IBA Compliance Connection

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Do you see any privacy or other issues with providing payable on death (POD) account beneficiaries with a list of all beneficiaries, and the amounts designated to each beneficiary, after the account owner has died?

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We believe that at least one exception in Regulation P would permit this disclosure, and we are not aware of any other prohibitions or risks involved in revealing this information after the account owner has died.

Regulation P permits banks to disclose account information to “persons holding a legal or beneficial interest relating to the consumer” and “for required institution risk control or for resolving consumer disputes or inquiries.” (These exceptions also apply under the Illinois Banking Act’s privacy provisions.) In this case, the account owner has died, leaving the POD beneficiaries with beneficial interests in the account. Additionally, because there is some risk of conflicting claims to the POD account funds, arguably disclosure is permitted for purposes of risk control or to resolve possible disputes.

For resources related to our guidance, please see:

  • Regulation P, 12 CFR 1016.15(a)(2) (Regulation P’s privacy requirements do not apply “when you disclose nonpublic personal information . . . (iv) To persons holding a legal or beneficial interest relating to the consumer.”)

  • Regulation P, 12 CFR 1016.15(a)(2) (Regulation P’s privacy requirements do not apply “when you disclose nonpublic personal information . . . (iii) For required institutional risk control or for resolving consumer disputes or inquiries.”)

  • IDFPR Interpretive Letter 01-01 (“Section 15 [of Regulation P] provides several other exceptions to the notice and opt-out provisions, including disclosures of information to fiduciaries or representatives of the customer or disclosures made to protect against fraud and unauthorized transactions. Although Section 48.1 of the [Illinois Banking Act] does not explicitly include these exceptions to its opt in requirement, the exceptions enumerated in the federal regulations are consistent with the purpose of Section 48.1 of the Act. Thus, we believe that a state bank need not obtain a customer’s authorization to make disclosures permitted by one of the exceptions contained in Subpart C of the federal regulations.”)