We provide a collection service. In doing so we accept payment from a buyer & apply this payment to an escrow account. We immediately debit the escrow account for the payment amount and credit the seller’s transaction account(immediate but provisional credit). Do we have the right to invoke Reg. CC holds on the disbursement/deposit to the seller’s account?

I don’t believe Reg. CC applies as the deposited funds are credited to the escrow account prior to hitting the transaction account. Any opinions on this?

I think that this would fall under the contract that you have with the seller to perform this collection service. I would think that if you get bad checks in you would charge some sort of a fee in the attempt to collection them or that you would not credit them to the seller until they were collected - as such you seem to be taking all the risk on potential bad checks..