We have a business customer that has asked that we take returned checks that they have deposited from their customers and forward them through our cash letter returns to another bank and not debit their account with us. This business has an operation here, but the home office is in another state. The account they have with us is basically a clearing account and the monies are swept out almost daily. We currently don't have the system capabilities to do this and were working on updating our system when a consultant stated we would be in violation of Reg CC if we did this. I'm brought in because of compliance issues, but I'm not understanding the other side of it. Can someone explain this to me? I can't understand where we would get our money from if we have a returned check but don't debit the customer's account.
Thank you!

"when a consultant stated we would be in violation of Reg CC if we did this."

Assuming this is a paid consultant, anytime a paid consultant tells me something I do not understand I make them stop and explain it to me. If you have a written agreement with a company outlining how you mutually agree to process returns, I am at a loss as to how you would be violating Reg. CC.

As for the logistics of forwarding returned items to another bank, I will let someone else speak to that as it has been a while since I was involved in item processing.

In the olden days the companies would just stamp their "please return to RT#" stamp on the back of the item and it would be qualified by hand to the requested bank. Now that almost everyone is doing image exchange, this is a nearly impossible task, unless your system is capable of letting you re-qualify the item back through your nightly return item cash letter they you would get paid by the fed. But the catch being now you have set yourself up for a potential late return claim. If they have a ZBA sweep, why not just charge them back as usual and mail them to the requested office and the money should work itself out for the customer.

I too suggest you go back to the person who gave you the advice that automatically re-clearing items would be a Regulation CC violation. I don't see how, but would say that you would need to have such a direction reduced to writing to waive your notice of dishonor requirements.

However, I think those issues are secondary. Your description of the relationship was:



If you are looking at a lot of fee income from this arrangement, you might consider putting in the enhancements this customer has requested. If you are not, you are simply serving as the unpaid conduit for this customer, I encourage you to forget about the compliance issues involved in providing the extra service and just say, "No."

Compliance is the "tail" if you will, it does not wag the dog.