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Question & Answer

Question: We have been placing exception holds on deposits made by a business customer because the account had been frequently overdrawn. We identified the problem and began placing the holds four months ago. Since then, the account has not been overdrawn. When the six months for this exception hold is up, can we renew the exception or must we make the deposited funds available on our general schedule?

Answer: Before the six months period has run, the bank should review the customer's account to evaluate the overdraft pattern. If there have been no overdrafts, then the bank must stop using this reason for placing an exception hold on this customer's deposits. Of course, other reasons for exception holds, such as large deposits, would be available, as appropriate. In addition, you may impose a case by case hold on deposits for up to the time periods for holds that Regulation CC permits. It would be prudent to closely monitor such an account after the six month period. If the customer again shows a pattern of overdrawing the account, the exception hold based on the new pattern of overdrafts could be re-instituted for another six month period.

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 14, 9/96

First published on 09/01/1996

Filed under: 
Filed under compliance as: 

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