New Account Holds
Question: We've always determined that a new checking account was to be considered "new" and watched for six months. Our Auditor now says we should only be watching it for 30 days. Are we doing something illegal?
Answer: It's interesting that your Auditor suggests that you become less vigilant instead of more so. There is nothing anywhere that says you can't consider an account to be "new" for six months, or even longer if you choose. The Bank Secrecy Act says you can't exempt an account until it is 12 months old, implying it's a 'new' account up until then.
What your Auditor may be referring to are the rules in the Expedited Funds Availability Act that say that for the first 30 days of its existence, the deposits into a new account can be held for whatever period of time the bank has decided to hold them and has included in its disclosure. The sample disclosure put out by Fed when Reg CC came out was 9 days, so many financial institutions adopted the 9 days exception holds on new accounts. Actually, you can hold deposits into new accounts much longer than that, but most banks don't.
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 5, 7/04
First published on 07/01/2004