Reg CC – It’s A Small World After All
November 3, 2009
William Repasky
The Board of Governors of the Federal Reserve has recently amended the routing number guide for next-date availability checks and local checks under Regulation CC.1 Regulation CC establishes the periods depository institutions may wait between receiving a deposit and making the deposited funds available for withdrawal. Generally, faster funds availability is required for “local check” deposits, versus “non-local.” A check is considered local if it is payable by, at, or through a bank located within the same Federal Reserve check-processing region as the depository bank.2 In other words, institutions whose Federal Reserve routing symbols are grouped under the same office are in the same check-processing region and thus are local to one another.
We all are well aware that overall check transaction volume has dropped significantly; a trend that is expected to continue. Pursuant to the cost recovery provisions of the Monetary Control Act, the Fed has responded to this trend by announcing its intention to transition to a single national check-processing center by the first quarter of 2010. That processing center will be located with the Federal Reserve Bank of Cleveland. Effective October 17, 2009 and November 14, 2009, respectively, the check-processing duties housed in Dallas and Los Angeles are being transferred to Cleveland. Not only will this effect commercial banks, savings institutions and credit unions in their funds availability obligations, this transition requires each to notify their account holders, who are consumers, within thirty (30) days after implementing a change that improves the availability of funds. See, §229.18(e) of Reg. CC. This means affected institutions must amend their funds availability schedules and related disclosures, if necessary, and to provide customers with corresponding notice.
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1 Federal Register, 10/15/09, pp. 52875-52877.
2 See also, Expedited Funds Availability Act, 12 USC §4001(13) (definition of “Local originating depository institution”).