Compliance Blog

Happy Monday, compliance friends! I hope everyone had a nice, relaxing weekend. Before we get to the topic of this blog, here is a picture of my cat, Quincy, relaxing and not worrying about when my particular funds are going to be made available (all he knows is that he owns the place and I just pay the bills).

While my cat may not care when funds are supposed to be made available, credit union members do. So, when an on-us check is deposited at a proprietary ATM when do the funds have to be made available? Section 229.19(a)(1) discusses when funds are considered deposited, and provides that:

“Funds deposited at a staffed facility, ATM, or contractual branch are considered deposited when they are received at the staffed facility, ATM, or contractual branch;”

Interestingly, which funds availability rule applies may depend on where the proprietary ATM is located. Section 229.10(c)(1) discusses “next day availability,” and provides that:

“(c) Certain check deposits —

(1) General rule. A depositary bank shall make funds deposited in an account by check available for withdrawal not later than the business day after the banking day on which the funds are deposited, in the case of—

[…]

(vi) A check deposited in a branch of the depositary bank and drawn on the same or another branch of the same bank if both branches are located in the same state or the same check processing region”

As the quote above illustrates, section 229.10(c)(1)(vi) lists “on-us” checks as being subject to “next day availability.” However, that section is specifically limited to on-us checks “deposited in a branch” of the credit union. The commentary to section 229.10(c) states the following regarding on-us checks:

“For the purposes of this requirement, deposits at facilities that are not located on the premises of a brick-and-mortar branch of the bank, such as off-premise ATMs and remote depositories, are not considered deposits made at branches of the depositary bank.” 

As such, whether on-us checks are subject to next day availability will depend on whether or not they are deposited to proprietary ATMs “located on the premises of a brick-and-mortar branch of the [credit union].” The commentary suggests that checks deposited at ATMs located on the premises of brick-and-mortar branches would be subject to next-day availability, whereas checks deposited at proprietary ATMs located somewhere off-premises would not.

For on-us checks deposited at an ATM on-premises, section 229.10(c)(1)(vi) states that the check is subject to next-day availability, which means that the entirety of the check funds must be made available on the business day after the banking day of deposit, unless an exception applies. 

If the check was deposited at a proprietary ATM that is located off-premises, then the commentary indicates that it would not be subject to next-day availability, and thus would follow the requirements of section 229.10(c)(1)(vii) and section 229.12.

section 229.10(c)(1)(vii) provides that a credit union must make available:

"(vii) The lesser of—

(A) $225, or

(B) The aggregate amount deposited on any one banking day to all accounts of the customer by check or checks not subject to next-day availability under paragraphs (c)(1) (i) through (vi) of this section.” (Emphasis added).

As the quote above illustrates, the regulation states that, when checks are not subject to "next day availability," then a credit union is required to make at least $225 of the aggregated check funds available on the next business day after the banking day of deposit. After that initial $225, the rest of the check funds will be subject to the availability rules found in section 229.12. Section 229.12(b)(1) discusses availability schedules and states:

“Local checks and certain other checks. Except as provided in paragraphs (d), (e), and (f) of this section, a depository bank shall make funds deposited in an account by a check available for withdrawal not later than the second business day following the banking day on which funds are deposited, in the case of -

(1) A local check;” (Emphasis added).

Based on the above, funds deposited at a proprietary ATM not located on a credit union’s premises via an on-us check are required to be made available by the second business day after the deposit was made (aside from the initial $225 that was required to be made available next-day). 

However, credit unions may also want to note that, section 229.12(d) would apply to both scenarios above (e.g., whether the on-us check is deposited at a proprietary ATM on the credit union’s premises or at a proprietary ATM off of the credit union’s premises) and states that:

“(d) Time period adjustment for withdrawal by cash or similar means. A depositary bank may extend by one business day the time that funds deposited in an account by one or more checks subject to paragraphs (b), (c), or (f) of this section are available for withdrawal by cash or similar means. Similar means include electronic payment, issuance of a cashier's or teller's check, or certification of a check, or other irrevocable commitment to pay, but do not include the granting of credit to a bank, a Federal Reserve Bank, or a Federal Home Loan Bank that presents a check to the depositary bank for payment. A depositary bank shall, however, make $450 of these funds available for withdrawal by cash or similar means not later than 5:00 p.m. on the business day on which the funds are available under paragraphs (b), (c), or (f) of this section. This $450 is in addition to the $225 available under § 229.10(c)(1)(vii).” (Emphasis added).

Based on the above, section 229.12 only requires a credit union to make $450 available for withdrawal via cash or similar means (in addition to the original $225 made available next day, as discussed above). Similar means includes “electronic payment, issuance of a cashier’s or teller’s check, or certification of a check, or other irrevocable commitment to pay…” However, the remainder of the check’s funds must be made available for purposes other than withdrawal by cash or similar means, such as writing a check. By the third business day after the banking day of deposit, all check funds must be made available for withdrawal by cash or similar means, unless an exception hold applies.

Credit unions may also want to keep in mind the “large deposit” exception hold under section 229.13(b). This exception provides that:

“(b) Large deposits. Sections 229.10(c) and 229.12 do not apply 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. For customers that have multiple accounts at a depositary bank, the bank may apply this exception to the aggregate deposits to all accounts held by the customer, even if the customer is not the sole holder of the accounts and not all of the holders of the accounts are the same.”

As such, if the check is worth more than $5,525, the funds above that amount can be delayed through the above exception.

Finally, what about checks deposited at non-proprietary ATMs? Section 229.12(f) states that the funds for those checks must be made available “not later than the fifth business day following the banking day on which the funds are deposited.”

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