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What is Reg CC?

Blog Post
May 21, 2020

To standardize how and when banks process checks, Congress passed the Expedited Funds Availability Act (EFAA) in the late 1980s. The legislation created protocols for financial institutions, including disclosure requirements for available funds and time frames for fund availability.

“The Expedited Funds Availability Act (EFAA) of the late 1980s created protocols for financial institutions, including disclosure requirements and timeframes for funds availability”

Prior to the EFAA, financial institutions could create and follow their own deadlines for check processing. Banks and financial institutions were not required to notify their customers when funds became available for withdrawal. They also could indiscriminately place holds on checks.

What Reg CC Means for Financial Institutions

The Federal Reserve’s implementation of the EFAA is known as Regulation CC (Reg CC). It’s split up into four subparts, each outlining a different set of check-related regulations.

  1. General: This introductory section describes which federal banking regulatory agencies are responsible for maintaining Reg CC compliance, how key terms are defined in the regulations, and what the purpose of the regulations are.
  2. Availability of Funds and Disclosure of Funds Availability Policies: This section spells out exactly when banks must make funds available to consumers, when they must start accruing interest on interest-bearing accounts, and how and when banks must disclose fund availability to their customers.
  3. Collection of Checks: The third section of Reg CC allocates how paying and returning banks are responsible for bounced checks, how and when they must notify their customers of nonpayment, and how checks must specifically be endorsed in order to be accepted by financial institutions.
  4. Substitute Checks: The final section of Reg CC details the conditions when certified duplicate copies of checks should be issued and how consumers should be notified of that issuance.

How You Should Respond to Reg CC and the New Rule

As the Federal Reserve recognized the primarily all-electronic nature of check processing, one final rule took effect July 1, 2018. In a post by BankersOnline, “The Board is also applying Regulation CC’s existing check warranties under subpart C to checks that are collected electronically, and in addition, has adopted new warranties and indemnities related to checks collected and returned electronically (including those deposited via remote deposit capture and mobile remote deposit capture) and to electronically-created items.” You can read the updated rule here: Availability of Funds and Collection of Checks

As with most financial regulations, knowledge is your biggest asset to maintaining compliance. Finance industry professionals can stay ahead of the curve by carefully reviewing the Federal Reserve’s Compliance Guide for Regulation CC.

The online document is not comprehensive, but it does provide a helpful overview of the regulations. For more in-depth information regarding Reg CC compliance, visit the Federal Reserve Board’s site, A Guide for Financial Institutions: Compliance with Regulation CC.

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