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Compliance More hold notices not necessarily a nightmare
WASHINGTON(5/2/08)—The rising number of exception hold notices to members, and the attendant recordkeeping, does not mean a credit union manager is doomed to be buried in paperwork, according to the Credit Union National Association’s Compliance Challenge. A recent Challenge points out that the pertinent regulation does not require that every piece of paper in such a transaction end up in the files. The credit union must retain a record of each exception hold notice only when it invokes the “reasonable cause to doubt collectibility exception.” At issue is Regulation CC Section 229.13(g)(1). It requires credit unions to provide a notice to members when the credit union extends the time when funds will be available based on one of the exceptions, such as new accounts, large deposits, redeposited checks, repeated overdrafts, or when there is reasonable cause to doubt collectibility. The section requires the notice be provided to the member at the time of the deposit, unless the deposit is not made to an employee of the credit union, or if facts on which upon which the decision to invoke an exception hold do not become known until after the deposit. If the credit union invokes the questionable collectibility standard, it must retain a record describing the circumstances that led to the decision. The record must be kept for two years.


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