Compliance Journal June 2024
Special Focus Regulation CC Reminders and Inflation Adjustments to Certain Dollar Thresholds By law, the Board of Governors of the Federal Reserve System (FRB) and Bureau of Consumer Financial Protection (CFPB) (collectively, the agencies) are required to adjust certain dollar thresholds of Regulation CC every five years by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As a result of a 21.8 percent increase in the CPI-1 between July 2018 and July 2023, dollar thresholds for several Regulation CC funds availability sections will increase effective in 2025. The specific adjustments are listed below. In addition, given the frequency of calls to the WBA Legal Call Program regarding Regulation CC, this article also provides reminders regarding two frequently discussed topics—funds availability disclosure and remote deposit capture. Funds Availability Policy and Disclosure Regulation CC requires a bank to provide a funds availability disclosure which describes its policy as to when funds deposited in an account are available for withdrawal. The disclosure must reflect the availability policy followed by the bank in most cases, even though a bank may in some cases make funds available sooner or impose a longer delay. For example, Applesauce Bank has a funds availability disclosure and policy that is next day availability. However, in practice, the bank generally does not delay availability and instead provides same day availability. In this case, Applesauce Bank’s disclosure and policy does not match its actual practice. If Applesauce Bank’s standard practice is to offer same day availability, then its policy and disclosure should match that practice. Regulation CC also states that in disclosing a bank’s funds availability policy that it follows in most cases, the bank may provide a single disclosure that reflects one policy to all its transaction account customers, even though some of its customers may receive faster availability than that reflected in the policy disclosure. Thus, a bank need not disclose to some customers that they receive faster availability than indicated in the disclosure. If, however, a bank has a policy of imposing delays in availability on any customers longer than those specified in its funds availability disclosure, those customers must receive disclosures that reflect the longer applicable availability periods. In either case, a bank’s funds availability disclosure should reflect its policy, which should be consistent with practice. In the scenario that some customers may receive faster availability, despite a policy to the contrary, it is important to note that faster availability in this scenario is the exception, rather than a reflection of bank’s typical practice. Regulation CC requires disclosures for customers to understand their relationship to the accounts and when their funds are available, so the disclosures should reflect bank’s actual practices. On occasion, a bank could find that its actual funds availability practice has morphed from its fund availability disclosure and policy inadvertently. In the example above, it could be that Applesauce Bank did not make a board-level decision to alter its funds availability policy to same day availability, but that over time, the actual practice at the teller line has changed to routinely provide same day availability. Banks should be mindful to monitor actual practice to ensure the bank’s Regulation CC funds availability disclosure reflects the availability policy followed by the bank in most cases. Banks in Wisconsin have been criticized in compliance examinations for the bank’s Regulation CC funds availability disclosure and policy not reflecting its actual practice in most cases.