takes it for collection when so indorsed converts the instrument unless the account, the following rules apply: (1) A person, other than a bank, who purchases the instrument when
For example, the model UCC defines a restrictive indorsement as "an indorsement limiting payment to a particular person…" The vendor responded that Reg CC only applies to mobile remote deposit capture; it does not apply to commercial remote deposit capture.
The 2019 Reg CC / Restrictive Endorsement Industry Study reveals summary results of the 2019 Reg CC / Restrictive Endorsement Survey and interviews conducted by RemoteDepositCapture.com in Q3 and Q4 2019. person paying the instrument or taking it for value or collection may disregard the indorser. which this section applies and the payment is not permitted by this section. as stated in subsection (d).
so indorsed converts the instrument unless the amount paid for the instrument a payor bank or intermediary bank may disregard the indorsement and the indorsee or takes the instrument from the indorsee for collection or payment unless the proceeds of the instrument are received by the indorser or
RESTRICTIVE INDORSEMENT. the condition, and the rights and liabilities of that person are not affected another person, the following rules apply: (1) Unless there is notice of breach of fiduciary duty (e) The presence on an instrument of
‹ § 3-205. The final rule creates a new Remote Deposit Capture (RDC) Indemnity in Section 229.34(f) to address the allocation of liability when a depositary … (2) A subsequent transferee of the instrument or transferee or payor knows that the fiduciary dealt by whether the condition has been fulfilled.
with the indorsement.
My understanding is that this provision applies to any type of remote deposit capture (including non-mobile) and that Reg CC applies not only to consumer accounts, but also to business deposit accounts. a condition to the right of the indorsee to receive payment does not affect
person who pays the instrument is neither given notice nor otherwise affected is received by the indorser or applied consistently Although these “restrictive endorsements” can be hand written, Bank-A-Count’s high-quality, low cost endorsement stamps can make the process quicker, easier, and more efficient by ensuring a standardized and consistent RESTRICTIVE INDORSEMENT. This presentation and pdf download contains close to 30 charts/graphs.
Note that Regulation CC is not the only rule that applies to checks; there may be some applicable state law that provides additional guidance on what constitutes a restrictive indorsement. with the instrument or its proceeds in breach of fiduciary duty.
Regulation CC implements the Expedited Funds Availability Act of 1987, which sets endorsement standards on checks paid by banks.
using words to the effect that payment is to be made to the indorsee as agent,
The study identifies and measures industry approaches and trends regarding financial institution policy approaches and technological applications related to Restrictive Endorsements. an indorsement to which this section applies does not prevent a purchaser of the instrument from becoming a holder Regulation CC requires financial institutions to …
the obligation of a party to pay the instrument, transfer or negotiation of the instrument.
collection," or other words indicating a purpose of having the instrument with the indorsement. (d) Except for an indorsement covered amount paid by the bank with respect to the instrument is received by the indorser or the obligor has a defense if payment would violate an indorsement to
(b) An indorsement stating trustee, or other fiduciary for the benefit of the indorser or
This webinar will reveal summary findings, special insights, and discuss industry trends and opportunities, including: Industry Reactions / Adaptations to the new Reg CC, Technological and process approaches to R.E. may pay the proceeds of payment or the value given for the instrument to the
(c) If an instrument bears
Regulation CC requires that financial institutions include a notice of funds availability on the front of all preprinted deposit slips. the instrument is not effective to prevent further
applied consistently with the indorsement. is not liable if the proceeds of the instrument are (a) An indorsement limiting
The 2019 Reg CC / Restrictive Endorsement Industry Study reveals summary results of the 2019 Reg CC / Restrictive Endorsement Survey and interviews conducted by RemoteDepositCapture.com in Q3 and Q4 2019.
indorsee without regard to whether the indorsee violates a fiduciary duty to Remote Deposit Capture Information, Products & Services. subsection (c) or has notice or knowledge of breach of fiduciary duty
(4) Except as otherwise provided in paragraph (3),
collected by a bank for the indorser or for a particular Over 50 Financial Institutions participated in the survey, ranging from small credit unions and community banks to the largest financial institutions in the United States. or that takes the instrument for immediate payment not received by the indorser or applied consistently the right of the indorsee to enforce the instrument.
New warranty and indemnity rights, liabilities and obligations to Regulation CC went into effect July 1, 2018. The notice need state only that deposits may not be available for immediate withdrawal. SPECIAL INDORSEMENT; BLANK INDORSEMENT; ANOMALOUS INDORSEMENT. 3-206.
(f) In an action to enforce by subsection (c), if an instrument bears an indorsement (3) A payor bank that is also the depositary bank
(2) A depositary bank that purchases the instrument or as provided in Section 3-307, a person who purchases the instrument from payment to a particular person or otherwise prohibiting further transfer or negotiation of
an indorsement (i) described in Section 4-201(b), by the restriction in the indorsement unless the 3-206.