Regulation CC Implementation – What You Shouldn’t Delay

Compliance expert, Rachelle Dekker, shares how to successfully implement upcoming changes to Regulation CC.

Rachelle Dekker – Senior Compliance Advisor

Although the upcoming changes to Regulation CC are not effective until July 1, 2020, if you haven’t already, you should be thinking of implementation steps to maintain compliance with changes. Just to recap the upcoming change to Regulation CC includes an amendment to Subpart B of Regulation CC, which comes from Dodd Frank. Every five years, six different sections within Subpart B of Regulation CC will be adjusted for inflation based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) using the indexing procedures addressed in section 229.11 of Regulation CC.

The second change comes from the Economic Growth Regulatory Relief Consumer Protection Act (EGRRCPA). The final rule adds the definition of “state” and “United States” to include certain territories. In addition, the definition of ATM was updated to include only ATMs located in the United States. Overall, institutions in American Samoa, the Commonwealth of the Northern Mariana Islands and Guam will need to follow the funds availability, payment of interest and disclosure requirements under Regulation CC.

As a result of these changes to Regulation CC, you will want to consider how your institution will implement these changes to maintain compliance with the new amounts and the updated definitions. Here is a list of items to consider for a successful implementation.

  1. Update and Test System: With the dollar amounts adjusting you now want to make sure that your institution is placing a hold on funds for the correct amount. For example, institutions can now place a hold on $5,525 rather than $5,000 when placing a large deposit exception hold. Have you updated your system to make the correct amount available?
  2. Revise Hold Notices: If you utilize a hold notice that references any of the dollar amounts currently addressed in Regulation CC, you will want to revise the hold notice to ensure the correct amount is disclosed. For example, if your institution uses model notice C-12 or C-14 found within Appendix C of Regulation CC, it addresses the $5,000 Large Deposit exception hold. However, effective July 1, 2020 instead of $5,000 the new threshold is $5,525; therefore, the hold notice shall reflect that amount.
  3. Train Employees: Employees that are responsible for invoking holds will need to receive training on the adjusted dollar amounts to understand how much of the consumers deposit may be delayed availability. In addition, consider training for applicable employees in your institution’s deposit operations department. Overall, training is always important when a changing a policy or procedure.
  4. Update Policy and Procedures: Another important implementation step involves updating your institution’s policy and procedures. If you provide procedures for completing the hold notice, you will want to be sure it is updated with the new dollar amounts. In addition, procedures should be updated if your institution does business in the territories of American Samoa, the Commonwealth of the Northern Mariana Islands, or Guam. Lastly, if your institution’s board approved policy is updated, you will want to be sure it is re-approved by the board.
  5. Change in Terms Notification: In addition to updating the institution’s internal policies and procedures, you will also need to update the institution’s Funds Availability Policy disclosure to reflect the recent amendments. This includes providing a change in terms notice to current customers or members. Consider when you will provide a change in terms notice, and in what method or format you will provide the notice. Where these changes are not considered adverse, then you may send the notice either 30 days before the effective date of the increased amount or within 30 days of the effective date of the increase. You can provide a change in terms electronically if the consumer consented through compliance with E-Sign. You can provide the notice along with their periodic statement or an updated full version of the availability disclosure may be provided. Keep in mind that if you are providing the full initial Funds Availability Policy disclosure, then you must highlight the changed terms in the disclosure.

Although July 1 is over three months away, don’t delay these implementation tasks. Need help with Regulation CC? Just ask the Temenos Compliance Services Advisory team and be sure to check out the updated Regulation CC Policy template, Quick Compliance Guide addressing the recent amendments, and new Funds Availability and Check 21 Checklists.

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Rachelle Dekker – Senior Compliance Advisor