Question & Answer

Question: I'm trying to update a manual for our tellers to make it easier for them to understand putting the exception holds on for Reg. CC, but I don't understand some of it.

For instance, when dealing with travelers checks-if they are deposited, are they considered to be cash, and would we then have to use special deposit tickets? They have transit numbers on them which would make them subject to our normal out-of-state hold, but in the case of new accounts they are considered to be cash. What do I tell my tellers?

Answer: Our answer to this one comes from our newest Advisor, Lucy Griffin, Principal of Compliance Management Services, whom we are glad to welcome aboard.

Although customers think of traveler's checks as basically a cash equivalent with added safety features, Regulation CC defines traveler's checks to be "checks" [12 CFR 229.2(k)&(h)]. (There is one exception to this rule when traveler's checks are deposited to open a new account.)

The availability rules that apply to checks include travelers checks. As the Official Staff Commentary explains, "Because a traveler's check is payable by, at, or through a bank, it is also a check for purposes of this regulation. When not subject to the next day availability requirements for new accounts, a traveler's check should be treated as a local or non-local check depending on the location of the paying bank." Thus, you should instruct your tellers to use the traveler's check routing number to determine whether the check is local or non-local for the appropriate availability category. Your tellers should also be instructed to treat traveler's checks in the same way as a cashier's or certified check when opening a new account. This is the sole exception to the "check" rule for traveler's checks.

Note that Regulation CC never treats traveler's checks as cash. The regulation specifically restricts the definition of "cash" [12 CFR 229.2(h)] to U.S. coin and currency. This definition clearly excludes traveler's checks.

Copyright © 1994 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 4, No. 7, 1/94