I know that Reg. CC outlines the requirements for placing holds on recent deposits, but what are the rules regarding the placement of holds on collected balances. I know the bank is justified in holding a balance if it receives notices of a levy, but what about other cases? For example, the bank receives notice of a forgery or discovers after the fact that a customer has deposited a business check in a personal account. Do Reg. CC requirements still apply?

If you receive notice of a forgery (or other item being returned), those are not collected funds. It is my understanding that you can place a hold in these instances to protect against a loss, but you must notify your customer.

In the case of an item posted to a wrong account, I don't see a reason to impose a hold. You may just need to move or revoke the credit, and be sure your customer is aware of why you need to make the adjustment.

We had a situation once when a new customer was bringing checks payable to her business that she had clearly altered by crossing out the business name and writing her name for deposit to her personal account. When the branch manager discovered the transactions, she reversed the credit to the account and declined to process the checks. We had to explain to the customer why her activity was not acceptable.

If you place a hold when you receive a notice of return, it's a Reg. CC "reasonable doubt" exception hold. You always have the other option -- don't place a hold, but charge the account instead. In either event, when you get a return item notification, you have a Reg. CC and UCC notice responsibility to inform your customer of the return (regardless of amount), even if you don't place a hold or charge the account. The customer may be able to waive that notice, but don't forget that it's both in Reg. CC and in the UCC.