All in Regulation D

Regulation D is an interesting regulation for compliance professionals as it isn’t a consumer protection rule, but rather was created by the Federal Reserve to help set monetary policy.  That said, compliance professionals typically focus on just a few elements of Regulation D such as ineligible entities on NOW accounts, waiving early withdrawal penalties, and, of course, monitoring for excessive transactions on savings accounts.

Regulation D sets transaction limitations on savings accounts where a customer is not permitted to make more than 6 restricted transaction from the account during the statement cycle (or calendar month).  If a customer repeatedly makes excessive withdrawals, Regulation D, by definition, changes the account type from a savings account to a transaction account. The result is that a converted account would be incorrectly reported on the Call report by the financial institution.  Therefore, Regulation D requires financial institutions to monitor restricted transactions and to take action if a consumer exceeds the maximum number of transactions permitted on a savings account.