This discussion is intended to give a broad overview of Expedited Funds Availability Act (EFAA). It is not a comprehensive discussion of the regulation.
EFAA requires banks to make funds deposited into transaction accounts available to customers according to specified time schedules, to adjust the dollar thresholds for inflation every fifth year, and to disclose their funds availability policies to their customers, among others. Subpart B of Regulation CC implements the requirements in Expedited Funds Availability Act (EFAA).
Availability of Funds
Cash, electronic payments, and certain check deposits generally must be made available for withdrawal the first business day following the banking day of deposit (“next-day availability”). Among the covered check deposits are cashier’s, certified, and teller’s checks; government checks (including U.S. Treasury checks, U.S. Postal Service money orders, state and local government checks, checks drawn on Federal Reserve or Federal Home Loan banks); and certain “on us” checks (checks drawn on the same bank or a branch thereof).
Business days are Mondays through Fridays except federal holidays. A banking day is any business day (up to the bank's cut-off hour) when a bank is open for substantially all of its banking activities.
Exceptions: When deposits of cash; cashier’s, certified, or teller’s checks; and government checks are not made in person (for example, when they are made at one of a bank’s ATMs), the funds must be made available by the second business day. Deposits (whether cash or check) made at an ATM that is not owned by the bank (a "nonproprietary" ATM) must be made available by the fifth business day.
For checks of types not discussed above, funds generally must be made available in accordance with a schedule specified in Regulation CC. That schedule differentiates between "local" or "nonlocal" checks. However, since there is now only one Reserve Bank check-processing region, there are no longer any "nonlocal" checks for purposes of Regulation CC. Funds from local checks must be made available by the second business day following the day of deposit.
Remember that up to the first $200 of a non-"next-day" check(s) must be made available the next day. This minimum amount increases to $225 effective July 1, 2020.
Banks are permitted to delay, for a "reasonable period of time," the availability of funds for the following types of deposits: (1) deposits greater than $5,000, (2) redeposited checks, (3) deposits to accounts that are repeatedly overdrawn, (4) doubtful collectability, (5) checks deposited during emergency conditions outside of the bank’s control, and (6) deposits into accounts open for less than 30 days. A "reasonable" time period is generally defined as one additional business day (making a total of two business days) for on-us checks, and five additional business days (total of seven) for local checks. A bank may impose longer exception holds, but the bank may have the burden of proving that they are "reasonable."
Statutorily-Required Inflation Adjustment to Dollar Amounts
Banks must adjust the dollar amount thresholds for inflation effective on July 1, 2020, on July 1, 2025, and on July 1 of every fifth year after 2025. The regulators anticipate issuing a rule in the Federal Register establishing the inflation adjustments at least one year before the effective date of each upcoming adjustment. For example, they anticipate publishing in the first half of 2024 the second set of inflation adjustments, which will become effective July 1, 2025. Note that the regulators will not publish a notice and opportunity for public comments for future adjustments.
The adjustments are based on the “annual percentage increase” in the CPI-W. Negative movements in the CPI-W are included when measuring the underlying inflation that is the basis for calculating adjustments. The adjustments will always be zero or upward, never downward.
If there is an aggregate percentage increase in any five-year inflation measurement period, then the aggregate percentage change is applied to the dollar amounts in Regulation CC rounded to the nearest multiple of $25 to determine the new adjusted dollar amounts.
Notices to Customers of Changes to Banks’ Funds-Availability Policies
Banks must provide customers who have a transaction account with disclosures stating when their funds will be available for withdrawal. Banks must send a written notice to consumer account holders at least 30 days before implementing a change to their funds-availability policy and, if the change improves the availability of funds, the change must be disclosed no later than 30 days after implementation. Many banks use the model disclosure statements included in Regulation CC.
Banks can lower their costs under the rule by providing the required notice electronically and by sending it with the monthly account statement. Electronic delivery is permitted where the bank has complied with the requirements of the Electronic Signatures in Global and National Commerce Act (E-SIGN Act). Further, the regulation already permits banks to send required change-in-terms notice on or with monthly account statements, irrespective of whether the bank sends the notice and statement electronically or in paper form.
Banks must establish procedures to ensure that they comply with the requirements of Regulation CC and provide a copy of these procedures to all employees who perform duties affected by the regulation. For example, employees who issue hold notices should be instructed on when to hold funds and how to notify customers that funds are being held.
Banks must also post, in each location where employees accept consumer deposits, a notice of their funds availability policy. The notice must specifically state the availability periods for the various types of deposits that may be made to consumer accounts. The notice need not be posted at each teller window, but it must be posted in a place where consumers looking to make deposits are likely to see it before making their deposits. For example, the notice might be posted at the point where the line forms for teller service in the lobby. The notice is not required at drive-through teller windows or at night depository locations, but it is required at all ATM.
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