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If we report interest bearing checking accounts as NOW accounts on our Call Report, does Regulation D require us to reserve the right to require seven days’ written notice prior to withdrawals from those accounts? – IBA Compliance Connection

If we report interest bearing checking accounts as NOW accounts on our Call Report, does Regulation D require us to reserve the right to require seven days’ written notice prior to withdrawals from those accounts?

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Yes, in order for an account to meet the definition of a NOW account under Regulation D, the bank must reserve the right to require at least seven days’ written notice prior to withdrawal or transfer of funds. Consequently, if you have classified an account as a NOW account on your Call Report, your institution must have reserved this right in your account disclosures.

For resources related to our guidance, please see:

  • Regulation D, 12 CFR 204.2(e)(2) (“Transaction account includes: . . . (2) Deposits or accounts on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and that are subject to check, draft, negotiable order of withdrawal, share draft, or other similar item, except accounts described in paragraph (d)(2) of this section (savings deposits), but including accounts authorized by 12 U.S.C. 1832(a) (NOW accounts).”)