§ 4003. — Safeguard exceptions.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
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
(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
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
(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.
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
if the receiving depository institution exercises such diligence as the
(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
(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
(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
(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
(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.
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),''
Subsec. (c)(1). Pub. L. 102-242, Sec. 225(2), substituted ``(a)(2)''
Subsec. (d). Pub. L. 102-242, Sec. 225(3), inserted ``(a)(2),''
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.
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.