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Funds Availability: Routing Changes

For some time, the Federal Reserve System has been restructuring its check processing centers. The impact of these actions is to reduce the number of check processing centers and, for many depository institutions, increase the number of local routing numbers.

Most recently, the Federal Reserve announced changes which involve a bit of back tracking. The closing of the check processing center in Nashville has been delayed until some time in 2007. Instead, because of hurricane damage in New Orleans, the checks normally processed in New Orleans are being processed through Atlanta. Following Hurricane Katrina, the Federal Reserve Bank of Atlanta implemented a disaster response by rerouting all New Orleans checks through Atlanta. The latest announcement from the Federal Reserve System simply makes that official - for the time being.

Using the Atlanta check processing center instead of New Orleans' is enough change for the region. So Nashville remains open for at least another year.

In the same publication, the Federal Reserve System published corrected routing numbers for the Helena branch of the Minneapolis Federal Reserve. If you do business in that region, it would be a good idea to double-check the accuracy. This restructuring is being done to reduce costs and increase efficiency at the Federal Reserve Banks. The increase in electronic transactions with the parallel reduction in check-based transactions makes sense from the perspective of the Federal Reserve.

While these changes are being made, however, they may be adding to risk and regulatory burden of depository institutions. Most institutions are now or soon will be dealing with an expanded local area and more local routing numbers. This means retraining and reprogramming as well as added risk from delays in check clearing from larger geographic areas.

Regulation CC has been a bit of a sleeper in the recent world of regulatory change. However, these check processing changes bring Regulation CC back up on your priority list. Don't overlook the changes to Appendix A just because the regulation itself is not changing. So dust off that Regulation CC training program, update the handouts with the local routing numbers and make sure your institution is on track.

Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 15, 12/05

First published on 12/01/2005

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