We are currently looking at setting up multiple ITM (Interactive Teller Machine) machines and I just have a question in regards to Reg CC holds that could be placed on a deposit made through an ITM. If the customer is working with an actual video teller while using an ITM and a decision is made at the time of deposit to place a Reg CC hold on the funds, there will be no way to provide an actual hold notice through the ITM. We have talked to other FI's and have been told that they mail the hold notice either same day or the following business day. My question is: does this satisfy notice requirements set forth in Reg CC or would it be in violation? I thought the notice had to be provided at time of deposit unless the customer did not make the deposit in person or a decision to hold the funds was made at a later time.

Thoughts?

229.16(c)(2)(ii) Notice at time of case-by-case delay--
Timing of notice. The notice shall be provided to the depositor at the time of the deposit, unless the deposit is not made in person to an employee of the depositary bank or the decision to extend the time when the deposited funds will be available is made after the time of the deposit. If notice is not given at the time of the deposit, the depositary bank shall mail or deliver the notice to the customer not later than the first business day following the banking day the deposit is made.

229.13(g)(1)(ii)(A) Notice of exception
Timing of notice: The notice shall be provided to the depositor at the time of the deposit, unless the deposit is not made in person to an employee of the depositary bank, or, if the facts upon which a determination to invoke one of the exceptions in paragraphs (b) through (f) of this section to delay a deposit only become known to the depositary bank after the time of the deposit. If the notice is not given at the time of the deposit, the depositary bank shall mail or deliver the notice to the customer as soon as practicable, but no later than the first business day following the day the facts become known to the depositary bank, or the deposit is made, whichever is later.

So, just to make sure I am understanding this correctly. The notice shall be provided at the time of deposit unless it's not, and then we can mail the notice as long as we follow the guidelines listed above.

So, we would be ok to mail the notice since we will not be providing it at the time of deposit.

Thanks Brian!

That's what the regulation says, yes.

From a practical viewpoint, if you mail the notice the day of the deposit, the customer may not get it until two days later, depending on the time of day you mail it. If your customer ordinarily gets same- or next-day availability, they may assume the funds are available and issue checks or bill payments based on that assumption.

If possible, I would suggest the teller notify the customer during the interactive video session concerning the hold. Of course, that could create a privacy concern at the customer end of the communication.

I agree John, I believe the customer definitely needs to be notified at the time of the deposit. Even if the notices are being mailed at a later time.

Thanks so much for your help!

It would make sense, I think, for an ITM to be programmed so that if the teller determines a hold is to be placed, the teller should be able to have the ITM produce the notice as part of the deposit receipt or on another slip of paper printed by the receipt printer. That would remove the concern for privacy.

I totally agree John, but from all of the information we have received from ITM vendors, this isn't an option. At least at this time.

Which leaves us to figure out how to make it work...

Making the deposit at the ITM, even with video capability, would not be "made in person" in my understanding. This is what allows you to mail the notice. At the end of the day the deposit goes into the machine, just like an ATM, not into the hand of the bank employee.

Just came across this thread now, and thought I should mention that Brian C.'s interpretation of the in-person deposit notice requirements does not align with my experience, or what I've been told by auditors and examiners, based on the following official interpretations from Appendix E to Part 229, Section VII (H)(1)(c) and (d):


c. For deposits made in person to an employee of the depositary bank, the notice generally must be given to the person making the deposit, i.e., the “depositor”, at the time of deposit. The depositor need not be the customer holding the account. For other deposits, such as deposits received at an ATM, lobby deposit box, night depository, or through the mail, notice must be mailed to the customer not later than the close of the business day following the banking day on which the deposit was made.

d. Notice to the customer also may be provided at a later time, if the facts upon which the determination to invoke the exception do not become known to the depositary bank until after notice would otherwise have to be given. In these cases, the bank must mail the notice to the customer as soon as practicable, but not later than the business day following the day the facts become known. A bank is deemed to have knowledge when the facts are brought to the attention of the person or persons in the bank responsible for making the determination, or when the facts would have been brought to their attention if the bank had exercised due diligence.


So, it is not correct to say that it is always OK to send a hold notice the next business day. If the person responsible for making the hold determination is the teller, and if the teller knows all facts necessary to make that determination, then the hold notice must be provided at the time of deposit. You only avoid this requirement if the person responsible for making the hold determination is someone in the back office, in which case you never have to provide notice at the time of deposit.

Re. whether or not an ITM deposit is "made in person to an employee of the depositary bank" is an interesting question. I think an argument could be made that if the video teller is provided with scanned images of the checks being deposited, then there is no practical difference and the in-person deposit hold rules should apply. It'll be interesting to see what happens when banks using ITM are examined.