If we did not place a hold on a deposit at the time of deposit, but are notified at a later date (4 days after deposit) that the check is being returned as a fraudulent item from the paying bank, is this subject to Reg CC Hold procedures or can we simply place a hold on the funds in anticipation of the check coming back?

Why don't you just process the return? This is way outside the realm of Reg. CC.

rlcarey is suggesting that you "revoke provisional credit" under the UCC i.e. debit the item back to the account now. The reasonable cause to doubt collectibility hold is available to you and it might protect you. However, if the money is still there, revoking provisional credit will protect you.

I agree. Under both Reg CC and the UCC in your state you are required to give your depositor notice of the fact that you were informed that the item is coming back, within one banking day of being so informed. You best option is to combine the information required in that notice with a notice of charge-back to the account. The debit to the account can be offset with a credit to whatever suspense account your bank uses for such things. Then, when the item actually appears in your inbound return items, you can debit the suspense account to remove the amount from suspense, offsetting it with a credit to the Fed or your correspondent (whichever charged you for the item).

As noted by Randy and Ken, you avoid the whole Reg CC hold process, and you can ensure that, if the item takes a bit longer than expected to show up, you won't be releasing funds from a hold and risking their withdrawal by your customer.

Are you able to charge back an NSF item the day you receive notification as well, or do you have to wait until the next day when you receive the item so they have a chance to cover it? In our scenario, normally we will run an item back through but occasionally it will come back again or there won't be funds so we charge it back to the account when we get the item. Can we charge it back the day before when we get notified that it is coming back? Can someone point us to where it talks about this in the UCC regulation?

normally we will run an item back through

Hopefully only with a hold harmless agreement. If the delay in the return of the check to the customer causes a loss, the bank will be on the hook.

229.33(h) Notification to customer. If the depositary bank receives a returned check, notice of nonpayment, or notice of recovery under § 229.35(b), it shall send or give notice to its customer of the facts by midnight of the banking day following the banking day on which it received the returned check, notice of nonpayment, or notice of recovery, or within a longer reasonable time.

Actually, as the quoted wording from Reg CC indicates (different wording appears in the UCC, but the message is the same), it's a delay in providing the notice to the depositor that causes a loss that can put the bank on the hook.

To be clear, banks have no "right" to re-run items unless the customer has specifically agreed to it. You take uncompensated risks for the reasons given.