Institution Postdating Cash Credit

[Quentin818]

I am formulating a complaint to a federal financial regulatory agency and I want to ensure my complaint is very clear, especially in terms of how a credit to an account must be dated, whether legally or in terms of mandated accounting standards (e.g., GAAP or IFRS).

However, I first want to be reasonably sure there are no legitimate reasons whereby an institution may change the date of a cash deposit where the credited funds are immediately available for withdrawal (i.e., no holds). Any comments would be appreciated.

[Anonymous_]

You may have to post more details in order to get a useful and accurate response.

However, is this question related to those posed in your previous posts?

[Quentin818]

Hello, yes, my post is tangentially related to a previous Jan 2022 discussion. I am working on this from a different angle trying to understand the rules for dating an account credit by a financial institution. I am curious to know whether the below hypothetical example of how a deposit is credited might or might not violate some accounting principle or other rule (e.g., IRS, FDIC, etc.):

-A cash deposit is made on a Saturday and becomes immediately available for cash withdrawal

-The institution dates the credited deposit amount for the following Monday on periodic statements

And, the days of the week could just as easily be Tuesday with a Wednesday record date.

[NCperson]

@Quentin818 - I am confused by what you issue is.  

"Saturday" is not a "banking day".  A "banking day" are days when the Federal Reserve is open and it only operates Monday - Friday, except for Banking Holidays. 

from Reg CC

§ 229.10 Next-day availability.

(a) Cash deposits.

(1) A bank shall make funds deposited in an account by cash available for withdrawal not later than the business day after the banking day on which the cash is deposited, if the deposit is made in person to an employee of the depositary bank.

(2) A bank shall make funds deposited in an account by cash available for withdrawal not later than the second business day after the banking day on which the cash is deposited, if the deposit is not made in person to an employee of the depositary bank.

Read through Reg CC which governs timeliness of deposits.

https://www.federalreserve.gov/pubs/regcc/examples.htm

further, your post makes the false assumption that cash deposited on a Saturday becomes immediately available.   While that may be a specific Bank's policy and the experience at your Bank, it far exceeds the Regulatory requirement that it be made available on Tuesday.  The Bank can accept the deposit on Saturday and not make the money available until Tuesday and not run afoul of any regulatory issues.  

When you state 'cash', do you mean 'greenbacks' or a check? 

[Quentin818]

Thank you for looking at this!

Yes, this institution does make funds available immediately when a deposit is received via online transfer of funds between accounts within the same institution. Transfers can be done at any time 24x7x366---so, not greenbacks but totally liquid nevertheless.

Once the transfer is made, funds are immediately made available for withdrawal from the "to" account (one could do a POS or Visa debit purchase or even an ATM cash withdrawal).

Now, this institution always dates cash withdrawals and deposits for the next business day if the transaction is executed after 6 pm on a business day or anytime on a non-business day. There is no trace of the actual transaction date soon after the online transfer is completed.

So, my question has to do with the dating of the deposit. I am interested to know if the institution might be in violation of some rule, regulation, or accounting principle where the transfer of funds as described is assigned a later date (specifically looking for the credit side but this may not matter).

[NCperson]

@Quentin818 again, read Reg CC and what I posted earlier.  

please read Page 2: 

https://www.federalreserve.gov/boarddocs/supmanual/cch/efaa.pdf

"Business and Banking Days
• A business day is any day except Saturday, Sunday, and a legal holiday (standard Federal
Reserve holiday schedule). 

• A banking day is a business day on which a bank is open for substantially all its banking activities.Even though a bank may be open for regular business on a Saturday, that day is not considered
a banking day for purposes of Regulation CC because Saturday is never a ‘‘business day’’ under
the regulation. The fact that one branch is open to the public for substantially all its banking activities
does not necessarily mean that that day is a banking day for the other branches of the bank. "

So Banks can only transact at the Fed on Business Days, which are Monday - Friday except for Federal Holidays. 

So while the Bank may take your deposit (and that could be cash, checks, intra banks transfers, ATM deposits, Zelle transaction etc.), they are REQUIRED by Reg CC to credit your account as soon as the 2nd business day after receipt of the money instrument.  If they post the credit to you account EARLIER than that, they are within the prescribed regulations - if they post  LATER than that, they violate the regulation. 

example: 

I walk into a Bank branch and deposit a check on Monday  (the first "business day"), the Bank has to make the money available AS EARLY AS TUESDAY (and I am over simpliying this because there are rules about out of area checks, etc.). 

I walk into a Bank and depsoit a check on a Satuday.  All Saturday transactions are part of Monday's Business activity (as Saturday is not a Business Day - the Fed is not open), so again, the Bank has to make the money available AS EARLY AS TUESDAY  (and I am over simpliying this because there are rules about out of area checks, etc.). 

In both examples, if the Bank makes the money available prior to Tuesday, it is exceeding the regulatory requirement and is in compliance with Reg CC. 

Also, 6 p.m. is after the "business day" cutoff since the Fed is closed.  So if you deposit a check at 6 p.m. on a Monday, that deposit is technically accepted as part of Tuesday's business day and the Bank doesn't have to give you credit until Wednesday at the earlist.  That is how Reg CC works.  Again in today's electronic enviornment, banks tend to far exceed those cutoff requirements. For example, a depsoit at a Bank of America ATM prior to 8 p.m. will be credited that same business day and an internal bank transfer (and I think this includes check deposits using your smartphone and the Banks phone app)) at Bank of America will be credited the same day as received as long as the transaction occurs up to 10:45 p.m.  That is far beyond what Reg CC requires.

"back in the day" (over 20 years ago), meeting Reg CC was rather challenging when everything was paper.  You presented your deposit to the cashier.  Banks tended to end the business day around noon time to give themselves more time to run all the checks from their brances to their central processing area for posting to indiviudal accounts.  Then all the checks, other than those written on the bank where they were deposited.  had to be physically transported to the Federal Reserve branch where local checks were traded back and forth..  Out of town checks were then transported by the Fed to the city where the check originated.  It took DAYS to settle a check.  Now it is all basically electronic and occurs the same day as the deposit.  Much easier to meet all the Reg CC deadlines. 

What is your real issue? I sense you are 'cranky' about something.