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Is it a best practice to monitor obituaries in case we see that any customers have died? – IBA Compliance Connection

Is it a best practice to monitor obituaries in case we see that any customers have died?

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Whether your bank wishes to monitor obituaries is strictly a business decision, and we are not aware of any legal requirements to monitor for customer deaths.

Note that an account holder’s death does not automatically revoke a bank’s authority to pay checks drawn on the account. The UCC provides that a bank may continue to pay checks drawn on or before the date of death for a period of ten days after it learns of the drawer’s death, unless it is ordered to stop payment by a person claiming an interest in the account, such as an executor or a surviving relative. 810 ILCS 5/4-405. By undertaking a daily review of your local paper’s obituaries, your bank is likely to learn of an accountholder’s death sooner than it otherwise would by virtue of receiving notice from the estate or the accountholder’s relatives. In other words, your bank’s practice is triggering the ten day period provided under Section 4-405 of the UCC earlier than it otherwise would begin.

Similar issues may arise if an accountholder is receiving social security or other federal benefit payments when he or she dies. If you your institution is not aware that a customer has died, it may not be liable to the U.S. Treasury for benefit payments made after the customer’s death. 31 CFR 210.11(a). Otherwise, your institution may be liable for those payments, and other duties arise after “learns of the death or legal incapacity of a recipient or death of a beneficiary from a source other than notice from the agency issuing payments,” including the duty to notify the paying agency using the R14 or R15 return codes. 31 CFR 210.10(a). The U.S. Treasury’s Green Book provides a useful guide to the reclamation of payments after the recipient’s death in Chapter 5.