In 1987, Congress passed the Expedited Funds Availability Act (PDF) (EFAA), to address concerns about the lengths of holds banks were then placing on checks deposited by their customers. The EFAA establishes maximum permissible hold periods for checks and other deposits. The Board's Regulation CC (12 CFR part 229) implements the funds-availability and disclosure provisions of the EFAA in Subpart B of the regulation.

The EFAA also gave the Board the authority to regulate the nation's check-clearing system more generally. Pursuant to this authority, the Board adopted rules to speed the return of unpaid checks. These rules reduce the risk to depositary banks of having to make funds from check deposits available for withdrawal before learning whether the checks have been returned unpaid. In the 1990s, the Board adopted a same-day settlement rule, which decreased the competitive disparity between Reserve Banks and private-sector banks when presenting checks for payment. The check-return rules and same-day settlement rules are set forth in Subpart C of Regulation CC.

In 2003, Congress passed the Check Clearing for the 21st Century Act (PDF) (Check 21), which was designed to enhance payment system efficiency by reducing legal impediments to processing checks electronically. Check 21 facilitated processing checks electronically by creating a new type of paper instrument, called a substitute check, which is the legal equivalent of the original check for all purposes. Check 21 creates substitute-check warranties, an indemnity, and consumer expedited-recredit procedures. Check 21 is implemented in subpart D of Regulation CC.

Check 21 has enabled banks to send checks electronically (rather than in paper form) to banks with which they have agreements to do so, and to send substitute checks to banks with which they do not. As a result, the nation's interbank check-collection processes have become almost entirely electronic, and the electronic methods have enabled banks to offer new customer services.

In response to the growth in electronic processing, the Reserve Banks reduced the number of their paper check-processing offices from 45 in 2003 to a single office in 2010. The consolidation resulted in all checks being considered "local checks" under Regulation CC.

Reg CC Availability of Funds and Collection of Checks

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Last Update: May 17, 2024