The Expedited Funds Availability Act (EFAA) is a United States federal law that was enacted in 1987. Its primary purpose is to regulate the availability of funds deposited by consumers in banks and other financial institutions. The EFAA is also commonly referred to as Regulation CC, as it is implemented and enforced by the Board of Governors of the Federal Reserve System through Regulation CC.

Key provisions and objectives of the Expedited Funds Availability Act include:

1. **Funds Availability Schedule:**
– The EFAA establishes guidelines for the maximum time that financial institutions can hold funds deposited by consumers before making those funds available for withdrawal. It sets forth a funds availability schedule based on the type of deposit and the location of the depositary bank.

2. **Types of Deposits:**
– Different types of deposits, such as cash, checks, electronic transfers, and certain other instruments, may have different availability periods. The EFAA outlines specific rules for each type of deposit.

3. **Local and Non-Local Deposits:**
– The availability schedule distinguishes between local and non-local deposits. Local deposits are those made at a branch of the depositary bank, while non-local deposits are made at a location other than the bank’s branch.

4. **Next-Day Availability:**
– The EFAA requires that the first $200 of a local check deposit be made available for withdrawal on the next business day. For non-local checks, the first $200 must be made available on the second business day following the deposit.

5. **Large Deposits:**
– Deposits above $5,000 may have longer holds, and the EFAA provides specific rules for such deposits. Financial institutions may extend the hold period for a reasonable additional period, depending on various factors.

6. **Electronic Payments:**
– Electronic payments, such as wire transfers and direct deposits, generally have next-day availability. This is consistent with the EFAA’s goal of providing consumers with quicker access to funds in electronic form.

7. **Consumer Disclosures:**
– Financial institutions are required to provide consumers with clear and concise disclosures regarding their funds availability policies. This includes informing customers about the specific time frames for making funds available.

8. **Enforcement and Penalties:**
– The EFAA grants regulatory authorities, including the Federal Reserve, the authority to enforce compliance with its provisions. Non-compliance with the funds availability requirements may result in penalties.

9. **Amendments and Updates:**
– The EFAA has been subject to amendments and updates over the years to reflect changes in banking practices, technology, and the overall financial landscape.

The EFAA plays a crucial role in ensuring that consumers have timely access to funds deposited in banks, promoting efficiency and transparency in the banking system. Financial institutions are required to adhere to the regulations outlined in the EFAA and provide clear information to consumers about the availability of their deposited funds. The goal is to strike a balance between the needs of consumers and the legitimate concerns of financial institutions regarding the risk associated with certain types of deposits.