So, we’ve discussed cashing on-us checks. Well, what if a customer deposits an on-us check? There is a question of the appropriate “funds availability” timeline for a deposit versus cashing an on-us check. Regulation CC generally requires a bank to make funds available to their customers as soon as the material risks associated with the type and amount of the check subside. The timelines act as a balance of safety and soundness and consumer protection risks. When a customer deposits an on-us check, the risk is relatively low because the bank can almost immediately determine that the check is authentic and that funds are available in the drawer’s account. When a customer deposits a transit check, the risk is much greater because the check could be altered, fraudulent, stolen, there may be insufficient funds, the clearinghouse or payor bank may have a system issue that delays settlement, etc. Because the risk is much lower, funds from on-us checks must generally be made available no later than the next business day following the banking day of deposit. A final word on funds availability — remember that banks are not permitted to invoke the “holds on other funds” rule when cashing on-us checks for customers. The handling of on-us checks presents unique challenges for banks, particularly regarding wrongful dishonor and funds availability. While federal regulations may not explicitly mandate the payment of on-us checks to non-customers, banks often have contractual obligations to do so. Additionally, state laws and UDAAP considerations may necessitate equitable treatment of customers and non-customers in on-us check cashing policies. Banks should carefully navigate these complexities by establishing clear procedures for on-us check handling and consulting bank counsel and your friendly neighborhood compliance advisors for guidance. Theodore “Theo” Kelly, JD, MBA, CCEP, associate general counsel, supports the Compliance Hub division. He holds a bachelor’s degree in political science from Ohio State University, a master’s in business administration from Franklin University and a Juris Doctor from Capital University Law School. 402.330.6300 www.walentineotole.com 11240 Davenport St. • Omaha, NE 68154-0125 WALENTINE O’TOOLE, LLP When time is of the essence, experience counts. Walentine O’Toole blends confidence, experience and knowledge with the personal attention you can expect from a regional law firm. Nebraska, Iowa and South Dakota Celebrating 40 years serving our valued clients. MORE FACE TIME. LESS WAIT TIME. Visit NebraskaBlue.com/Telehealth to learn more. Health benefits that give you access to virtual visits with doctors and specialists, even if you’re out of state. So you can get the care you need — wherever you are, whenever you need it. An independent licensee of the Blue Cross and Blue Shield Association. 28 NEBRASKA BANKER
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