FDIC & Reg CC Holds

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Question:

I heard from a colleague that the FDIC is citing banks under Regulation CC (Section 229.16(c)(2)(ii)) for mailing case-by-case hold notices for deposits made in person by a customer. Apparently this was caught by the examiners in banks where their procedures require that large dollar checks deposited into customer accounts be placed in a bin for later review/hold determination by an Ops manager or where there is a secondary review of all hold notices prior to mailing. Purportedly, the FDIC has taken the stance that a case-by-case notice may only be mailed to the customer when the transaction was not done in person and that any references in Regulation CC and the commentary about mailing a notice refers only to those specific deposits which are not done in-person. This is not the way we or our compliance auditors have looked at this in the past, and we are curious to know how your group views this. What say you?

Answer:

Answer by Randy Carey:I would say it is a urban myth or that the examiners are off base:

229.16(c)

(2) Notice at time of case-by-case delay--

(ii) Timing of notice. The notice shall be provided to the depositor at the time of the deposit, unless the deposit is not made in person to an employee of the depositary bank or the decision to extend the time when the deposited funds will be available is made after the time of the deposit. If notice is not given at the time of the deposit, the depositary bank shall mail or deliver the notice to the customer not later than the first business day following the banking day the deposit is made.

Answer:

Answer by Jim Bedsole:I wonder if the examiners are further relying on the comment in the Official Staff Commentary at 229.16(c) - Comment #2.d. which states:

For deposits made in person to an employee of the depositary bank, the notice generally must be given at the time of the deposit. The notice at the time of the deposit must be given to the person making the deposit, that is, the "depositor." The depositor need not be the customer holding the account. For other deposits, such as deposits received at an ATM, lobby deposit box, night depository, through the mail, or by armored car, notice must be mailed to the customer not later than the close of the business day following the banking day on which the deposit was made. Notice to the customer also may be provided not later than the close of the business day following the banking day on which the deposit was made if the decision to delay availability is made after the time of the deposit.

I could see where a reading of this comment alone could be interpreted the way the questioner's colleague was relaying. However, my argument back would be that the commentary cannot be taken alone and is a supplement to the regulatory language. In this case, the regulatory language, as provided above is clear. The notice does not have to be delivered at the time of the deposit if the decision to place the hold was made after the time of deposit.

First published on BankersOnline.com 3/22/10