In the FDIC alert about the Canadian Lottery scam, the Canadian Mounted Police report indicates that during their investigation of this scan they learned US banks "can freeze funds for a period of up to 14 days in order to confirm funds are secured". Where is this 14 day reference from? PA & FL banks within my HC have recently experienced several losses (one rather large) from deposited Canadian checks which were returned as late as 6 mos. later due to a claim of fraudulant origin. In reviewing Reg. CC, I found no reference indicating the reg. applies to Canadian checks - even if payable in US dollars. Our legal staff not only searched the UCC and "Brady on Checks", but also contacted a Canadian attorney to see if he was aware of agreements between Canada and the US for timely return of checks. The Canadian attorney did not believe any such agreement exists.

In light of these problems, would it be better to accept Canadian checks only as a collection item instead of for deposit?

Thanks, Bonnie. That is what our banks have decided to do. We established a $1,000 threshold for consumers and $5,000 for businesses based upon what we felt was an acceptable risk level for banks of our size. The reason for the two tiers was the level of recapture risk - the likelihood of being able to recapture funds from our customer should a deposited Canadian check be returned later for fraud reasons. We also considered the high collection fees imposed upon the customers by our correspondent processor - reason not all Canadian checks are sent as collection items. However, even for deposits below our thresholds, we planned to place holds on the funds. I just want to make sure if I choose 3 weeks as the appropriate hold period, based upon our experience of the average time it takes for a Canadian NSF check to be returned, that I'm not in violation of some obsure law which has mandated the 2 WEEKS referenced in the Canadian Mounted Police report.

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Any opinion stated above is mine alone and not my employer's.