[jemery]

Good afternoon,
The discussion has come up on monitoring for customers who are now deceased. Our current process is to review newspapers for our areas. However, they are wanting to change the process. I have informed staff that 31 CFR section 210 does required use of commercially reasonable business practices in order to limit any liability. So what is everyone else doing to check to see if a customer is deceased?

[rcooper]

There are no specific requirements for monitoring for deceased customers. To limit liability some banks check obituaries in their areas in order to freeze the account so unauthorized transactions can’t be made and so the bank can promptly return any federal benefit payment received via ACH after the account holder’s death to avoid those funds from being accessed and the bank having liability. (Note: For federal benefit payments that come into the account via direct deposit you must immediately return any post-death Federal benefit payments received and if you learn of the death of a recipient of these payments from a source other than the federal agency, you must notify the agency of the recipient’s death. Return code R14-R15 with date of death in the memo line.)

Something else to consider is that there have been some court rulings that have set a precedent in which a notification of death in a newspaper could be considered notification of death if the bank has a procedure of monitoring newspapers for death announcements. As a result, a bank could be held liable if it had notification of death through its newspaper monitoring procedure and it fails to prevent unauthorized activity on the account (i.e. even if it missed the notification in the newspaper, some case laws sets the precedent that its procedures dictates it was notified). As a result, and because monitoring multiple newspapers daily can be a burdensome and impractical process in some cases, many banks wait for notification of death rather than monitoring death notifications.

You should develop a procedure that fits your financial institution.

These two links have useful information on SSA and other federal benefit payments received by deceased customers as what is considered notification of death:
https://www.ssa.gov/pubs/EN-05-10008.pdf
https://www.fiscal.treasury.gov/fsreports/ref/greenBook/chapter_5.htm (See pl. 5-8)

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