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Flashcards in Reg CC Deck (59):
1

For purposes of the availability rules, does the term "account" include time deposits or savings accounts?

No.

2

For purposes of the availability rules, what does "account" mean?

A transaction account which generally includes accounts at a bank from which the holder is permitted to make transfers or withdrawals by negotiable instruments, telephone transfers, electronic payments and so forth. This includes consumer and commercial transaction accounts!

3

For purposes of the rules for substitute checks, what does "account" mean?

Any deposit at the bank, including a DDA, transaction account, savings deposit or time deposit.

4

What are the three deposits that must be made available on the next business day? (Funds from these types of deposits must be made available one business day after the banking day of deposit.)

Cash deposits
Electronic payments
Certain checks (US Treasury, USPS money orders, Federal Reserve Bank, Federal Home Loan Bank, state and local governments, Cashier's checks, certified checks, teller checks)

5

What "certain checks" are subject to the next day availability rules? (Funds from these types of deposits must be made available one business day after the banking day of deposit.)

- US Treasury depsited in the payee's account
- USPS money orders deposited IN person and into the payee's account
- Federal Reserve Bank and Federal Home Loan Bank deposited IN person and into the payee's account
- state and local governments deposited IN person and into the payee's account
- Cashier's checks, certified checks, teller checks deposited in person & into the payee's account, using a special deposit slip if required by the bank.

6

Items that would be subject to next-day availability rules but are not deposited in person, must be available for withdrawal when?

On the second business day after the funds are deposited.

7

The following deposits were made on Monday at First National Bank:
• Martha Smith, a new customer, deposited $150 in checks into her checking account, which she had opened the previous week
• Jerry Williams, an established customer, deposited a $7,000 check from his father
• Amanda Thomas, also an established customer, deposited her $600 IRS refund into her account
What funds must be made available to these depositors on Tuesday?

a. $200 for each
b. $200 for Martha and Jerry; $600 for Amanda
c. $200 for Jerry; $600 for Amanda
d. $200 for Martha; $600 for Amanda

c. $200 for Jerry; $600 for Amanda

Jerry's deposit is a check that does not have to be available the next day, with the exception of $200. Because Amanda's check is on the U.S. Treasury, her entire deposit is available the next day. Martha's account is a new account; therefore, none of her deposit is required to be made available on the next business day.

8

Which of the following accounts is considered to be a new account for delayed funds availability purposes?

a. A new account opened by an established customer who has had several transaction accounts with the bank for a long time
b. A new account opened by a customer who previously had an account but closed it 15 days before opening the new one
c. A new account opened by a customer who has had a regular savings account at the bank for five years
d. A new account opened by a customer who is a joint account holder on another checking account at the bank but who has no other individual account

c. A new account opened by a customer who has had a regular savings account at the bank for five years

A savings account is not a transaction account and therefore is not an account according to the definition given in Regulation CC. Therefore, the customer has not had an account at the bank at the time the new account was opened, so the new account exception applies.

9

A customer deposits a $7,000 local check and a $12,000 U.S. Treasury check in the bank on Monday. The bank’s policy is that it generally makes funds from checks available on the next business day, although it does place exception holds. When does the bank have to make these funds available?

a. $5,000 is available on Tuesday; the rest is available within a reasonable time period
b. $500 is available on Tuesday; $4,500 is available on Wednesday; and the remaining is available within a reasonable time period
c. $5,200 is available on Tuesday; $4,800 is available on Wednesday; and the remaining is available within a reasonable time period
d. $12,200 is available on Tuesday and $6,800 is available on Wednesday

a. $5,000 is available on Tuesday; the rest is available within a reasonable time period

The aggregate deposit is subject to the large deposit exception. The next day availability requirement for Treasury checks is not applicable to the entirety of a large deposit. Only $5,000 of the Treasury check must be made available on the next business day. In the case of a large deposit exception, the $200 does not have to be made available, so only $5,000 is required to be made available on the next business day. The remainder of the deposit can be made available within a reasonable period of time.

10

For which of the following deposits is a bank NOT required to give next day availability?

a. A deposit of seven $100 bills
b. A deposit of a Social Security check by mail
c. A deposit of a Social Security payment
d. The deposit of a cashier's check at an ATM

d. The deposit of a cashier's check at an ATM

This type of deposit must be made in person to a bank employee to be eligible for next-day availability.

11

What is the required timing for giving notice to customers regarding a change to a bank’s Regulation CC funds availability policy that improves or expedites availability?

a. At least 15 days prior to implementation
b. At least 30 days prior to implementation
c. No later than 15 days after implementation
d. No later than 30 days after implementation

d. No later than 30 days after implementation

12

A $7,000 check is presented to First National Bank, as the paying bank on Monday. First National is going to return the check to the depositary bank. Generally, First National mails return checks to the Federal Reserve Bank and mails its forward collection checks as well to avoid the costs of a courier. Other banks in the community send both return and forward collection checks to the Federal Reserve Bank by courier if the checks are over $5,000. Can First National follow its usual procedure in this case?

a. Yes. Provided the bank is consistent in its method of return, it does not have to use the most expeditious method.
b. Yes. Provided the bank uses the mail for forward collection, it can use the mail for returns.
c. No. The bank must use the method used by banks in similar circumstances.
d. No. The bank is always required to use the most expeditious method of return

c. No. The bank must use the method used by banks in similar circumstances.

The bank is not required to use the most expeditious method provided it uses the method a similarly situated bank would use for forward collection.

13

The manager of teller operations contacts the compliance manager about a high level of exceptions noted on hold notices during recent compliance monitoring. Which of the following recommendations is MOST appropriate for the compliance manager to make?

a. Require an officer's review and signature on all hold notices.
b. Support the purchase of a new teller computer system to automate hold notices.
c. Increase the frequency and volume of compliance monitoring to better determine the weak areas.
d. Arrange remedial training on hold notice requirements for tellers where the exceptions were noted.

d. Arrange remedial training on hold notice requirements for tellers where the exceptions were noted.

While the other alternatives are appropriate also, the first action should be to retrain the tellers where the exceptions were noted. Training will help immediately correct the problem. The other actions would have an effect in the long term.

14

For which of the following deposits is a bank required to give next-day availability (assume that all checks are deposited into the account of the payee)?

a. A deposit of pesos
b. A deposit of a Social Security check by mail
c. A deposit of a U.S. Postal Money Order by mail
d. The deposit of a cashier's check through the night deposit box

b. A deposit of a Social Security check by mail

This type of deposit does not need to be made in person to a bank employee to be eligible for next-day availability.

15

On which of the following deposits is a bank NOT required to give next day availability?

a. A cashier's check deposited at a proprietary ATM
b. A Social Security check received through the mail to be deposited in the payee's account
c. U.S. Postal Service money orders deposited in person to the payee's account
d. Cash, where the deposit was made in person to a teller at the depository bank

a. A cashier's check deposited at a proprietary ATM

Cashier's checks must be deposited in person to get next day availability.

16

First National has an account for Mary Jones, who has had several overdrafts in her account over the past few months. On February 15, she overdrew her account and had a negative balance, which lasted for 10 days. As of March 14, the number of negative days in the statement cycle was three; and as of April 14, the number of days was six. The last overdraft occurred on May 14, and the account was overdrawn for three days. Mary has not been overdrawn since May. First National has extended the holds placed on all deposits to her account. How long can the bank continue to subject her account to extended hold periods?

a. Until May 14
b. Until October 14
c. Until July 14
d. Until April 14 of the next year

b. Until October 14

The bank can apply the extended hold because the depositor has been overdrawn for at least six days during the preceding six months. The six days is a running total. Basically, from any day in the year the bank should count back six months to determine if the number of overdrafts within that time period equals six or more. In this situation the six months begins to run from the April 14 date (the first date as of which the account has actually been overdrawn for six days). If Mary's account has no more overdrafts, by October 14 it will no longer meet the criterion of having been overdrawn for six days during the previous six months—so the hold will have to be lifted.

17

A senior officer of a bank is considering breaking with tradition and opening the main office for general banking business on Saturdays. Before making the final decision, he requests your input. Which of the following describes the Regulation CC implications of his proposal?

a. Saturday is not a ''business day'' under the regulation, and the funds availability schedule will not be affected.
b. Funds availability disclosures and lobby notices will have to be revised for all branches.
c. An extra day of interest on Saturday deposits will have to be paid.
d. Being open on Saturday will shorten hold periods and increase exposure to operating losses.

a. Saturday is not a ''business day'' under the regulation, and the funds availability schedule will not be affected.

18

First National’s funds availability policy states that funds from checks are generally available for withdrawal on the next business day following the day of deposit. The policy also states that longer holds may be required on a case-by-case basis and advises customers to ask if they need to be sure of the availability of a specific deposit. Henry Cranston deposited a check into his account on Monday. Henry needed to use the funds on Tuesday but he did not ask about the availability at the time of the deposit. A bank teller accepted the deposit and gave Henry a receipt. After Henry left the bank, the teller’s supervisor noticed the check and decided that a longer hold needed to be placed and the funds would not be available until Wednesday . Which of the following actions must the bank perform?

a. The bank must make the funds available on Tuesday, because Henry was not notified at the time of the deposit.
b. The bank may hold the funds for a longer time period but must send Henry a hold notice.
c. The bank may hold the funds for a longer time period and need not notify Henry because he did not ask about the availability of the deposit.
d. The bank may hold the funds for a longer time period and may, at its option, send Henry a notice of the delay

b. The bank may hold the funds for a longer time period but must send Henry a hold notice.

The bank must send Henry a hold notice even if it is sent after the deposit is made. Notice must be sent no later than the first banking day following the day of the deposit.

19

What items must be available for withdrawal by the second business day?

- Checks deposited in a proprietary ATM
- US Treasury that was not deposited in the payee's account
- USPS money orders NOT deposited IN person and/oor into the payee's account
- Federal Reserve Bank and Federal Home Loan Bank NOT deposited IN person and/or into the payee's account
- state and local governments NOT deposited IN person and/or into the payee's account
- Cashier's checks, certified checks, teller checks NOT deposited in person and/or into the payee's account, NOT using a special deposit slip if required by the bank.

20

Banks may extend the availability time period for cash or other similar withdrawals on deposits of checks by one business day provided that up to $__ of the deposited funds is made available by __ PM on the day that the funds would be made available under the schedule. This $__ is in addition to the initial $200 availability.

$400
5:00 pm
$400

21

The first $_____ of deposits into the payee's new account of checks drawn on the US Treasury must be made available on the __ business day; amounts over $____ must be made available no later than on the ___ business day following the banking day of the deposit.

$5,000
next
$5,000
9th

22

The first $____ of in-person deposits into the payee's new account of checks drawn on Federal Reserve Banks, Federal Home loan Banks, and state and local governments, and cashier's, certified, teller and traveler's checks must be available on the ___ business day; amounts over $____ must be available no later than on the __ business day following the day of deposit.

$5,000
next
$5,000
9th

23

For large deposit check holds, the first $____ is subject to the availability schedules; amounts over $____ are not subject to any hold restrictions except that these deposits can be held only for a reasonable amount of time. "Reasonable" means up to __ business days.

$5000
$5000
5

24

For redeposited check holds, checks may be held for _______________.

a reasonable period of time (5 business days).

25

To be subject to the repeated overdraft hold exception, the account must have had what?

- A negative balance for 6 or more banking days within the preceding 6 months
OR
- A negative balance of $5000 or more for 2 or more banking days within the preceding 6 months.

26

For the repeated overdraft hold exception, how long may checks be held for?

A reasonable period of time (5 business days)

27

For items where there is reasonable cause to doubt collectibility, how long may checks be held for?

A reasonable period of time (5 business days)

28

How long must banks maintain documentation about the reasons to doubt collectibility on a check hold?

2 years

29

What are the bank's responsibilities if the bank doubts the collectibility of an item and does not give the depositor a hold notice at the time of the deposit?

The bank may not assess a fee for overdrafts if the overdrafts would not have occurred except for the delayed availability of funds if the check was paid by the paying bank.

30

What are examples of emergency conditions for placing holds?

- Interruption of communications of computer or other equipment
- Suspension of payments by another bank
- War
- Emergencies beyond the control of the bank.
- Fire
- Water damage

31

When must a hold notice be given to the accountholder?

At the time of the deposit, unless the deposit was not made in person to a bank employee or facts that gave rise to the exception being invoked were learned later, in which case the bank must send the notice by the next business day after the facts become known.

32

If the hold notice is not given at the time of the deposit, when must the notice be sent by?

The next business day after the day of the deposit.

33

____ ____ must contain a statement that funds may not be available for immediate withdrawal.

deposit slips

34

If deposits are not removed more than __ times a week from the ATM, the bank must disclose at the ATM the days on which the deposits will be considered received.

2

35

If the bank changes the availability policy, it must notify all holders of consumer accounts at least __ days before implementing the policy change, unless the change expedite s the availability of the funds, in which case notice may be given within __ days after the change.

30
30

36

Funds are considered to be deposited on the next banking day if deposited on a non banking day OR after a cutoff hour of ___ PM or later for on-premises deposits and __ or later for off-premises deposits or ATMs.

2:00 pm
12:00 pm

37

Funds to be made available on a business day must be available by the later of __ AM local time or when the bank's teller facilities are available for customer withdrawals.

9:00 am

38

Reg CC requires what in regards to procedures and training?

Procedures and training are both requirements of the regulation.

39

How long must banks retain evidence of compliance for Reg CC?

2 years

40

What banks may charge a fee for handling returned checks?

Returning banks

41

Reg CC warranties are not made on what types of checks?

US Treasury checks, USPS money orders, or state or local government checks.

42

What is a substitute check?

It's a legally equivalent to the original if
- It accurately represents all of the information on the front and back of the original check at the time the check was truncated
- It bears the legend "This is a legal copy of your check. You can use it in the same way you would the original check."

43

Do Reg CC disclosures have to be given to each accountholder?

No. Just one.

44

Your institution is open for all business functions on Saturday. Customer Jones deposits a $4,000 IRS refund check payable to him with a teller on Saturday at the driveup window. When must the funds be made available for withdrawal?

a. Monday
b. Tuesday
c. Wednesday
d. Same day

b. Tuesday

45

What items must be available for withdrawal by the second business day?

- Local checks
- US Treasury checks that are not subject to next-day availability or are deposited at a proprietary ATM
- USPS money orders that are not subject to next-day availability
- Federal Reserve and Federal Home Loan Banks, government checks, Cashier's, certified and teller checks that are not governed by the next day availability rules.

46

Banks may extend the availability time period for cash or other similar withdrawals on deposits of local and nonlocal checks by one business day provided that up to $__ of the deposited funds is made available by __ PM on the day that the funds would be made available under the schedule. This $__ is in addition to the initial $100 availability.

$400
5:00 pm
$400

47

What is a business day under Reg CC?

Any day that is not a weekend or a Federal holiday. This is NOT dependent on when your bank is open for business.

48

What is a banking day under Reg CC?

A business day when a deposit is made. This is when your bank is open for business. A deposit made after the cutoff time (not earlier than 2 pm, or noon for deposit-taking ATMs) is considered made the following banking day.

49

When can a bank NOT place a new account hold?

Deposits of cash, electronic payments or the first $5000 of official-type checks.

50

This type of holds applies when bank's general policy is to make deposits available sooner than the statutory limits.

Case-by-case holds

51

If a bank chooses to make case-by-case holds, how long can the bank hold funds?

Up to the statutory time limits.

52

If a bank chooses to make case-by-case holds, how much money must be available at the time of deposit?

The first $200.

53

You are doing a review of the bank's consumer deposit account periodic statements for Regulation E compliance. As part of the review, you should check for:

a. The actual date the transfer was conducted
b. The authorization code for the transaction
c. The total amount of credits applied
d. The amount of any fees assessed for EFTs

a. The actual date the transfer was conducted

54

A bank must keep records of EFT disputes resolved for a period of:

a. 2 months
b. 1 year
c. Permanently
d. 2 years

d. 2 years

55

If a consumer wants to stop payment on a preauthorized EFT, the consumer must notify the bank...

a. At least 3 business days before the transfer is scheduled to occur
b. At least 1 day before the transfer is scheduled to occur
c. At least 14 days before the transfer is scheduled to occur
d. At least 10 days before the transfer is scheduled to occur

a. At least 3 business days before the transfer is scheduled to occur

56

What is truncation?

The physical check document is covered into an electronic image; contains the same information as the paper check.

57

Are institutions required to truncate checks?

No.

58

If a check has been truncated, what do we do if a customer needs a physical document to evidence payment?

The electronic image is turned into a paper substitute check.

59

What happens if a bank does NOT have the capability to process truncated checks (has not invested in the electronic software)?

The electronic image is turned into a paper substitute check.