The area that works mobile deposits has started using “Information from the paying bank indicates that the check may not be paid” as the reason for an Exception Hold. Should the information from the paying bank be noted on the bank’s copy? I have concerns that the “other bank” was not contacted, and therefore, there is no information.

You cover your mobile deposits under Regulation CC in your agreements? Why?

We have but are working on removing the Regulation CC from the mobile deposit agreements but are still working on the redisclosures.

If the checks are deposited in the branch, should the information from the paying bank be noted on the bank’s copy?

If you are not contacting the paying bank, how can you use a reasonable cause exception? THe reason would be based on what they told you unless you thought it was confidential information.

(e) Reasonable cause to doubt collectibility--

(1) In general. Sections 229.10(c) and 229.12 do not apply to a check deposited in an account at a depositary bank if the depositary bank has reasonable cause to believe that the check is uncollectible from the paying bank. Reasonable cause to believe a check is uncollectible requires the existence of facts that would cause a well-grounded belief in the mind of a reasonable person. Such belief shall not be based on the fact that the check is of a particular class or is deposited by a particular class of persons. The reason for the bank's belief that the check is uncollectible shall be included in the notice required under paragraph (g) of this section.

And comment 229.13(e)-2.d.:

d. There are reasons that may cause a bank to believe that a check is uncollectible that are based on confidential information. For example, a bank could conclude that a check being deposited is uncollectible based on its reasonable belief that the depositor is engaging in kiting activity. Reasonable belief as to the insolvency or pending insolvency of the drawer of the check or the drawee bank and that the checks will not be paid also may justify invoking this exception. In these cases, the bank may indicate, as the reason it is invoking the exception, that the bank has confidential information that indicates that the check might not be paid.

And comment 229.13(g)-5:

5. Record retention. A depositary bank must retain a record of each notice of a reasonable cause exception for a period of two years, or such longer time as provided in the record retention requirements of §229.21. This record must contain a brief description of the facts on which the depositary bank based its judgment that there was reasonable cause to doubt the collectibility of a check. In many cases, such as where the exception was invoked on the basis of a notice of nonpayment received, the record requirement may be met by retaining a copy of the notice sent to the customer. In other cases, such as where the exception was invoked on the basis of confidential information, a further description to the facts, such as insolvency of drawer, should be included in the record.