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§ 4003. —  Safeguard exceptions. - US § 4003. —  Safeguard exceptions. - US Code : CHAN ROBLES VIRTUAL LAW LIBRARY

[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 12USC4003]

 
                       TITLE 12--BANKS AND BANKING
 
                CHAPTER 41--EXPEDITED FUNDS AVAILABILITY
 
Sec. 4003. Safeguard exceptions


(a) New accounts

    Notwithstanding section 4002 of this title, in the case of any 
account established at a depository institution by a new depositor, the 
following provisions shall apply with respect to any deposit in such 
account during the 30-day period (or such shorter period as the Board 
may establish) beginning on the date such account is established--

    (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 withdrawal 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 business 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 account by a check 
    (other than a check described in subparagraph (C) or (D) of 
    paragraph (1)), the availability for withdrawal of such funds shall 
    not be subject to the provisions of section 4002(b), 4002(c), or 
    paragraphs \1\ (1) of section 4002(e) of this title.
---------------------------------------------------------------------------
    \1\ So in original. Probably should be ``paragraph''.
---------------------------------------------------------------------------

       (3) Limitation relating to certain checks in excess of 
                                   $5,000

        In the case of funds deposited in such account 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 respect to the first 
        $5,000 of such aggregate amount; and
            (B) not more than 8 business days shall intervene between 
        the business day on which any such funds are deposited and the 
        business day on which such excess amount shall be available for 
        withdrawal.

(b) Large or redeposited checks; repeated overdrafts

    The Board may, by regulation, establish reasonable exceptions to any 
time limitation established under subsection (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 overdrawn repeatedly.

(c) Reasonable cause exception

                           (1) In general

        In accordance with regulations which the Board shall prescribe, 
    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 depository 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) of this section.

                     (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 determines that a check 
    deposited in an account is a check described in paragraph (1), the 
    receiving 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) of this section (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 
    regular examination of a depository institution and shall describe 
    in each report to the Congress 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) of this section as a result of the application 
    of this subsection.

(d) Emergency conditions

    Subject to such regulations as the Board may prescribe, subsections 
(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 facilities;
        (2) suspension of payments by another depository institution;
        (3) any war; or
        (4) any emergency condition beyond the control of the receiving 
    depository institution,

if the receiving depository institution exercises such diligence as the 
circumstances require.

(e) Prevention of fraud losses

                           (1) In general

        The Board may, by regulation or order, suspend the applicability 
    of this chapter, or any portion thereof, to any classification of 
    checks if the Board determines that--
            (A) depository institutions are experiencing an unacceptable 
        level of losses due to check-related fraud, and
            (B) suspension of this chapter, or such portion of this 
        chapter, with regard to the classification 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, 
    Sundays, 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 regulation or issuing any 
        order under paragraph (1), the Board shall transmit a report of 
        such action to the Committee on Banking, Finance and Urban 
        Affairs of the House of Representatives and the Committee on 
        Banking, Housing, 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 in making the 
            determination under paragraph (1) with respect to such 
            regulation or order; and
                (iii) specific examples of the check-related fraud 
            giving rise to such regulation or order.

(f) Notice of exception; availability within reasonable time

                           (1) In general

        If any exception contained in this section (other than 
    subsection (a) of this section) applies with respect to funds 
    deposited in an account at a depository institution--
            (A) the depository institution shall provide notice in the 
        manner provided in paragraph (2) of--
                (i) the time period within which the funds shall be made 
            available for withdrawal; and
                (ii) the reason the exception was invoked; 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 
        depository institution, but shall not exceed a reasonable period 
        of time as determined by the Board.

                         (2) Time for notice

        The notice required under paragraph (1)(A) with respect to a 
    deposit to which an exception 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 deposit is received.
            (C) In the case of a deposit to which subsection (d) or (e) 
        of this section applies, notice shall be provided by the 
        depository institution in accordance with regulations of the 
        Board.
            (D) In the case of a deposit to which subsection (b)(1) or 
        (b)(2) of this section applies, the depository institution may, 
        for nonconsumer accounts and other classes of accounts, as 
        defined by the Board, that generally have a large number of such 
        deposits, provide notice at or before the time it first 
        determines that the subsection applies.
            (E) In the case of a deposit to which subsection (b)(3) of 
        this section applies, the depository institution may, subject to 
        regulations of the Board, provide notice at the beginning of 
        each time period it determines that the subsection applies. In 
        addition to the requirements contained in paragraph (1)(A), the 
        notice 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) of this section 
    to any deposit only become known to the receiving depository 
    institution 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 depository institution.

(Pub. L. 100-86, title VI, Sec. 604, Aug. 10, 1987, 101 Stat. 642; Pub. 
L. 102-242, title II, Secs. 225, 227(b)(2), Dec. 19, 1991, 105 Stat. 
2307, 2308.)


                               Amendments

    1991--Subsec. (a)(2). Pub. L. 102-242, Sec. 227(b)(2), struck out 
``and (2)'' after ``paragraphs (1)''.
    Subsec. (b). Pub. L. 102-242, Sec. 225(1), inserted ``(a)(2),'' 
after ``subsection''.
    Subsec. (c)(1). Pub. L. 102-242, Sec. 225(2), substituted ``(a)(2)'' 
for ``(a)(2)(F)''.
    Subsec. (d). Pub. L. 102-242, Sec. 225(3), inserted ``(a)(2),'' 
after ``subsections''.
    Subsec. (f)(1)(A)(i). Pub. L. 102-242, Sec. 225(4), substituted 
``time period within which'' for ``day''.
    Subsec. (f)(2)(D), (E). Pub. L. 102-242, Sec. 225(5), added subpars. 
(D) and (E).

                         Change of Name

    Committee on Banking, Finance and Urban Affairs of House of 
Representatives treated as referring to Committee 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 
Congress. Committee on Banking and Financial Services of House of 
Representatives abolished and replaced by Committee on Financial 
Services of House of Representatives, and jurisdiction over matters 
relating to securities and exchanges and insurance generally transferred 
from Committee on Energy and Commerce of House of Representatives by 
House Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001.


                             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.

                  Section Referred to in Other Sections

    This section is referred to in section 4002 of this title.




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