I just returned from a session where the consultant stated that Reg CC did not apply to remote deposit capture (he wasn't referring to converted items falling under Reg E)....I can't find any regulatory support for this. Does anyone else have any thoughts or a different opinion?

I think he's full of poo. A check in remote deposit capture is still a check and would follow all applicable check rules.

Now, if the check had been converted to ACH it follows under NACHA rules. If the account is a consumer, then add Reg E as well.

Section 229.19 of Reg CC establishes when deposits are received by a bank. Under that section the determination as to when the deposit is received is based on the location of the staffed facility, ATM or contractual branch at which the funds are deposited. Since with a remote deposit the funds are not deposited at any of the locations described in the Reg, I've read that that there has been an unofficial interpretation by a Federal Reserve Board staff attorney which states the images of the remotely captured checks are not subject to the availability requirements of Reg CC. They suggest that the issue of availability and the period of time for which funds may be held would be resolved by agreement between the parties. Maybe this is what the speaker was referring to.

Do you remember where you read that information? I've now heard that it was a private attorney who talked to someone at the OCC, or it was an unofficial statement by a regulator - anyway, I'm don't think I can base any decision on those sources. Maybe I don't get it, but it would seem that the reason 229.19 doesn't address remote capture is because it didn't exist at the time the reg was written, not necessarily because they didn't intend the reg to cover such a situation.

The check -- image or otherwise -- gets received by a depositary bank at some time. I suspect we'll be getting a clarification by the Fed soon on this issue. But suggesting that remotely captured items won't be subject to Reg. CC rules based on third-hand oral information is the stuff of nightmares.

If you don't see it in writing from the Fed, it ain't reliable.

Agreed!

Reviving old thread. The info about Reg CC not applying to remote deposit capture is found in a white paper posted on the Internet by NetDeposit.
Any further information or interpretations on this subject?

To clarify, the white paper in question cites an unofficial interpretation by a Fed Board staff attorney. Since the check images are not deposited at a location specified in Reg. CC (the RDC terminal is not a branch, and the deposits are taking place there), the images of the captured checks are not subject to Reg. CC. Availability of funds deposited in this way would be subject to a contract between the bank and the operator of the RDC terminal.

Our bank uses Kirchman as our core processor and this came directly from Kirchman compliance.

"A banker recently asked us what availability timeframes would apply to a remotely captured check deposited electronically into a merchant’s account at a bank. We researched the issue, and finding it a gray area, phoned one of the Reg CC specialists at the Fed in Washington. She said that kind of item is not covered at all by Reg CC, so no availability timeframes apply. A bank may hold it for whatever period it chooses, or agrees to with its commercial customer, or as may be dictated by state law. As far as we can recall, that is the first time a regulatory agency has voluntarily relinquished turf!

The specialist told us that, so far, the Fed has nothing official or written on this topic. There is just an informal, unofficial, unwritten staff position/opinion that they tell anyone who inquires. Their technical regulatory analysis runs as follows: the availability rules apply to cash, which this item clearly is not; to electronic payments, which this item is not because it is not an ACH credit or a wire transfer; and to checks, which this item is not because it is not in paper form when it first reaches the bank of deposit. In her words, “it falls through the cracks of availability.”

As the practice of remote capture grows in popularity with merchants and their banks, we expect the Fed to amend Reg CC to address the availability of such items. If we were betting on how they will decide, we’d bet they will give them the same availability as the original paper items: on-us, local, nonlocal, and so on. That information is in the MICR band data being transmitted electronically to the depositary bank, and can be used to assign availability."

What is the latest thinking, or current "best practice," on how long a remote capture customer should keep original checks and when they should be destroyed? I have seen a variety of opinions on those subjects

The Kirchman observations are good, and can be used as a guide to craft your contract with merchants who will remotely capture these images. Suggest to your attorney that you'll want to provide availability based on your current policy for acceptance of paper checks for deposit at a branch of the bank. Then you can consider tweaking it to allow for a later deposit deadline for images, if you wish.

Don't forget to include protection for the bank from its warranty liability under Check 21 if the bank has to reconvert any of the merchant's images in order to present them (or under image-exchange agreements with the Fed or others). You don't want a merchant with poor image quality to create financial losses for the bank that you can't pass back to the merchant.

Acceptance of images from your merchant customers may or may not improve the speed with which check presentment takes place. The fact that images are not universally acceptable means that some items may even take a little longer if they enter the process as images. So it might be a mistake to provide better availability for images than you do for paper items, at least for now.

Was there an answer given to the time of retention question?

I don't have documentation to back this up, but since banks hold checks for 90 days - I have heard that it is recommended that those doing remote follow this as well.