Hold Period on Foreign Checks

Some Credit Unions have recently been the target of fraudulent checks deposited to newshare accounts where the deposit checks are drawn on banks in Canada. It is important to remember that Canada is a foreign country and checks take much longer to clear through Canadian banks.

The person opening the account counts on the Credit Union instituting the normal checkhold period for an out of area check of 4 days. They then leave with the money before the check is returned uncollectible.

Credit Unions are reluctant to extend the checkhold period for fear that they will be liable for a violation of Reg CC. However, there is no hold period mandated in Reg CC for foreign checks. Reg CC only applies to checks drawn on U.S. banks, and banks in protectorates such as Guam and the Virgin Islands. Any check drawn on a foreign bank can have an internal checkhold period that is established by the Credit Union.