Hi! I have run into a situation while auditing Regulation O. We have an executive officer that has a checking account, and a check was trying to clear the account. The check would have taken the account into the negative over $1000.00. The check was paid, and an overdraft charge was applied to the account. The executive officer deposited enough money to cover the check the same day. I thought that this was a cut and dry violation of Regulation O, but then I found a posting from a compliance guru online that said the following:

"If a bank receives a check in its cash letter, it has until midnight of the day after the day that it received it to return it. Until the time has past for the bank to return the item, it has not technically paid it." This article is titled "Guidance on Executive Officer and Director Overdrafts, written by Blair Rugh. https://myemail.constantcontact.com/Guid...aid=pAA_ugz5Am8

Has anyone ever heard of this? If so, could you please point me to some regulatory guidance, so that I can justify why this should or should not be a finding? I must confess that I want this to be true:) Thank you in advance for any insight. I appreciate it!

Thank you!

It is not actually a Reg O violation until the check posts to the account and actually makes the account insufficient. If the check is NSF and is kicked into the cuts and they pay it but there is a deposit so the account will not actually be OD then it is not a Reg O. if they pay the NSF check and it actually posts to the account making it have an OD balance, then that is a Reg O. Clear as mud.