Cashier's Check and Reg CC New Account

If I understand correctly, placing a New Account hold on a cashier's check does not affect the entire amount, right? So a $2,500 cashier's check deposited into a new account cannot have a New Account hold, because it is less than $5,525?

That is correct. For mandatory next day items, you can hold the amount over $5,525 up to the ninth business day. Anything under that must be given next day availability.

Correct. For a new account hold on deposited "next day" checks, you make the first $5,525 of the next-day checks available by the start of business on business day one after the banking day of deposit. The rest of the "next day" check amount has to be made available by the start of business on the 9th business day after the banking day of deposit.

On-us checks are not covered by the new account hold rule, and the $225 next-day availability provision of §229.10(c)(1)(vii) and the provisions of §229.12 aren't applicable to any other checks deposited to a new account.

Thanks Brian and John!!!

Don't forget, you can place a "Case By Case" hold on the check.

No, you can't. Case by case holds cannot be placed on mandatory next day items such as cashier's checks.

Brian is correct - you cannot place a case-by-case hold on mandatory next day items. However, if another exception hold reason applies - for example, frequent overdrafter, reasonable cause to doubt collectibility, etc. - then you can hold the entire amount of the item that normally requires next day availability for up to 7 business days.

REGARDLESS, you can FIND a reason to hold ANY check.

If you think that a brand new customer is opening a brand new checking account with a $500,000.00 Cashier's Check and getting $494,500.00 available in a few days, you're nuts.

You're still not quite right. If you're hunting and inventing reasons to hold a check you're violating a federal regulation - period. However, if you have a brand new customer that comes in a $500k cashier's check that you don't trust you can refuse the check altogether.

I think the regulation says that the customer would have $5,525 available the first business day and the remainder available by the ninth business day using a new account hold exception. If I am that concerned about the check or the customer, I refuse to open the account.

I donate of my time freely to support the compliance community. Personal attacks will not be tolerated.

Of course, if this is a new account, it's unlikely you'll have a "frequently overdrawn" customer situation. If you do, you'd probably be closing the account and, as suggested in an earlier comment, refusing the cashier's check deposit.

I have a clarifying question...

A mandatory next-day item would NOT include certain checks (US Treasury, postal money order, cashiers, on-us, etc.) that are NOT payable to the account holder, right? 229.10(c)(1).

If so, is it correct that such a third-party check could be placed under a case-by-case hold, if the bank wishes to accept it for deposit in the first place?

(Disclaimer, I think such a decision isn't so great in the first place. Further disclaimer, I think CBC holds are pretty worthless. But if a bank is facing such an issue, I'd like to debate it will dance on the head of a pin. )

Trying to stir things up, Rebekah? Because I share your opinion of the value of CBC holds. But technically, those checks you mention are subject to section 229.12 rather than 229.10 if they are deposited by anyone other than a payee of the check.

Fabulous, thanks for confirming John. Always good to have a compliance lifeline when the regulatory deep end starts to suck you under.

And yes, the extent of my rabble-rousing largely amounts to arguing the minutia of Reg CC. (Note to self... develop a wild side...)

Oh for pity's sake, I need to go one step further, please. If such a third-party check were being deposited into a new account, it:

- Would not be considered a next-day item, because of 229.10(c)(1); AND
- Would not be subject to 220.12 either, because of 229.13(a)(iii)

Therefore, a "certain check" 1) not payable to the account holder 2) being deposited into a new account could be held, without any notice, for the entire check amount, for the duration specified in the bank's Funds Availability Policy for new accounts. Right?

That's a pretty darn narrow set of parameters, but geez louise, I can see it happening.

I'd like to know what the statistics are of banks being burned on making the $5525.00 available next day on a new account.

I think we all would, but you are not going to find any reliable statistics. If you have doubts, all you have to do is refuse it for deposit.

I've been out of CC for a while, but couldn't you offer to put it into a savings account and put an extended hold on the entire check?