Skip to content

Reg CC Notice of Nonpayment for NSF Return

We have an auditor questioning Regulation CC and its relation to Subpart C 229.33(d). If we have a loan customer who makes a check payable to our bank for payment, and the paying bank says its being returned for NSF, are we required to send our loan customer written notice of nonpayment under this section of the regulation?

Answer by Ken Golliher: Sec. 229.33 Notice of nonpayment.

(a) Requirement. If a paying bank determines not to pay a check in the amount of $2,500 or more...

You are the payee, not the "paying bank." Regulation CC's instruction does not apply to you.

Your motivation for promptly notifying the drawer of the bad check would come from enlightened self interest, not law or regulation.


Answer by Randy Carey: Ken - I had the same gut feeling, but technically the auditor might be on to something.

The definition of a depository bank (229.2(o)) includes: "A bank also is considered a depositary bank with respect to checks it receives as payee. For example, a bank is a depositary bank with respect to checks it receives for loan repayment, even though these checks are not deposited in an account at the bank."

and 299.33(d) requires: "This paragraph requires a depositary bank to notify its customer of nonpayment upon receipt of a returned check or notice of nonpayment, regardless of the amount of the check or notice."

Is this a new gotcha that someone dreamed up??? I have never heard of it before I followed this through the regulation, but it appears to be an accurate assessment of the requirement.


Answer by Ken Golliher: Ditto.

I'm taken aback, but assume my "enlightened self interest" would assure that I met the timing requirements of the notice. However, I'm not certain I would have automatically complied with the content requirements. My "notice" would have been more focused on the "Whattayagonna do about it" issue.


First published on 6/24/13

First published on 06/24/2013

Filed under: 
Filed under compliance as: 

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics