We have adopted a next day availability schedule in accordance with Regulation CC. We would like to have automatic holds placed on items that are over a specific $ and for the purpose of wire transfer outside our bank. Can we set criteria, by policy that would require the placement of an exception hold without changing our general next day policy?

The hold would be placed after the nightly processing so the notices would need to be mailed to the account holder.

If I understand your scenario correctly, you do not need to amend your disclosure. You are allowed to place holds on accounts for contingent liabilities. For example, when you wire funds or cash a check you can hold the funds until overnight processing when the memo hold becomes a posted withdrawal.

We want to hold the funds for the maximum allowed by Reg. CC...not just overnight. In other words, if we have a non-local check deposited for the purpose of a wire transfer, we would want to be able to hold it up to 11 days.

You can hold, for exception reasons, as long as you notify the customer. If I am understanding correctly, you want your policy to be, any transaction that falls into a certain catagory, you want a longer hold on. Make certain you have a valid reason for the longer hold. I don't know about the "automatic" part. Our check processing system assigns holds based on routing number automatically, I don't think we could place an "automatic" longer hold, that would have to be done manually.

Again, be very careful that you have a valid reason for the extended hold, for that reason I do not know that I would adopt a "blanket" policy to cover certain transactions. Regulators like to know you are reviewing transactions on a per transaction basis, rather then lumping all of them together!

Be careful. There is a provision in Reg. CC that prevents us from placing blanket holds because items belong to a certain group...
The specific class of checks I'm recalling are credit card checks. I'm sorry that I can't recall the specific seciton in Subpart B.

If you are looking to "automatically" place holds, you will probably have a number of issues to address.

1) If you change your basic policy, you must redisclose to all transaction customers and change your lobby signs to reflect your normal availability policy. A normal policy cannot extend beyond 2nd business day for a local item and 5th business day for a nonlocal item. You will probably also want to implement the use of a special deposit slip to faciliate next day availability of low risk items, such as cashier's checks.

2) Your policy disclosure must also reserve the right to extend holds under safeguard exception rules. You cannot "automatically" extend to 7th or 11th day on every customer, you must have a qualified reason for the exception.

3) You will need to train personnel on all of the special rules which exist for low risk items. These can be tricky. If you have a next-day policy, you probably don't deal with them often. You will under a longer policy.

A key to remember when considering your policy disclosure: does your notice accurately reflect what you do most of the time? If not, you have disclosures issues.

Debbie - are you looking to place the "automatic" hold within the normal availability schedule? (i.e. 2-day for local; 5-day for non-local)

If you wish to be able to do this WITHOUT having to give a Case-by-Case notice, then I do believe you need to amend your policy and send it to your customers at least 30 days before implementation per 229.18(e)

If you wish to define a narrow parameter of the occassion when the "automatic" hold will apply, I recommend you get qualified counsel to write the provision as it doesn't seem to fit any of the model notices in Appendix C.

Otherwise, I believe you can place a Case-by-Case hold on those checks that meet the parameters (over a certain $ & for purposes of funding a wire transfer) and give the hold notice to your customer at time of deposit. (If you made the decision AFTER the deposit was made, you can mail the notice out no later than the first business day following deposit.)

Note - if you wish to impose the Exception Hold schedule (7 days / 11 days) then you STILL need to give your customer a notice of delayed availablity at time of deposit even if you amended your Hold Policy Disclosure. (You can also mail out the Exception Hold notice no later than the first business day following the day the facts become known for an Exception Hold.)

[This message has been edited by Bonnie M (edited 02-15-2002).]