If we are unable to verify a large check because the paying bank "doesn't verify funds" (I won't share the name...but it has the word America in it...oops!)it only verifies that the account is active, can we place an extended hold for reasons such as unable to verify funds or the typical "we believe a check will not be paid because..." unable to verify funds? We've done so several times but want to make sure we can. Thanks.

I'd say no, you cannot hold beyond Reg CC guidelines as you have not received any information stating that the check is in question.

Send large checks for collection.

This has been debated in the past, take a look at this thread for a good discussion.

Thanks to you both! Jello, very good link to a previous thread. Now I'm stressed, we have issues because we always delay availability for that reason. You just can't win, especially since a LOT of banks won't verify funds anymore. Yeah, there's the large deposit exception but there's still the potential for a $5,000 loss.

I hadn't read the previous thread before, so I went back and read it this morning. We do exactly what they are saying not to do. If a bank will not verify funds for us, we mark other and type "unable to verify funds". We just came through an OCC exam a couple of months ago and Reg CC was one of the Regs that the examiners took a close look at. We discussed this particular practice and the reasoning behind it, and the examiners had no problem with it whatsoever. Does it seem to anyone else that there is some latitude given depending on who does your exam?

I think you got some fortuitous "slack" from your examiner. Don't look a gift horse in the face, but do think about whether you want to continue with the practice. IMHO, one cannot justify an exception hold for "unable to verify." In my compliance world, an absence of positive information does not equal an inference of bad information.

I disagree. Reg CC says I must have "the existence of facts to cause a well grounded belief in the mind of a reasonable person" that the check may not be good. One of the model reasons for an exception hold is "information from the paying bank indicates the check may not be good. If the paying bank won't verify the funds I certainly have an existence of facts that the check MAY not be good.

I argued this on the previous thread that is referenced, but my argument is growing stronger (at least in my mind ). I think many people believe this, as evidenced by the multiple people that bring this up as well as those of us that arguing it. Therefore, you would have to argue that we are all not "reasonable" (the other component to make this an exception hold.)

Now, if I'm wrong, what's the penalty. I've never seen a bank get any type of serious trouble for Reg CC. Failure to follow my advise exposes the bank to many potentially bank checks. From a risk-based issue, this is a slam dunk.

I tell you what I wish they would change with Reg CC is the ability to put extended holds on cashiers checks. We get daily fraud updates from our state banking association, which also include FDIC and nationwide alerts. We are having trouble keeping up with all the fraud alerts on stolen and counterfeit checks. It often takes a long time to try to call and verify whether the check is legitimate or not, it is really becoming a problem. I really wish regulators would consider a modification to reg CC in light of all the fraud.

MackenzieS at home

Our FDIC field and regional office told us, in no uncertain terms, that we cannot use "Reasonable Doubt" just because a bank does not verify checks.

All of which proves that reasonable people will disagree.

And please, David, don't assume that my splitting hairs over what a "reasonable belief" is constitutes an implication that anyone is unreasonable.

I happen to agree with David's assertion that there seems to be little financial risk (and everything to gain except perhaps goodwill) in placing these holds. But I disagree with him on the premise that lack of information from the drawee constitutes a reasonable belief that the item may not be paid. It runs in the face of our everyday acceptance of 99.99% and more of all checks for deposit: we do so on the reasonable assumption (I think) that no news (about dishonor) is good news.