A Must-Read for Executives
Regulation CC (Reg CC), also known as the Expedited Funds Availability Act, is a critical piece of legislation that governs how financial institutions, including credit unions, make deposited funds available to their members. While it’s been around for decades, ensuring ongoing compliance is crucial for credit union executives. We know most credit unions are aware of Reg CC and specific deadlines as they come up, but we thought we would discuss this topic a bit as not every forms provider may be as proactive as Oak Tree in ensuring the answer is a resounding “YES” to the question of “is your credit union Reg CC Compliant?”
What is Reg CC and Why Does it Matter?
Reg CC aims to speed up the check-clearing process and ensure members have timely access to their deposited funds. It sets specific timeframes for when funds must be made available, depending on the type of deposit (cash, checks, electronic transfers) and the location of the paying bank. This regulation impacts everything from member satisfaction to your credit union’s operational efficiency and risk management.
Key Areas of Focus for Credit Union Executives:
- Funds Availability Schedules: Understanding the specific timeframes for different deposit types is paramount. Reg CC outlines various scenarios, including:
- Cash: Generally available immediately.
- Electronic Transfers: Often available the next business day.
- Local Checks: Typically available the second business day after deposit.
- Nonlocal Checks: These are usually available the fifth business day after deposit.
- Special Exceptions: Certain exceptions exist for large deposits, new accounts, and repeated overdrafts, allowing for longer holds. Ensure your staff is well-versed in these exceptions.
- Disclosure Requirements: Transparency is key. Your credit union must disclose its funds availability policy to members. This disclosure should be provided at account opening and be readily accessible (e.g., on your website, in branch locations). The disclosure must clearly explain when members can access their funds after depositing.
- Check 21 and Electronic Check Processing: The Check Clearing for the 21st Century Act (Check 21) is intertwined with Reg CC. It allows for the electronic transmission of check images, speeding up the clearing process. Your credit union must have the necessary systems and procedures to handle electronic check presentment and returns.
- Risk Management and Fraud Prevention: While Reg CC emphasizes quick access to funds, it’s essential to balance this with effective risk management. Implement robust fraud prevention measures to mitigate potential losses from returned checks or fraudulent deposits. This includes monitoring account activity, verifying endorsements, and training staff to identify suspicious transactions.
- Compliance and Training: The NCUA is responsible for enforcing Reg CC compliance for credit unions. Regular internal audits and staff training are essential to ensure ongoing adherence to the regulation. Keep up-to-date with any regulatory changes and update your policies and procedures accordingly.
Why Should Credit Union Executives Prioritize Reg CC Compliance?
- Member Satisfaction: Timely access to funds is a crucial aspect of member service. Compliance with Reg CC ensures members can manage their finances effectively, leading to greater satisfaction and loyalty.
- Regulatory Scrutiny: Non-compliance can result in regulatory fines, penalties, and reputational damage. Proactive compliance protects your credit union from these risks.
- Operational Efficiency: Streamlined check processing and clear funds availability policies contribute to operational efficiency and reduce the need for manual intervention.
- Risk Mitigation: Effective risk management practices related to Reg CC minimize potential losses from fraud and returned checks.
Reg CC is not just a set of rules; it’s a framework for providing efficient and reliable financial services to your members. As a credit union executive, staying informed and ensuring ongoing compliance is crucial for maintaining member satisfaction, mitigating risk, and protecting your institution. Regularly review your policies, train your staff, and stay abreast of any regulatory updates to ensure your credit union remains in good standing.
As a forms provider, we are always paying attention to the regulatory landscape and doing what we can to keep our clients compliant, and if you feel your forms provider is not doing that then it is time to see the Oak Tree Advantage. You also can stop expecting an annual cost increase as we also do everything we can to not have rates rise every year as we see some other forms providers doing. Check out our forms to see why we have the best forms on the market!
