In polishing up our policy, we've come across something we need clarification on. If a new account customer deposits a check (not a government check or cashiers check, just a regular check) - how long can we hold it? It appears from what we're reading that there isn't a time limit! I think we might be missing something here.

Nor is there a requirement for providing a notice or $100 availability to the customer. However, in trying to promote consistent application in training and customer service we have started using the exception hold guidelines. Branches are encouraged to follow-up to see if new customer checks have cleared if they have any concerns.

You're not missing anything. This is one of the bank protections that do exist in Reg CC. Be careful though that you look to the relationship age, and not just the account age in determining whether this exception applies. A customer with an existing transaction account relationship with your bank that opens a new checking account and deposits a check is not eligible for this new account hold.

I agree with Jim and would also add that if the customer had a previous account within the past 30 days, the new account exception does not apply. I would also suggest that you make sure your policy and Reg CC disclosures have the provisions for new account exceptions included. I have seen many instances where banks have elected not to include this in the disclosures.

Rather than start a new thread, I'm tagging on to this one. It may be little lengthy.

The bank has a new customer who opens both a new checking and new savings account. Deposit is a non-local cashier's check in the amount of $27,691.77. Customer wants to deposit a portion to her savings and a portion to her checking account. Teller does a "split" deposit, $19,591.77 will go to the savings and $8,000.00 to the checking and $100.00 was given back in cash. Teller decides to place a hold on the cashier's check and prepares two notices. Hold notice #1 is for $19,591.77 into the savings account and held for 11 days. Hold notice #2 is for $8,000 into the checking account also available in 11 days. Is it possible to place 2 holds on the same check?

Also, since they are both new accounts (and the bank does place holds on savings account deposits), what would have been the best way to handle this? Thank you.

Technically speaking, the amount deposited to the savings account can be held exclusive of Reg CC. The reg only applies to transaction accounts. The balance deposited to the checking account could be handled with two holds. On an official bank check the first $5000 (not the first $100) must be available the next business day - the amount over the first $5000 may be held on an exception hold for reason "amount deposited exceeds $5000". The amount held in the savings account may be held however long you want to - being reasonable, of course. But you state that your policy extends the reg to savings accounts so you can't hold the balance over $5000 longer than the 11 business days. I suppose that's clear as mud - just like the regulation.

I don't disagree with Allan, but I was wondering, what is the reason for the hold? You said it was for 11 days, so it must be a nonlocal check and it must be for an exception hold reason (a reasonable cause to doubt the collect-ability of the check). Are you holding it because it is just a new account?

The teller did not indicate a reason on the notice so we are surmising that she made it a non-local with an exception. We think we understand without a reason it appears to be case by case; but we believe she meant to use an exception. (NOTE: in case this wasn't clear above, the teller completed 2 hold "notices" not just 2 holds.) Again it is a cashier's check so we thought we understood that if the New Account exception was used, after the first $5,000, isn't the remainder available by the 9th business day and not the 11th? Would it have been more appropriate to us the longer exception hold?

To use an exception hold (not New Account hold), you must have a reasonable cause (large deposit, redeposited check, repeated overdrafter or "the existence of facts that would cause a well-grounded belief in the mind of a reasonable person." Your notice must state this reason.

You are correct that the amount above $5000 must be available on the 9th day (at least for a cashiers check). But no reason is necessary - it is a new account is all the reason you need.

Could this hold have been accomplished using one hold notice to the customer rather than two or was the two ok since they are both different accounts? I'm a little unclear as to how we should have prepared this. Where do you apply the $5,000 next day in this instance? Thank you.

At my bank we would have used two holds since two different accounts were used and the account number is disclosed on the hold form. If I understand your scenario, we would have given next day availability for the first $5,000 of the Cashier's check, then 9 days for everything over the $5,000. If your policy states that Reg CC only applies to transaction accounts, then 11 days would be OK on the savings deposit. We use Reg CC on savings as well as DDA since the clearing times for the items are the same and making it as simple as we can avoids many hold errors.