What is Regulation CC in Banking?

Regulation CC, part of the Federal Reserve’s regulatory framework, governs the availability of funds and the collection of checks in the United States. Established to provide uniformity and clarity in banking practices, it aims to protect consumers and ensure that banks handle deposits and checks efficiently and transparently. This regulation is crucial for both banks and their customers as it dictates how long banks can hold deposited funds and ensures prompt access to these funds.

Regulation CC, Explained

Regulation CC, or Reg CC, was implemented under the Expedited Funds Availability Act (EFAA) of 1987. The primary goal of this regulation is to standardize the timeframes within which banks must make deposited funds available to customers. This standardization helps in reducing the uncertainties and disputes between banks and customers regarding funds availability.

Regulation CC also includes provisions related to check collection and return processes, encouraging the use of electronic means to speed up these processes. By setting specific timelines for the availability of different types of deposits, Regulation CC ensures a balance between banks’ needs to verify deposits and customers’ right to access their funds.

How Does Regulation CC Work?

Regulation CC works by specifying maximum hold periods for different types of deposits. These hold periods define how long a bank can hold a deposit before the funds must be made available to the customer. The regulation categorizes deposits into several types, such as regular paper checks, mobile checks, electronic payments, and cash deposits, each with specific availability timelines.

The regulation also requires banks to disclose their funds availability policies to customers. This disclosure must be clear and provided when an account is opened and whenever the policy changes. Also, Regulation CC mandates that banks post notices about their funds availability policies in branches and on ATMs.

To ensure compliance, the Federal Reserve monitors and enforces Regulation CC. Banks found in violation of these rules may face penalties, and customers can report non-compliance issues to their respective banking regulators.

What are the Key Components of Regulation CC?

Reg CC manages two primary areas: funds availability timing schedules and guidelines for disclosing funds availability policies.  

Funds Availability Timing Schedules

Regulation CC outlines specific timing schedules for when funds must be made available to customers. Three essential elements determine the timing: 

  • Type of deposit (i.e., cash, mobile check, direct deposit)
  • When in the business day, the money was deposited
  • Amount of deposit (i.e., $5,525 or greater may be held longer)

Generally, a majority of cash deposits, certain check deposits, direct deposits, and electronic payments are available the next business day after the business day they were deposited. 

Guidelines for Disclosure Funds Availability Policies

Banks must provide clear and detailed disclosures about their funds availability policies to customers. Reg CC guidelines require banks to disclose funds availability policies when customers open a new account as well as when any changes to the policy are implemented. These disclosures help customers understand when their deposits will be available for use.

Regulation CC Requirements

Check Collection 

With the Check Clearing for the 21st Century Act, also known as Check 21, electronic checks are legally allowed to replace paper checks. Electronic checks provide faster, more efficient processing times, and they enable banks to offer additional electronic-based services to their customers. 

Disclosure Requirements

Banks must post funds availability policies in branches and on ATMs, ensuring customers are aware that “Deposited funds may not be available for immediate withdrawal.” Banks are required to notify customers of any changes to their funds availability policies thirty days before the effective change date.

Exception Holds

Banks are allowed to place longer holds on deposits in certain circumstances, such as for new accounts, large deposits, or suspicions of fraud. However, they may only do so if their policy discloses the exception to hold notice to the depositor. For example, if the amount being deposited in one business day is $5,525 or greater, it would qualify as an exception hold as long as it has been properly disclosed. 

By understanding and complying with Regulation CC, banks can enhance their customer service, reduce disputes, and avoid regulatory penalties. This regulation provides clear guidelines for customers on when they can expect access to their deposited funds, fostering trust and reliability in banking relationships.

Learn More About Regulation CC with BankersHub

Effective in 2020, Regulation CC has experienced significant changes in Subpart B, which directly impacts funds availability. As of May 13, 2024, even more changes are on the horizon. 

A 21.8% increase in the Consumer Price Index has elevated a number of funds availability thresholds. Join BankersHub for our Regulation CC: Funds Availability, Warranties and Indemnities Updated and Explained webinar. While these changes provide solutions to past warranty issues, financial institutions must be clear on how to implement them appropriately. Register today! 


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