COMPLIANCE CORNER The IBA Law Department
QUESTION
Are we prohibited from allowing customers to transfer funds from a business account to a personal account through online banking transfers?
ANSWER No, we are not aware of any law or regulation that would prohibit you from allowing a customer to transfer funds from a business account to a personal account using online banking — provided the customer is
authorized by the business to make such transfers from the business account, and your bank is unaware of any wrongdoing by the customer in transferring business funds to a personal account (which could have
several innocent explanations, such as to pay a salary or other expenses). We also recommend reviewing the account agreement for your business account to determine whether such transfers are allowed.
QUESTION
The new Regulation CC changes that became effective July 1 modified the amounts that must be made available during holds and required notification to our customers within thirty days of the change. However, our initial disclosures do not reference the dollar amounts of available funds during various holds. Do we need to begin disclosing these hold amounts to our customers, or may we simply notify them that the hold amounts have changed and are available if they wish to view them? Currently, we use the basic funds availability policy (Model C-1) in Appendix C to Regulation CC.
ANSWER We do not believe you need to include the dollar amounts of available funds during holds in your initial Regulation CC disclosures, provided that the model availability policy you are using (Model C-1) accurately reflects the specific availability policy followed by your bank in most cases. Under Regulation CC, banks must provide potential customers (and any person who makes an oral or written request) with the bank’s applicable specific availability policy disclosure. According to the official commentary to Regulation CC, the disclosure “must reflect the availability policy followed by the bank in most cases, even though a bank may in some cases make funds available sooner or impose a longer delay.” Whether a bank’s disclosure must reflect specific hold amounts depends
•6•
on the availability policy followed by that bank. For example, “a bank that makes deposited funds available for withdrawal on the business day following the day of deposit need simply disclose that deposited funds will be available for withdrawal on the first business day after the day of deposit, the bank’s business days, and when deposits are considered received.” Banks with such an availability policy may use Regulation CC’s Model C-1 (next-day availability) policy disclosure, which does not reference specific hold amounts. However, banks that have a policy of routinely delaying the time when deposited funds are available for withdrawal on a blanket basis or have a combination of next-day availability and blanket delays would need more detailed disclosures that reference hold amounts (such as those reflected in Model C-2 and Model C-3).
• September-October 2020
Regarding the new Regulation CC dollar amounts that took effect July 1, 2020, Regulation CC states that a “bank shall send a notice to holders of consumer accounts at least 30 days before implementing a change to the bank’s availability policy regarding such accounts, except that a change that expedites the availability of funds may be disclosed not later than 30 days after implementation.” Since the funds banks must make available to customers during holds is increasing, we agree that you may provide notice of the change within thirty days after the change is implemented. We also agree that you do not need to include the dollar amounts of the funds available during holds in your notice, since they are not referenced in your availability policy.
