Joint cheque hold period | General financial discussion | Discussion forum

I would guess no.

Once the issuing FI receives the cheque through the clearing system and does not bounce the cheque, then the money is no longer with the issuing FI. That will happen way before a five business day hold is over.

This CDIC FAQ answers a similar question about CDIC coverage:

Are funds “in transit” still covered by CDIC? I have money at one CDIC member (ABC Trust) and I have instructed them to transfer the funds to another CDIC member (XYZ Bank) in an eligible deposit.

Yes. Funds that are “in transit” means only that your transfer instructions have not yet been fully carried out. At all times, either ABC Trust or XYZ Bank would be liable to you for the monies. The liability of XYZ Bank would commence on its receipt of the monies from ABC Trust, and conversely, until XYZ Bank receives the monies, ABC Trust would remain liable for them.

Norman1 said
I would guess no.

Once the issuing FI receives the cheque through the clearing system and does not bounce the cheque, then the money is no longer with the issuing FI. That will happen way before a five business day hold is over.

This CDIC FAQ answers a similar question about CDIC coverage:

Are funds “in transit” still covered by CDIC? I have money at one CDIC member (ABC Trust) and I have instructed them to transfer the funds to another CDIC member (XYZ Bank) in an eligible deposit.

Yes. Funds that are “in transit” means only that your transfer instructions have not yet been fully carried out. At all times, either ABC Trust or XYZ Bank would be liable to you for the monies. The liability of XYZ Bank would commence on its receipt of the monies from ABC Trust, and conversely, until XYZ Bank receives the monies, ABC Trust would remain liable for them.

  

Thanks, Norman. This is correct. I would just add that each financial institution may have their own internal policies with regard to governing joint accounts, but in most or nearly all cases, they all operate in a substantially similar way.

As well, if the bank has a reason, which they are not obliged to formally disclose, to suspect or otherwise call into question any aspect of the cheque, they can, aside from refusing the deposit), extend the hold period. In most cases, though, one need not worry about that.

Cheers,
Doug

Loonie said
Interesting illustration from CDIC.
How would a customer know when the money had actually been received by XYZ? This could be more important if going from CDIC to CU coverage. …

I've never seen that information shown by the financial institution that I deposited a cheque into.

I think one would have to contact XYZ Bank to find out when the batch of cheques, that includes the deposited cheque, was submitted into the Payments Canada ACSS system. The money would be "received" sometime in the morning of the business day after the business day the batch was submitted. That's when funds are moved between accounts at the Bank of Canada to settle any clearing imbalances between the direct clearers:

Specific participant financial institutions, referred to as direct clearers, participate directly in the ACSS. These participants handle the clearing and settlement of payments for their own customers, as well as for customers that maintain accounts at the other financial institutions, known as indirect clearers. Direct clearers must maintain settlement accounts at the Bank of Canada. Settlement of the previous day’s net balances occurs during the morning of each business day, where settlement account balances are extinguished via payments to and from the Bank of Canada.

I think for a cheque, one would have double deposit insurance coverage for a short period of time. For a time, one has a deposit both at ABC Trust, that the cheque is drawn on, and at XYZ Bank, where the cheque is deposited!

That is when ABC Trust's liability ends. Once the amount has been debited from the Bank of Canada account, then ABC Trust has handed over the amount of and has honoured the cheque.

There was an incident years ago during the time of ING Direct. Royal Bank had a major systems failure that brought down their branch network and their part of the Payments Canada clearing system. They were down for days!

ING Direct was severely affected as they cleared through Royal Bank. My push from ING Direct was stuck somewhere for over a week! For serious cases, ING Direct was sending out bank drafts by overnight courier.

Norman1 said
That is when ABC Trust's liability ends. Once the amount has been debited from the Bank of Canada account, then ABC Trust has handed over the amount of and has honoured the cheque.

There was an incident years ago during the time of ING Direct. Royal Bank had a major systems failure that brought down their branch network and their part of the Payments Canada clearing system. They were down for days!

ING Direct was severely affected as they cleared through Royal Bank. My push from ING Direct was stuck somewhere for over a week! For serious cases, ING Direct was sending out bank drafts by overnight courier.  

Thanks, Norman. I don't remember that, or hadn't heard of it. 🙂

FWIW, RBC Royal Bank is still the clearing service provider for Tangerine Bank. Look on the back of your cleared Tangerine cheques for proof of this.

Cheers,
Doug