• Funds Availability Regulation CC Amendments
  • August 15, 2017 | Authors: Lawrence D. Coppel; Marjorie A. Corwin; Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • The Board of Governors for the Federal Reserve System recently finalized long-awaited amendments to FRB Regulation CC’s Availability of Funds and Collection of Checks provisions to address the reality that most checks are presented, collected, and paid electronically. The final rules take effect on July 1, 2018. The rules, among other things, add new liability provisions concerning remotely deposited checks and require each bank that accepts a remotely deposited check (remote deposit bank) to indemnify any other bank that takes the underlying original check for deposit. The new indemnity obligation is not absolute. If an underlying original check has a restrictive endorsement (such as “for remote deposit only”), the bank that accepts the original check cannot make an indemnity claim against the remote deposit bank. Also, if a bank that accepts the underlying original check has acted negligently or in bad faith, the remote deposit bank’s indemnity obligation will be reduced proportionately to the extent of such negligence/bad faith. Financial institutions that offer remote deposit services should (1) examine their remote deposit agreements to ensure that customers have a duty to add a restrictive “for remote deposit only” type endorsement to all remotely deposited checks; and (2) discuss with the provider of their remote deposit platform any tools that the provider may have to examine incoming remote deposits for the specified restrictive endorsements (and reject checks without a proper restrictive endorsement). Please contact Christopher Rahl to discuss this topic or for help reviewing/updating your remote deposit agreements.