![]() ![]() Because the rule did not specify the exact phrase a credit union should use, it seems that from a Regulation CC perspective, the wording the credit union chooses for its restrictive indorsement requirement will be a risk-based decision for the credit union. The commentary provides another example: "for mobile deposit at Depositary Bank A only." As these are just examples, other indorsements may also be sufficient so long as it shows the member's intent to deposit the check remotely and not physically. In the preamble to the final rule, the Federal Reserve Board explains that "for mobile deposit only" is an example of a restrictive indorsement that should raise a red flag to the financial institution accepting the original check. ![]() If the original check presented bears a restrictive indorsement, this should alert the financial institution accepting this check that it may have been presented for payment already by other means. For an indemnity claim to go forward, section 229.34(f)(2) essentially requires the original check to be presented. For example, if a credit union and a bank both accept a check via RDC, neither the credit union nor the bank may seek indemnity because neither received the original check. However, in determining what to require for the restrictive indorsement, it is important to note that only institutions that receive the original check can seek indemnity. To summarize, a credit union that accepts remotely deposited checks can be liable to another financial institution if the original check is deposited in that financial institution and the check does not bear the appropriate restrictive indorsement.īut what exactly is the correct restrictive phrase to use for a remotely deposited check? The answer to this question is twofold as checks are regulated by federal and state laws.įinal Regulation CC does not specifically defines what constitutes a restrictive indorsement. For an overview of the newly added warranty and indemnity provisions for electronic checks, see this blog. This means that, among other things, credit unions offering remote deposit capture (RDC) technology should have finalized any changes made to their RDC agreements, policies and procedures to ensure the correct restrictive indorsements are placed on these remotely deposited checks. Regulation CC's compliance deadline was yesterday, July 1st. Written By Stephanie Lyon, Senior Regulatory Compliance Counsel, NAFCU ![]()
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