First, let me explain that we're a 'pay all' bank, which means all items are posted and then unposted if necessary.

Recently, a customer brought in an on-us check from another customer for deposit. The depositor knew that the check was NSF and wanted to have it dishonored at the teller line. The teller told him that she was not allowed to do that, and he would have to deposit the check and let it be dishonored in the back office. So he did.

The teller did not place a hold on the deposit, so the next day, the depositor showed up and withdrew the amount of the check (closing his account).

My contention is that the teller knew the item was not good, and should have placed a hold on it. I'm being told by my teller supervisor that we can't put a hold on an on-us check.

Anybody know for sure?

Thanks
Ed Lampman
Community Bank & Trust

229.13(c) allows banks to place exception holds on items that have been returned unpaid.

For a nex-day items, such as an on-us check, you could have placed a hold for one additional day, giving availability on the second business day after the date of the deposit. See 229.13(h).

That would have allowed you to bounce the check again before the funds were available.