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#1105060 - 01/02/09 09:46 PM When is a check a check?
ComplyWithMeToo Offline
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Posts: 225
In regards to Regulation D and covered transactions for money market accounts. I'm aware of the 6 covered transactions and what they entail and the caveat that 3 of these can be a check - what I seem to be having a "brain freeze" over is whether a check is a check (for these purposes) regardless who it's written to? Example: Client writes 4 checks to themselves (in one month), are we out of compliance because 4 checks were written?

I say yes - but I'm begining to question my logic! Any one want to rescue me?

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#1105066 - 01/02/09 09:55 PM Re: When is a check a check? ComplyWithMeToo
ahanna Offline
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Texas
Checks written to "self" should be counted in the 6 limitation, not the 3 because they are not payable to third parties.

204.2(d)(2)"...and no more than three of the six such transfers may be made by check, draft, debit card, or similar order made by the depositor and payable to third parties."
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#1105072 - 01/02/09 10:04 PM Re: When is a check a check? ahanna
ComplyWithMeToo Offline
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Thanks for the help. Now let's confused the issue. What if the check is cashed at a different bank?

Example: Client has relationships at two banks A and B. Client writes a check from MMDA at Bank A but cashes it at bank B. Is this a covered transaction?

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#1105088 - 01/02/09 10:20 PM Re: When is a check a check? ComplyWithMeToo
ahanna Offline
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Posts: 380
Texas
Unless the check is actually payable to a third party, it should be counted in the 6 limitation instead of the 3.

If they actually came to your counter to cash the same check, it would be considered an in-person withdrawal, which is unlimited.

204.2(d)(2) Exemptions include: "... withdrawals (payments directly to the depositor) from the account when such transfers or withdrawals are made by mail, messenger, automated teller machine, or in person ... regardless of the number of such transfers or withdrawals"
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#1105178 - 01/03/09 02:29 PM Re: When is a check a check? ahanna
rlcarey Online
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rlcarey
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Galveston, TX
"Unless the check is actually payable to a third party, it should be counted in the 6 limitation instead of the 3."


I disagree. A transfer to a third party (the other bank) has been made using a check. It would count in the three category. The other bank just happens to credit the funds to the customer. If the customer lists thenselves as the payee on the check, they sign the check over to the other bank when they endorse the check. The payment goes to the other bank (third party). No different than writing a check to the gas company for credit to the customer's account.
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#1105276 - 01/05/09 01:48 PM Re: When is a check a check? rlcarey
Georgia Plum
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I agree with rlcarey. Otherwise you'd have to physically look at every check processed and that would be impossible to do. If it comes in inclearings from another bank, it counts in the three.

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#1119310 - 01/29/09 07:17 PM Re: When is a check a check? ComplyWithMeToo
Karen W. Offline
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Karen W.
Joined: Dec 2008
Posts: 5
Virginia
I'm confused about whether a check drawn on a money market account and deposited to another account of the same business at the same institution is considered a covered or non-covered transaction.

Also I'm wondering how other institutions monitor the check withdrawals on these accounts to verify whether they are payable to a 3rd party or payable to the customer?

Any help would be appreciated.

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#1119359 - 01/29/09 07:55 PM Re: When is a check a check? Karen W.
Milby Offline
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Joined: Apr 2007
Posts: 953
Tejas
Like rlcarey and Georgia Plum, if the check is presented at another bank I would treat that as as a third party check.

Keep in mind that if your customer writes a check to "Self" and negotiates it at your bank, it wouldn't count at all. It would be an unlimited transaction. See http://www.bankersonline.com/tools/regdlimits_chart.html Of course, you can choose to assess a fee for exceeding a disclosed transaction limit whether or not the transaction is limited by Reg D.

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#1119492 - 01/29/09 09:27 PM Re: When is a check a check? Milby
Karen W. Offline
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Karen W.
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Posts: 5
Virginia
Thanks Milby.
Part of my confusion came from ahanna's reply "Checks written to "self" should be counted in the 6 limitation, not the 3 because they are not payable to third parties." unless those checks were not negotiated at the bank which is not clear in ComplyWithMe's question.

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#1121340 - 02/02/09 08:36 PM Re: When is a check a check? ComplyWithMeToo
Still Complyin Offline
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Texas USA
what about when a check is written butcomes through as ACH item?

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#1121446 - 02/02/09 09:50 PM Re: When is a check a check? Still Complyin
John Burnett Offline
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John Burnett
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Cape Cod
If the ACH item is an RCK, ARC, POP, or BOC, I believe that it fits the phrase "check, draft, debit card, or similar order made by the depositor and payable to third parties" and should be counted as if it were a paper check payable to a third party.

What I truly believe is that the Fed should find a way to finalize its proposal of last year to eliminate the special limit for checks, drafts, debit cards, etc.

Not that they have anything else more important to be concerned with wink.
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