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Reg CC: Funds availability requirements and fraud

Mary Ellen Biery
September 8, 2023
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How to comply with both Reg CC and fraud requirements

Read about the rules outlined by Reg CC, the circumstances that allow exceptions, and what to do when your financial institution suspects fraud.

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Balancing fraud-fighting with consumer compliance

As check fraud and other forms of fraud continue to soar, financial institutions increasingly are called to know when they can hold deposited funds longer than permitted by Regulation CC, or Reg CC.  

Financial institutions’ AML programs, including efforts to prevent fraud and their associated losses, incorporate tremendous resources to be effective. However, banks and credit unions must balance their fraud-fighting obligations with consumer compliance requirements on deposit-availability timeframes and notices under Reg CC.  

Efficient compliance with both Reg CC and the requirements tied to anti-fraud or anti-money laundering can also greatly impact customer or member experiences. Legitimate customers and members expect access to their deposits quickly. They equally assume their banks and credit unions will protect them against fraud.  

This article explains Reg CC and its general rules for making funds available after a deposit. It covers when a financial institution is allowed to hold a member or customer’s deposit for longer than the one to two days typically allowed under Reg CC. Finally, it examines what the funds availability regulation says about holding funds when fraud is suspected.  

Understanding Reg CC’s consumer compliance requirements can help AML professionals work with others in the institution to prevent and detect check fraud and other suspicious activity. See the regulation and discuss with your institution’s attorney to evaluate your bank or credit union’s specific requirements.  

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Regulatory requirements

What is Reg CC in banking?

Reg CC is the federal requirement for banks and credit unions to make funds deposited to a transaction account available for withdrawal within specific timeframes. The regulation is rooted in a 1987 law aimed at addressing concerns that financial institutions were placing lengthy holds on checks deposited by customers or members. The consumer compliance regulation has been revised several times over the years. Its requirements can sometimes feel at odds with anti-fraud efforts, especially when check fraud is such a problem. 

So when do credit unions and banks have to make deposited funds available for withdrawals?  

In all cases, the clock to make funds available starts ticking on the banking day of a deposit rather than the calendar day in case those differ. Business days (not calendar days) are used in the regulatory deadlines for how soon funds must be available. Exceptions to the deadlines are discussed below, but generally, the exceptions provide additional time to scrutinize the transaction.  

Types of accounts covered by Reg CC include demand deposit accounts or similar transaction accounts at a depository institution that can make third-party payments. Accounts that are not covered by Reg CC include savings accounts or time deposit accounts, such as money market deposit accounts, even though they may have limited third-party payment powers. 

Quick turnaround

Deposits requiring “next-day availability” under Reg CC

Many deposits, especially if made in person at the account holder’s institution or branch, must be available for withdrawal on the first business day following the deposit. The following types of deposits are among those generally required to have “next-day availability:” 

  1. Cash 
  2. Electronic payments such as wire transfers and ACH credit transactions, so long as the receiving institution has received both the payment “in actually and collected funds” and instructions on both the account and amount to be credited 
  3. U.S. Treasury checks deposited in an account held by the check payee 
  4. U.S. Postal Service money orders, Federal Reserve Bank checks, and Federal Home Loan Bank checks that are deposited into the payee’s account and in person via an employee of the institution 
  5. Cashier’s or certified checks deposited in person to the payee’s account via an employee of that depositary bank or credit union 
  6. Checks that are drawn on an account at the institution and that are deposited in person with an institution employee 
  7. State and local government checks deposited by the payee into their account, as long as the state or local government is in the same state as the bank or credit union and it’s done in person with a credit union or bank employee 
  8. Cashier’s checks, certified checks, or teller’s checks deposited to the payee’s account in person with a bank or credit union employee 

Deposits that require second-day availability 

Other types of deposits must be made available for withdrawal no later than the second business day. Those include checks not deposited in person but otherwise meeting the requirements listed above for: 

  • Postal Service money orders 
  • Fed or FHLB checks  
  • State and local government checks 
  • Cashier’s, certified, or teller’s checks  

Financial institutions generally must make available the first $225 of any checks that don’t require next-day availability.  

In-the-know clientele

Reg CC's required disclosures

Reg CC also requires banks and credit unions to inform customers or members of the institution’s policy on funds availability “clearly and conspicuously in writing.”  

This is often in the form of posted notices where bank or credit union employees accept deposits, posted notices at ATMs, and preprinted notices on deposit slips that are provided by the institution and have the customer's name and account number preprinted on them. The policy might also be highlighted in a document describing the terms of an account. In any case, the notice should reflect the availability policy the bank or credit union follows in most cases.  

Exceptions to the rule

Check hold exceptions allowed by Reg CC

Because Regulation CC aims to implement Congress’s goal of providing customers or members access to their deposited funds as quickly as possible, exceptions to the required availability schedules are limited. That makes it important for staff to understand the Reg CC exceptions in all their check fraud detection efforts.  

The six exceptions to Reg CC are related to: 

  1. New accounts, which are those newer than 30 calendar days. However, suppose each customer on an account has had another account at the bank or credit union for 30 days before an additional account is opened. In that case, it is not considered a new account.  
  1. Large deposits, defined as those totaling more than $5,525 on any single banking day, regardless of how many accounts list the customer or member. Nevertheless, financial institutions must make some of the funds available quickly, as outlined in Reg CC. 
  1. Redeposited checks, which are those that have been returned unpaid and redeposited by the customer or the financial institution. However, this exception doesn’t apply to checks redeposited after a missing endorsement is obtained or if a check that had been post-dated is no longer post-dated. 
  1. Repeated overdrafts, including accounts or combined accounts with negative balances on at least six days in the last six months. This exception also includes accounts with a negative balance of $5,525 or more on at least two banking days in the last six months.  
  1. Reasonable cause to doubt the collectibility of a check or other deposit, which requires “the existence of facts that would cause a well-grounded belief in the mind of a reasonable person” that the check is uncollectible.  
  1. Emergency conditions, such as natural disasters, communication interruptions, or another situation that prevents the bank or credit union from processing checks normally. 

The length of restrictions to deposited funds, including check holds, can vary under Reg CC. In addition, in all cases above except for the one regarding new accounts, financial institutions postponing access to funds from checks or other deposits must quickly provide the depositor with written notice of the delay.   

Combatting illicit activity

Fighting fraud under Reg CC

So, what can financial institutions do to fight fraud while complying with Reg CC? 

Nothing in Reg CC affects a financial institution’s right to accept or reject a check for deposit, regulators have noted. Strong know your customer (KYC) training and ongoing customer due diligence (CDD) compliance are essential for this approach. Ensure bank or credit union staff, from the teller line to the fraud staff, are familiar with check-kiting red flags and other check fraud detection tips.  

Reg CC also doesn’t affect the right to revoke settlement, charge back accounts for returned or unpaid checks, or charge back electronic payments if the institution doesn’t receive “actually and finally collected funds.”  

Suppose circumstances surrounding suspected check fraud or other types of fraud don’t “fit” the exceptions tied to new accounts, large deposits, or redeposited checks. In that case, financial crime professionals can also consider using the exception for “reasonable cause to doubt collectability” to extend the hold time. Indeed, commentary following Reg CC gives additional detail on this exception, including providing examples of when checks can be held, including being held for suspected check fraud. 

“This exception applies to local and nonlocal checks, as well as to checks that would otherwise be made available on the next (or second) business day,” according to regulators' commentary. “When a bank places or extends a hold under this exception it need not make the first $100 of a deposit available for withdrawal on the next business day.” 

Financial institutions can rely on “a combination of factors that give rise to a reasonable cause to doubt” that the check will be paid, the commentary continues. Among examples, some of which could tie to fraud scenarios, for which institutions can invoke the “reasonable cause” exception: 

  • The bank or credit union receives a notice from the paying institution that a check was not paid and is being returned. 
  • The paying bank provides information before the check is deposited that gives the depositing institution reason to believe the check is uncollectible. This includes a stop payment notice.  
  • A check is deposited more than six months after the date on the check.  
  • The financial institution has confidential information that leads it to believe the check will not be paid. “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,” Reg CC commentary says. “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.” 

One important directive related to the “reasonable cause” exception is that a determination of uncollectibility cannot be based on “a class of checks or persons.” For example, it can’t be based on the depositor’s race or national origin. Another example: A depositary bank can’t invoke the exception because the check is drawn on a rural bank, even if it means it won’t have the chance to learn of nonpayment before the deadline to make the funds available.  

Financial institutions have tremendous responsibilities when it comes to preventing and detecting fraud. Knowing Reg CC’s requirements for funds availability and when exceptions can be made is essential for financial institutions to balance regulatory compliance for AML and consumer interests. 

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About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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