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Withdrawal Limitations on ACHs Returned NSF

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Reg D and MMKT withdrawal limitations. We have a customer that has a large money market account they deposit into regularly by us crediting the account when we originate an ACH file for them. We receive a number of ACH returns where these drafts are NSF at other banks and we charge them back to our customer. We probably charge 10 or 12 a month back to them. Are these exempt from counting towards the transaction limits? This customer would like to use the Internet banking system we have to move money to another account in our bank. Will these count towards the transaction limits?

First question: Do the ACH returns count toward the transaction limits?

No. In a FRB Staff Opinion Letter of 7/29/92 (Federal Reserve Regulatory Service Locator No. 2-342.21), it was stated that when a check is returned unpaid in similar circumstances, the charge-back of that returned deposited item would not count toward the six-transfer limit. I see no reason not to apply the same logic to bounced ACH items.

Second question: If the customer uses your Internet banking system to move money to another account (from the MMDA), will the transfers count toward the transaction limits?

Yes. Internet-generated transfers are considered transfers initiated by telephone order or instruction. They are counted toward the six-transfer limit.

First published on 1/16/06

First published on 01/16/2006

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