Also, the endorsement must correctly identify the endorsing bank and unpaid checks must be immediately returned to the paying bank. The depositary bank can quickly remove the deposited funds from the depositors account before it can be spent or withdrawn. The same-day settlement policy increases the likelihood that the depositary bank will quickly learn if a check is dishonored (not paid) by the payor bank. This expedited period reduces the risk to the depositary bank in making funds available after the check is deposited. More specifically, it limits the period of time for holding the deposited check before forwarding it to the original payor bank. Regulation CC implements check-return rules (the depository bank returning the check to the original payor bank) and same-day settlement rules. The original bank will then make payment on the check.
As such, the receiving bank will pay the check, endorse it, and forward it to the original bank on which the check was drawn. The payee may cash or deposit the check at a different bank or depository institution. When someone writes a check, it is drawn on a bank at which the writer holds an account. Back to: BANKING, LENDING, & CREDIT INDUSTRY How Does Regulation CC Work? It also implements portions of the Check Clearing for the 21st Century Act, removing certain legal restrictions on processing electronic checks. The purpose of the regulation is to implement the Expedited Funds Availability Actof 1987, which sets standards for the endorsements on checks drawn on or paid by regulated banks and depository institutions. Regulation CC is a regulation promulgated by the US Federal Reserve Bank.
Update Table of Contents What is Regulation CC? How Does Regulation CC Work? What is Regulation CC?