Page 3 - Compliance Monthly 8-12-2019

Focus

Of the Month

Availability of Funds and Regulation CC Final Rule

Effective Date: July 1, 2020

In June 2019, the FRB and CFPB finalized amendments to Regulation CC implementing a statutory adjustment to adjust the dollar amounts under
the Expedited Funds Availability (EFA) Act for inflation. The final rule applies to all depository institutions regardless of their size.

Highlights of the amendments are:

• The dollar amounts will be adjusted every five years beginning July 1, 2020. The next adjustment of the dollar amounts will occur
on July 1, 2025 and on July 1 of every fifth year after 2025. The adjustments to the Regulation CC thresholds that will impact
financial institutions as a result of this amendment are:
o The minimum amount of deposited funds that financial institutions must make available for withdrawal by opening of
business on the next day for certain check deposits will increase to $250 from the current $200;
o The amount a financial institution must make available when using the EFA Act’s permissive adjustment to the funds-
availability rules for withdrawals by cash will increase to $450 from the current $400;
o The amount of funds deposited by certain checks into a new account that are subject to next-day availability will
increase to $5,525 from the current $5,000;
o The threshold for using an exception to the funds-availability schedules if the aggregate amount of checks on any one
banking day exceeds the threshold amount increase of $5,525 from the current $5,000;
o The threshold for determining whether an account has been repeatedly overdrawn is increased to $5,525 from the
current $5,000.
• The civil liability amounts for noncompliance will not less than $100 (no change from current amount) to no more than $1,100 (an
increase from the current $1,000) for an individual action and no more than $552,500 ( an increase from the current $500,000), or
1% of the net worth of the financial institution in a class action law suit.
• The agencies also amended Regulation CC to incorporate the Economic Growth, Regulatory Relief and Consumer Protection Act (S.
2155) amendments to the EFA Act, which extends coverage to American Samoa, the Commonwealth of the Northern Mariana
Islands, and Guam as well as certain other technical amendments.

Action Plan Checklist:

• Regulatory Impact Analysis. Perform an assessment of the impact that it will have. Impact may be limited for financial institutions
with next day availability or based on your exception and case-by-case hold policies.
• Risk Assessment. Update your compliance risk assessment as well as departmental risk assessments if you are a financial institution
impacted by the extended coverage provisions or for any changes to current process.
• Systems. Work with your third party provider to ensure that system changes are scheduled I regard to availability amounts and to
understand the timeline for such changes.
• Policies and Procedures. Ensure that policies and procedures are updated based on the results of the risk assessment and the
changes in the threshold amounts.
• Educate. Schedule training for front line, call center, deposit operations and compliance personnel concerning the changes. Not
only should training address the regulatory change but it should also address how the change will be handled operationally.
• Consumer Awareness. Review signage and disclosures to ensure that the adjusted thresholds are incorporated. Ensure that old
disclosures are removed from the system, or if preprinted, are destroyed.
• Monitoring. Revisions must be made to monitoring and internal audit programs to ensure that the proper controls are in place.

https://www.federalregister.gov/documents/2019/07/03/2019-13668/availability-of-funds-and-collection-of-checks-regulation-cc

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