Compliance Blog

New Accounts Exception Hold

Large Deposit Exception Hold

Applicability

It applies to new accounts—those that are not older than 30 calendar days. Notwithstanding that general rule, “[a]n account is not considered a new account if each customer on the account has had, within 30 calendar days before the account is established, another account at the depositary bank for at least 30 calendar days.”

It is not limited to accounts of a certain age. It “appl[ies] to the aggregate amount of deposits by one or more checks to the extent that the aggregate amount is in excess of $5,525 on any one banking day.”

What it does?

It requires credit unions to make the first $5,525 deposited on any given banking day available the next business day or the second business day, if checks need to be deposited in person to get next-day availability, when the funds are deposited by the following types of checks:

• U.S. Treasury checks deposited into the payee’s account;
• U.S. Postal Service money orders deposited in person and into the payee’s account;
• Federal Home Loan Bank or Federal Reserve Bank checks deposited in person into the payee’s account;
• State or local government checks deposited in person, into the payee’s account, in state, and, if applicable, with whatever slip or envelope is required by the credit union; or
• An official check (e.g., cashier’s check, certified check, teller’s check) deposited in person, into the payee’s account, and, if applicable, with whatever slip or envelope is required by the credit union.

If the amount of funds deposited by these types of checks on any given banking day exceeds $5,525, the exception hold permits the credit union to hold the excess funds.

Under the rule, on-us checks are not subject to their normal availability requirements. The same is true for the $225 rule, which generally requires up to $225 of funds deposited by checks not subject to next-day availability be made available the next business day following the banking day of deposit. The rule also explains that local checks, funds deposited at nonproprietary ATMs, and everything else normally covered by section 229.12 of Regulation CC are not subject to their normal availability requirements.

Like the new accounts exception hold, the large deposit exception hold only applies to funds greater than $5,525 deposited by checks on any given banking day. For checks subject to the availability rules in section 229.10(c) (e.g., next-day availability and second business day availability for deposits not received in person) and section 229.12 (e.g., second business day availability for local checks, fifth business day availability for nonproprietary ATM deposits), the first $5,525 is subject to the normal rules. The exception hold permits the credit union to hold funds in excess of $5,525.

How long can funds be held?

The rule requires making the funds available “not later than the ninth business day following the banking day on which funds are deposited[.]”

The rule permits holding the funds for “a reasonable period of time.” What is reasonable depends on the type of check that is deposited. Under the rule (1) one business day is reasonable for on-us checks; (2) five business days is reasonable for local checks, other checks subject to second business day availability, and checks normally subject to next-day availability; (3) six business days for nonproprietary ATM deposits.

Notice requirement

Specific availability policy disclosure.

Notice at the time of deposit or possibly the “one-time” notice that can be provided to nonconsumer account holders.