how regulation cc works
as part of the policies to regulate the check clearing system the board of governors of the federal reserve adopted rules to hasten the return of unpaid checks 1check return rules and same day settlement rules are outlined and implemented under regulation cc the intent of those rules is to reduce risks to depository banks regarding the availability of funds for withdrawal after checks are deposited the check return rule better ensures that banks can discover whether or not the checks were returned as unpaid same day settlement decreases the disparity between private sector banks and reserve banks when checks are presented for payment 1regulation cc requirementsother rules and policies implemented under regulation cc include the check clearing for the 21st century act check 21 this legislation was created by congress as a means to improve efficiency in the payment system the act reduced certain legal impediments to electronic check processing the act allowed for the creation of a substitute for paper checks in electronic check processing as a legal equivalent for original checks 1the act lets banks send checks electronically instead of requiring them in paper form when processing funds with banks they have agreements in place with this also lets banks send substitute checks to banks with which they do not have electronic processing agreements the enactment of this act under regulation cc has allowed check collection among banks in the united states to become predominantly electronic based this has also given banks the ability to offer their customers other types of electronic based services 