A customer filed a reg E claim because funds he transferred to an external bank did not arrive. The bank gave provisional credit and continued to investigate. The bank the funds went to were returned because the account information was incorrect. Now the customer has his original funds back in his account and our provisional credit. Must we give him the required notice and watch for overdrafts for five business days or can we reverse the prov cr immediately?

Don't reverse the provisional credit. Instead, make your provisional credit final and reverse the credit for the returned funds from the other bank, stating that it's a second credit for the funds. Do that all on the same day, and you don't need to do the OD monitoring dance.

That keeps everything compliant. Thanks