12 U.S.C. § 4003 — Safeguard exceptions

Page 1583 TITLE 12—BANKS AND BANKING § 4003 1 So in original. Probably should be ‘‘subparagraph’’. (2) Extension for certain deposits in noncontig- uous States or territories Notwithstanding any other provision of law, any time period established under subsection (b), (c), or (e) shall be extended by 1 business day in the case of any deposit which is both— (A) deposited in an account at a depository institution which is located in Alaska, Ha- waii, Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana Is- lands, Guam, or the Virgin Islands; and (B) deposited by a check drawn on an orig- inating depository institution which is not located in the same State, commonwealth, or territory as the receiving depository in- stitution. (e) Deposits at ATM (1) Nonproprietary ATM (A) In general Not more than 4 business days shall inter- vene between the business day a deposit de- scribed in subparagraph (B) is made at a nonproprietary automated teller machine (for deposit in an account at a depository in- stitution) and the business day on which funds from such deposit are available for withdrawal. (B) Deposits described in this paragraph 1 A deposit is described in this subparagraph if it is— (i) a cash deposit; (ii) a deposit made by a check described in subsection (a)(2); (iii) a deposit made by a check drawn on a local originating depository institution (other than a check described in sub- section (a)(2)); or (iv) a deposit made by a check drawn on a nonlocal originating depository institu- tion (other than a check described in sub- section (a)(2)). (2) Proprietary ATM—temporary and perma- nent schedules The provisions of subsections (a), (b), and (c) shall apply with respect to any funds deposited at a proprietary automated teller machine for deposit in an account at a depository institu- tion. (3) Study and report on ATM’s The Board shall, either directly or through the Consumer Advisory Council, establish and maintain a dialogue with depository institu- tions and their suppliers on the computer soft- ware and hardware available for use by auto- mated teller machines, and shall, not later than September 1 of each of the first 3 cal- endar years beginning after August 10, 1987, re- port to the Congress regarding such software and hardware and regarding the potential for improving the processing of automated teller machine deposits. (f) Check return; notice of nonpayment No provision of this section shall be construed as requiring that, with respect to all checks de- posited in a receiving depository institution— (1) such checks be physically returned to such depository institution; or (2) any notice of nonpayment of any such check be given to such depository institution within the times set forth in subsection (a), (b), (c), or (e) or in the regulations issued under any such subsection. (Pub. L. 100–86, title VI, § 603, Aug. 10, 1987, 101 Stat. 637; Pub. L. 101–625, title X, § 1001, Nov. 28, 1990, 104 Stat. 4424; Pub. L. 102–242, title II, § 227(a), (b)(1), Dec. 19, 1991, 105 Stat. 2307; Pub. L. 111–203, title X, § 1086(a), (e), July 21, 2010, 124 Stat. 2085, 2086; Pub. L. 115–174, title II, § 208(a)(2), May 24, 2018, 132 Stat. 1312.) Editorial Notes AMENDMENTS 2018—Subsec. (d)(2)(A). Pub. L. 115–174 inserted ‘‘American Samoa, the Commonwealth of the Northern Mariana Islands, Guam,’’ after ‘‘Puerto Rico,’’. 2010—Subsec. (a)(2)(D). Pub. L. 111–203, § 1086(e)(1), substituted ‘‘$200’’ for ‘‘$100’’. Subsecs. (b)(3)(C), (c)(1)(B)(iii). Pub. L. 111–203, § 1086(e)(2), (3), substituted ‘‘$200’’ for ‘‘$100’’ in heading. Subsec. (d)(1). Pub. L. 111–203, § 1086(a), inserted ‘‘, jointly with the Director of the Bureau of Consumer Financial Protection,’’ after ‘‘Board’’. 1991—Subsec. (e)(1). Pub. L. 102–242, § 227(b)(1)(A), struck out ‘‘—temporary schedule’’ after ‘‘ATM’’ in heading. Subsec. (e)(1)(C). Pub. L. 102–242, § 227(a), struck out subpar. (C) which read as follows: ‘‘This paragraph shall apply with respect to funds deposited at a nonpropri- etary automated teller machine after August 31, 1988, and prior to the expiration of the 2-year period begin- ning on November 28, 1990.’’ Subsec. (e)(2) to (4). Pub. L. 102–242, § 227(a), (b)(1)(B), redesignated pars. (3) and (4) as (2) and (3), respectively, and struck out former par. (2) which related to perma- nent schedule for funds deposited at nonproprietary automated teller machines. 1990—Subsec. (e)(1)(A). Pub. L. 101–625, § 1001(1), sub- stituted ‘‘4’’ for ‘‘6’’. Subsec. (e)(1)(C). Pub. L. 101–625, § 1001(2), substituted ‘‘prior to the expiration of the 2-year period beginning on November 28, 1990’’ for ‘‘before September 1, 1990’’. Subsec. (e)(2)(D). Pub. L. 101–625, § 1001(3), substituted ‘‘the expiration of the 2-year period beginning on No- vember 28, 1990’’ for ‘‘September 1, 1990’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Amendment by Pub. L. 115–174 effective 30 days after May 24, 2018, see section 208(b) of Pub. L. 115–174, set out as a note under section 4001 of this title. EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. EFFECTIVE DATE Section effective Sept. 1, 1988, see section 613(b) of Pub. L. 100–86, set out as a note under section 4001 of this title. § 4003. Safeguard exceptions (a) New accounts Notwithstanding section 4002 of this title, in the case of any account established at a deposi- tory institution by a new depositor, the fol- lowing provisions shall apply with respect to Page 1584 TITLE 12—BANKS AND BANKING § 4003 1 So in original. Probably should be ‘‘paragraph’’. any deposit in such account during the 30-day period (or such shorter period as the Board, jointly with the Director of the Bureau of Con- sumer Financial Protection, may establish) be- ginning on the date such account is estab- lished— (1) Next business day availability of cash and certain items Except as provided in paragraph (3), in the case of— (A) any cash deposited in such account; (B) any funds received by such depository institution by wire transfer for deposit in such account; (C) any funds deposited in such account by cashier’s check, certified check, teller’s check, depository check, or traveler’s check; and (D) any funds deposited by a government check which is described in subparagraph (A), (B), or (C) of section 4002(a)(2) of this title, such cash or funds shall be available for with- drawal on the business day after the business day on which such cash or funds are deposited or, in the case of a wire transfer, on the busi- ness day after the business day on which such funds are received for deposit. (2) Availability of other items In the case of any funds deposited in such ac- count by a check (other than a check de- scribed in subparagraph (C) or (D) of para- graph (1)), the availability for withdrawal of such funds shall not be subject to the provi- sions of section 4002(b), 4002(c), or paragraphs 1 (1) of section 4002(e) of this title. (3) Limitation relating to certain checks in ex- cess of $5,000 In the case of funds deposited in such ac- count during such period by checks described in subparagraph (C) or (D) of paragraph (1) the aggregate amount of which exceeds $5,000— (A) paragraph (1) shall apply only with re- spect to the first $5,000 of such aggregate amount; and (B) not more than 8 business days shall in- tervene between the business day on which any such funds are deposited and the busi- ness day on which such excess amount shall be available for withdrawal. (b) Large or redeposited checks; repeated over- drafts The Board, jointly with the Director of the Bureau of Consumer Financial Protection, may, by regulation, establish reasonable exceptions to any time limitation established under sub- section (a)(2), (b), (c), or (e) of section 4002 of this title for— (1) the amount of deposits by one or more checks that exceeds the amount of $5,000 in any one day; (2) checks that have been returned unpaid and redeposited; and (3) deposit accounts which have been over- drawn repeatedly. (c) Reasonable cause exception (1) In general In accordance with regulations which the Board, jointly with the Director of the Bureau of Consumer Financial Protection, shall pre- scribe, subsections (a)(2), (b), (c), and (e) of section 4002 of this title shall not apply with respect to any check deposited in an account at a depository institution if the receiving de- pository institution has reasonable cause to believe that the check is uncollectible from the originating depository institution. For purposes of the preceding sentence, reasonable cause to believe requires the existence of facts which would cause a well-grounded belief in the mind of a reasonable person. Such reasons shall be included in the notice required under subsection (f). (2) Basis for determination No determination under this subsection may be based on any class of checks or persons. (3) Overdraft fees If the receiving depository institution deter- mines that a check deposited in an account is a check described in paragraph (1), the receiv- ing depository institution shall not assess any fee for any subsequent overdraft with respect to such account, if— (A) the depositor was not provided with the written notice required under subsection (f) (with respect to such determination) at the time the deposit was made; (B) the overdraft would not have occurred but for the fact that the funds so deposited are not available; and (C) the amount of the check is collected from the originating depository institution. (4) Compliance Each agency referred to in section 4009(a) of this title shall monitor compliance with the requirements of this subsection in each reg- ular examination of a depository institution and shall describe in each report to the Con- gress the extent to which this subsection is being complied with. For the purpose of this paragraph, each depository institution shall retain a record of each notice provided under subsection (f) as a result of the application of this subsection. (d) Emergency conditions Subject to such regulations as the Board, jointly with the Director of the Bureau of Con- sumer Financial Protection, may prescribe, sub- sections (a)(2), (b), (c), and (e) of section 4002 of this title shall not apply to funds deposited by check in any receiving depository institution in the case of— (1) any interruption of communication fa- cilities; (2) suspension of payments by another depos- itory institution; (3) any war; or (4) any emergency condition beyond the con- trol of the receiving depository institution, if the receiving depository institution exercises such diligence as the circumstances require. Page 1585 TITLE 12—BANKS AND BANKING § 4003 (e) Prevention of fraud losses (1) In general The Board, jointly with the Director of the Bureau of Consumer Financial Protection, may, by regulation or order, suspend the appli- cability of this chapter, or any portion there- of, to any classification of checks if the Board, jointly with the Director of the Bureau of Con- sumer Financial Protection, determines that— (A) depository institutions are experi- encing an unacceptable level of losses due to check-related fraud, and (B) suspension of this chapter, or such por- tion of this chapter, with regard to the clas- sification of checks involved in such fraud is necessary to diminish the volume of such fraud. (2) Sunset provision No regulation prescribed or order issued under paragraph (1) shall remain in effect for more than 45 days (excluding Saturdays, Sun- days, legal holidays, or any day either House of Congress is not in session). (3) Report to Congress (A) Notice of each suspension Within 10 days of prescribing any regula- tion or issuing any order under paragraph (1), the Board, jointly with the Director of the Bureau of Consumer Financial Protec- tion, shall transmit a report of such action to the Committee on Banking, Finance and Urban Affairs of the House of Representa- tives and the Committee on Banking, Hous- ing, and Urban Affairs of the Senate. (B) Contents of report Each report under subparagraph (A) shall contain— (i) the specific reason for prescribing the regulation or issuing the order; (ii) evidence considered by the Board, jointly with the Director of the Bureau of Consumer Financial Protection, in making the determination under paragraph (1) with respect to such regulation or order; and (iii) specific examples of the check-re- lated fraud giving rise to such regulation or order. (f) Notice of exception; availability within rea- sonable time (1) In general If any exception contained in this section (other than subsection (a)) applies with re- spect to funds deposited in an account at a de- pository institution— (A) the depository institution shall pro- vide notice in the manner provided in para- graph (2) of— (i) the time period within which the funds shall be made available for with- drawal; and (ii) the reason the exception was in- voked; and (B) except where other time periods are specifically provided in this chapter, the availability of the funds deposited shall be governed by the policy of the receiving de- pository institution, but shall not exceed a reasonable period of time as determined by the Board, jointly with the Director of the Bureau of Consumer Financial Protection. (2) Time for notice The notice required under paragraph (1)(A) with respect to a deposit to which an excep- tion contained in this section applies shall be made by the time provided in the following subparagraphs: (A) In the case of a deposit made in person by the depositor at the receiving depository institution, the depository institution shall immediately provide such notice in writing to the depositor. (B) In the case of any other deposit (other than a deposit described in subparagraph (C)), the receiving depository institution shall mail the notice to the depositor not later than the close of the next business day following the business day on which the de- posit is received. (C) In the case of a deposit to which sub- section (d) or (e) applies, notice shall be pro- vided by the depository institution in ac- cordance with regulations of the Board, jointly with the Director of the Bureau of Consumer Financial Protection. (D) In the case of a deposit to which sub- section (b)(1) or (b)(2) applies, the depository institution may, for nonconsumer accounts and other classes of accounts, as defined by the Board, that generally have a large num- ber of such deposits, provide notice at or be- fore the time it first determines that the subsection applies. (E) In the case of a deposit to which sub- section (b)(3) applies, the depository institu- tion may, subject to regulations of the Board, provide notice at the beginning of each time period it determines that the sub- section applies. In addition to the require- ments contained in paragraph (1)(A), the no- tice shall specify the time period for which the exception will apply. (3) Subsequent determinations If the facts upon which the determination of the applicability of an exception contained in subsection (b) or (c) to any deposit only be- come known to the receiving depository insti- tution after the time notice is required under paragraph (2) with respect to such deposit, the depository institution shall mail such notice to the depositor as soon as practicable, but not later than the first business day following the day such facts become known to the deposi- tory institution. (Pub. L. 100–86, title VI, § 604, Aug. 10, 1987, 101 Stat. 642; Pub. L. 102–242, title II, §§ 225, 227(b)(2), Dec. 19, 1991, 105 Stat. 2307, 2308; Pub. L. 111–203, title X, § 1086(b), July 21, 2010, 124 Stat. 2085.) Editorial Notes AMENDMENTS 2010—Subsecs. (a) to (e). Pub. L. 111–203, § 1086(b)(1), inserted ‘‘, jointly with the Director of the Bureau of Consumer Financial Protection,’’ after ‘‘Board’’ wher- ever appearing. Subsec. (f)(1)(B), (2)(C). Pub. L. 111–203, § 1086(b)(2), substituted ‘‘Board, jointly with the Director of the Page 1586 TITLE 12—BANKS AND BANKING § 4004 Bureau of Consumer Financial Protection.’’ for ‘‘Board.’’ 1991—Subsec. (a)(2). Pub. L. 102–242, § 227(b)(2), struck out ‘‘and (2)’’ after ‘‘paragraphs (1)’’. Subsec. (b). Pub. L. 102–242, § 225(1), inserted ‘‘(a)(2),’’ after ‘‘subsection’’. Subsec. (c)(1). Pub. L. 102–242, § 225(2), substituted ‘‘(a)(2)’’ for ‘‘(a)(2)(F)’’. Subsec. (d). Pub. L. 102–242, § 225(3), inserted ‘‘(a)(2),’’ after ‘‘subsections’’. Subsec. (f)(1)(A)(i). Pub. L. 102–242, § 225(4), sub- stituted ‘‘time period within which’’ for ‘‘day’’. Subsec. (f)(2)(D), (E). Pub. L. 102–242, § 225(5), added subpars. (D) and (E). Statutory Notes and Related Subsidiaries CHANGE OF NAME Committee on Banking, Finance and Urban Affairs of House of Representatives treated as referring to Com- mittee on Banking and Financial Services of House of Representatives by section 1(a) of Pub. L. 104–14, set out as a note preceding section 21 of Title 2, The Con- gress. Committee on Banking and Financial Services of House of Representatives abolished and replaced by Committee on Financial Services of House of Rep- resentatives, and jurisdiction over matters relating to securities and exchanges and insurance generally trans- ferred from Committee on Energy and Commerce of House of Representatives by House Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001. EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. EFFECTIVE DATE Section effective Sept. 1, 1988, see section 613(b) of Pub. L. 100–86, set out as a note under section 4001 of this title. § 4004. Disclosure of funds availability policies (a) Notice for new accounts Before an account is opened at a depository in- stitution, the depository institution shall pro- vide written notice to the potential customer of the specific policy of such depository institution with respect to when a customer may withdraw funds deposited into the customer’s account. (b) Preprinted deposit slips All preprinted deposit slips that a depository institution furnishes to its customers shall con- tain a summary notice, as prescribed by the Board, jointly with the Director of the Bureau of Consumer Financial Protection, in regulations, that deposited items may not be available for immediate withdrawal. (c) Mailing of notice (1) First mailing after enactment In the first regularly scheduled mailing to customers occurring after September 1, 1988, but not more than 60 days after September 1, 1988, each depository institution shall send a written notice containing the specific policy of such depository institution with respect to when a customer may withdraw funds depos- ited into such customer’s account, unless the depository institution has provided a disclo- sure which meets the requirements of this sec- tion before September 1, 1988. (2) Subsequent changes A depository institution shall send a written notice to customers at least 30 days before im- plementing any change to the depository in- stitution’s policy with respect to when cus- tomers may withdraw funds deposited into consumer accounts, except that any change which expedites the availability of such funds shall be disclosed not later than 30 days after implementation. (3) Upon request Upon the request of any person, a depository institution shall provide or send such person a written notice containing the specific policy of such depository institution with respect to when a customer may withdraw funds depos- ited into a customer’s account. (d) Posting of notice (1) Specific notice at manned teller stations Each depository institution shall post, in a conspicuous place in each location where de- posits are accepted by individuals employed by such depository institution, a specific notice which describes the time periods applicable to the availability of funds deposited in a con- sumer account. (2) General notice at automated teller ma- chines In the case of any automated teller machine at which any funds are received for deposit in an account at any depository institution, the Board, jointly with the Director of the Bureau of Consumer Financial Protection, shall pre- scribe, by regulations, that the owner or oper- ator of such automated teller machine shall post or provide a general notice that funds de- posited in such machine may not be imme- diately available for withdrawal. (e) Notice of interest payment policy If a depository institution described in section 4005(b) of this title begins the accrual of interest or dividends at a later date than the date de- scribed in section 4005(a) of this title with re- spect to all funds, including cash, deposited in an interest-bearing account at such depository institution, any notice required to be provided under subsections (a) and (c) shall contain a written description of the time at which such depository institution begins to accrue interest or dividends on such funds. (f) Model disclosure forms (1) Prepared by Board and Bureau The Board, jointly with the Director of the Bureau of Consumer Financial Protection, shall publish model disclosure forms and clauses for common transactions to facilitate compliance with the disclosure requirements of this section and to aid customers by uti- lizing readily understandable language. (2) Use of forms to achieve compliance A depository institution shall be deemed to be in compliance with the requirements of this section if such institution— (A) uses any appropriate model form or clause as published by the Board, jointly