee of the check; and (2) In-person to an employee of the credit union. |
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| Check drawn by a state or a unit of general local government | (1) Into an account held by a payee of the check; (2) Into a depositary [credit union] located in the state that issued the check, or same state as the unit or general local government that issued the check; (3) In-person to an employee of the credit union; and (4) Using a special deposit slip or envelope, if required by the credit union under section 229.10(c)(3). |
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| Cashier's Check; Certified Check; or Teller's Check | Must be deposited: (1) Into an account held by a payee of the check; (2) In-person to an employee of the credit union; and (3) Using a special deposit slip or envelope, if required by the credit union under section 229.10(c)(3). |
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| On-Us Checks | Must be deposited in a branch of the depositary credit union |
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As the chart illustrates, section 229.10 requires that certain checks be deposited in-person to an employee of the credit union in order to receive next-day availability. If those checks are not deposited in-person to an employee of the credit union, then section 229.10(c)(2) states that the credit union "shall make funds deposited… available for withdrawal not later than the second business day after the banking day on which funds are deposited…"
Normal or Second-Day Availability Schedule
If a member deposits a check or multiple checks not subject to "next day availability," then section 229.10(c)(vii) requires that the first $275 of the funds from the check (or $275 in the aggregate if there are multiple checks) be made available on the next day (i.e. the next business day after the banking day of deposit). Thus, even checks not covered in the chart above still receive up to $275 of "next-day availability." Beyond that initial $275, the funds will be subject to the availability rules found in section 229.12, which requires that the entire remainder of the funds (above the $275) must be made available by the 2nd business day.
However, section 229.12(d) states that only $550 of those funds must be made available "for withdrawal by cash or similar means." The term "similar means" is defined to include "electronic payment, issuance of a cashier's or teller's check, or certification of a check, or other irrevocable commitment to pay." Thus, while the regulation requires the entire amount to be made available by the 2nd business day, in practical terms only $825 (the original $275 plus $550) needs to be made available for withdrawal by cash, to make electronic payments, for issuance of cashier's or teller's checks, and more. By the 3rd business day, the entirety of the funds must be made available for all purposes, including withdrawal by cash or similar means, unless the credit union invokes one of the exception-holds discussed in section 229.13.
The chart below discusses the normal timeline of availability for checks not subject to next-day availability:
| Amount | Available for… | Availability Deadline | Citation |
| $275 | Any type of use or withdrawal | Next business day after banking day of deposit | §229.10(c)(1)(vi) |
| $825 (original $275 plus additional $550) | Withdrawal by cash or similar means | 2nd business day after banking day of deposit | §229.12(d) |
| Entire funds | Uses other than "withdrawal by cash or similar means" | 2nd business day after banking day of deposit | §229.12(b)& (d) |
| Entire funds | Any type of use or withdrawal | 3rd business day after banking day of deposit | §229.12(d) |
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.
