Customer informed our institution today that a check cleared their account twice; 2nd presentment occurred more than 12 months ago. Same depository bank in each instance, however the serial number was not correct on one item so our internal systems would not have flagged as a duplicate. Our account agreement with the customer says that errors must be reported within 60 days. Is it correct that as the paying bank, we would not be liable in this instance? What is the regulatory guidance on this? UCC or Reg CC? Thanks in advance.

If the most recent item was presented as a check image or (hardly ever happens anymore) paper check, or as an RCK ACH, it's subject to the UCC and your deposit agreement. If it arrived via ACH as a check conversion entry (BOC, ARC), and the account is a consumer account, it's a Reg E issue. Check conversions on business accounts aren't Reg E issues, so they remain UCC concerns.

If it's a Reg E issue, and you can confirm it is a duplicate of the first presentment of the check, the customer makes a claim that the second payment was not authorized, and the bank honors the claim under 1005.6, regardless of how long ago the ACH item posted. Reg E doesn't have a "statute of limitations" on unauthorized EFTs.

If it's a UCC issue, your deposit agreement probably protects the bank from the customer's late claim. If the customer's claim was made more than a year after the statement of account was sent with the second presentment of the item, UCC section 4-406 should bar the customer's claim for being too late whether your deposit agreement does or not (see your state's version of section 4-406 of the UCC to make sure it includes a one-year deadline in the last paragraph of the section).

Perfect, thank you! It was presented as a check image.