Regulation CC governs when banks must make deposited funds available for withdrawal, and it generates a steady stream of examination findings at community banks. The rules are deceptively technical: different hold periods for different deposit types, specific notice requirements for each exception, and disclosure obligations that must be precisely worded. Examiners test Reg CC by pulling deposit hold samples and checking every element, the hold period, the reason, the notice, and the timing. This guide covers the availability rules, the exceptions banks rely on most, and the violations that show up in exam reports.
Key Takeaways:
- Regulation CC (12 CFR Part 229) sets maximum hold periods that vary by deposit type, method, and account age
- Next-day availability is required for specific deposit types including cash, electronic payments, and the first $225 of any deposit
- Exception holds (large deposits, new accounts, reasonable cause) require specific written notices delivered by the time of the hold
- The most common violations are missing hold notices, incorrect hold periods, and failure to make the first $225 available by the next business day
What Regulation CC Requires
Regulation CC (12 CFR Part 229), issued by the Federal Reserve Board, implements the Expedited Funds Availability Act (EFAA). The regulation has two core components:
Subpart B: Availability of Funds: Sets the maximum hold periods banks can impose on different types of deposits. These are maximum periods, banks can make funds available sooner, but cannot hold longer.
Subpart C: Collection of Checks: Governs the check collection process, including return deadlines and interbank responsibilities. For most community banks, Subpart B generates the examination findings.
The fundamental principle: depositors need predictable access to their funds, and banks have limited rights to delay availability. Every hold must fall within the regulation's permitted categories, and every hold requires proper notice.
Funds Availability Schedules
Regulation CC divides deposits into categories with different maximum hold periods. These periods run from the banking day of deposit (the business day on which the deposit is received before the bank's cutoff time).
Next-Day Availability Items (§ 229.10)
The following deposits must be available for withdrawal by the start of the next business day after the banking day of deposit:
- Cash deposits made in person to a bank employee
- Electronic payments (ACH credits, wire transfers, direct deposits)
- U.S. Treasury checks deposited in person
- Checks drawn on the same bank (on-us checks) deposited in person
- State and local government checks deposited in person (if the bank is in the same state as the payer)
- Cashier's, certified, and teller's checks deposited in person (up to $5,525)
- Federal Reserve Bank and Federal Home Loan Bank checks
- USPS money orders deposited in person
- The first $225 of any deposit that is not already available the next day
The $225 threshold is critical. Even when a bank places a legitimate hold on a deposit, the first $225 must be available by the next business day. This applies per deposit, not per day or per account. Examiners specifically test whether the first $225 was made available on time.
Local and Non-Local Check Holds
Under the Check Clearing for the 21st Century Act (Check 21) and amendments to Reg CC, the distinction between local and non-local checks has been largely eliminated for availability purposes. The current rule provides:
- Most check deposits: Funds must be available by the second business day after the banking day of deposit for the first $5,525 (as adjusted), and by the fifth business day for amounts exceeding $5,525
These are maximum periods. Many community banks provide faster availability as a competitive practice or based on customer relationship.
ATM Deposits
Cash and check deposits made at proprietary ATMs (owned by the depositor's bank) follow the same schedules as in-person deposits, with one exception: cash deposited at a proprietary ATM must be available by the second business day (not next day).
Deposits at non-proprietary ATMs (owned by another bank) may be held up to five business days.
Exception Holds
Regulation CC permits banks to extend hold periods beyond the standard schedules in specific circumstances. These are exceptions, not general authority, each must be properly invoked and noticed.
Large Deposit Exception (§ 229.13(b))
A bank may extend the hold period for the portion of a deposit that exceeds $5,525 (adjusted periodically) on any single banking day. The extended hold is for the amount above $5,525, and the excess may be held for an additional period:
- Up to one additional business day for on-us checks
- Up to five additional business days for other checks
The first $5,525 must still be available within the standard schedule. The bank must provide written notice of the extended hold.
New Account Exception (§ 229.13(a))
For accounts open less than 30 days, the bank has broader authority to hold deposits. During the new account period:
- Next-day availability still applies to cash, electronic payments, and the first $5,525 of U.S. Treasury, state/local government, cashier's, certified, and teller's checks
- All other deposits may be held for up to nine business days
The new account exception is one of the most permissive, but banks still must provide written notice of any holds and must make eligible next-day items available on time.
Reasonable Cause Hold (§ 229.13(e))
A bank may extend the hold period if it has reasonable cause to believe the check will not be paid. Reasonable cause must be based on specific, articulable facts, not a general suspicion or a hunch.
Valid reasonable cause includes:
- The check has been returned unpaid previously
- Information from the paying bank that the check may not be paid
- Stale dates or post-dated checks
- The depositor has a history of overdrafts or returned deposits
Crucially, the bank must document the specific facts supporting the reasonable cause determination. A hold notice that says only "reasonable cause" without explaining the basis is a violation. Examiners pull reasonable cause holds specifically because of the documentation requirement.
Other Exceptions
Additional exceptions exist for:
- Redeposited checks (checks previously returned unpaid and redeposited)
- Deposits exceeding $5,525 into accounts that have been repeatedly overdrawn
- Emergency conditions (communications interruptions, war, natural disasters)
Notice Requirements
Every hold beyond the standard next-day or second-day availability requires written notice to the depositor. The notice requirements are specific and are the most frequently violated aspect of Reg CC.
Timing: The hold notice must be provided at the time of the deposit (if the deposit is made in person) or by the banking day after the banking day of deposit (if the deposit is made at an ATM or by other non-in-person methods).
Required content of the hold notice:
- The depositor's account number (or other identifying information)
- The date of the deposit
- The amount of the deposit
- The amount of the hold
- The reason for the hold (must specify the applicable exception, large deposit, new account, reasonable cause, etc.)
- The date the funds will be available
- The bank's telephone number for questions (if the notice is not given in person)
For reasonable cause holds, the notice must also state that the bank is holding the deposit because it has reason to believe the check may not be paid, and it must include the specific reason (e.g., "Information indicates the check may not be paid" or "The account has been repeatedly overdrawn").
Case-by-case vs. general notices: Banks can provide general disclosure of their funds availability policy at account opening (§ 229.17), but this general disclosure does not satisfy the requirement for a specific hold notice each time an exception hold is placed. Both are required.
The Most Common Regulation CC Violations
Based on examination findings and enforcement actions, these violations appear most frequently:
1. Missing hold notices
The bank places a hold but doesn't provide the required specific written notice. This is the single most common Reg CC violation. It typically occurs when:
- The teller system places an automatic hold but doesn't generate a notice
- The notice is generated but not delivered to the customer
- The bank relies on the general availability policy disclosure instead of a transaction-specific notice
2. Incomplete hold notices
The notice is provided but missing required elements, most commonly the specific reason for the hold, the date funds will be available, or the bank's telephone number. A notice that says "hold placed per bank policy" without specifying the exception (large deposit, new account, reasonable cause) is deficient.
3. Holds exceeding permitted periods
The bank holds funds longer than Reg CC permits for the deposit type and exception invoked. This can occur when:
- Hold periods are calculated incorrectly (counting calendar days instead of business days)
- The bank applies a large-deposit exception to the entire deposit rather than only the amount exceeding $5,525
- Holds are not released on the required date due to system errors
4. Failure to make the first $225 available
The first $225 of every non-next-day deposit must be available by the next business day. Banks that apply holds to the entire deposit amount without carving out the $225 minimum violate this requirement. Examiners specifically test this.
5. Reasonable cause holds without documentation
The bank invokes the reasonable cause exception without documenting the specific facts supporting the hold. An undocumented reasonable cause hold is treated as an impermissible hold.
6. Disclosure deficiencies
The bank's general funds availability policy (required at account opening under § 229.17) is outdated, incomplete, or doesn't match actual hold practices. Examiners compare the disclosure to actual hold samples.
Examination Procedures
Examiners test Reg CC compliance through a structured process:
- Review the bank's funds availability policy and disclosures for completeness and accuracy
- Pull a sample of held deposits from the review period
- For each held deposit, verify: the hold period was within permitted limits, the correct exception was applied, proper written notice was provided with all required elements, and the first $225 was made available on time
- Review reasonable cause holds for documented factual basis
- Check system settings to verify automated holds comply with maximum permitted periods
- Compare disclosures to practice, does the bank's actual hold behavior match what the availability policy says?
How Canarie Helps Banks Track Reg CC Compliance
Reg CC compliance depends on consistent execution, every hold must be noticed, every notice must contain the right elements, every hold period must comply with the applicable schedule. At community banks where tellers process hundreds of deposits weekly, the risk of missing a notice or miscalculating a hold period is real.
Canarie tracks Reg CC obligations as part of your deposit operations compliance program. Hold notice procedures are mapped to tasks with completion evidence, and periodic self-testing of hold practices is scheduled and documented. When your examiner pulls a deposit hold sample, your compliance team can produce documentation showing systematic adherence to notice and availability requirements.
See how Canarie helps banks document deposit operations compliance →
Frequently Asked Questions
Does Regulation CC apply to mobile deposit capture?
Yes. Mobile deposits (remote deposit capture) are treated as deposits not made in person for funds availability purposes. The bank may hold these deposits under the same schedules as non-in-person deposits. However, the first $225 must still be available by the next business day. If the bank places a hold exceeding the standard schedule, it must provide the required written notice, which for non-in-person deposits must be mailed or delivered by the banking day after the banking day of deposit.
Can a bank place a hold on a direct deposit or ACH credit?
No. Electronic payments, including ACH credits, wire transfers, and direct deposits, are next-day availability items under § 229.10(b). The bank must make these funds available for withdrawal by the start of the next business day after the banking day of receipt. The exception hold provisions (large deposit, new account, reasonable cause) do not apply to electronic payments. Placing a hold on an ACH direct deposit is a per-se Reg CC violation.
What is the difference between Regulation CC and the bank's individual hold policy?
Regulation CC sets maximum hold periods, the longest a bank can hold funds. The bank's own hold policy may be shorter (more favorable to the customer) but cannot exceed the Reg CC maximums. The bank's availability policy must be disclosed to customers at account opening, and the disclosed policy must accurately reflect actual practice. If the bank's policy is more restrictive than Reg CC permits, or if actual practice is more restrictive than the disclosed policy, both are violations.
How does the $5,525 threshold work for multiple deposits on the same day?
The $5,525 threshold for the large deposit exception applies on a per-banking-day basis, aggregating all deposits made on the same day. If a customer makes three check deposits of $2,000 each on the same day ($6,000 total), the large deposit exception applies to the $475 above $5,525. The first $5,525 must be available under the standard schedule, and the bank may extend the hold on the $475 excess. Each deposit individually is below $5,525, but the aggregate triggers the exception.