TN 18 (11-08)

GN 02408.625 Financial Institution’s Liability for EFT Reclamations

A. Introduction

A financial institution (FI) is liable for the full amount of all payments received after the death of a beneficiary/recipient unless it meets the qualifications for limiting its liability.

B. Process when an FI limits its liability

The FI can limit its liability if it meets all of the following:

  • It did not know of the death at the time of the deposit or withdrawal of post-death benefit payments;

  • It returns all post-death payments it receives after it learns of the death; and

  • It responds to the Notice of Reclamation within 60 days of the date of the notice.

The Department of the Treasury (DT) determines the liability of the FI.

C. Process when an FI has full liability

If the FI has full liability, the FI must complete all of the following:

  • Mail the “Notice to Account Holders” (Part 5 of the Notice of Reclamation) to the account holder(s);

  • Notify the account holder(s) of any action the FI has taken or intends to take against the account;

  • Respond to DT so the response arrives at the Government Disbursing Office within 60 days of the date of the Notice of Reclamation; and

  • Return all payments listed on the Notice of Reclamation and any payments received after receipt of the Notice.

D. Process when calculating the limited liability amount

DT determines the liability of the FI, based on the factors in this section at GN 02408.625B., and calculates the amount due from the FI. We do not need to calculate the liability amount. This section helps explain how the limited liability amount is determined.

If the FI meets all qualifications for limiting its liability, the amount it is liable to pay is the total of:

  • the amount in the account at the time the FI received the report of death, and

  • the amount of the post-death benefit payments received within 45 days after the death.

The limited liability amount cannot be more than the total of all benefit payments received after death.

EXAMPLE: Four payments of $200 each arrived after the death, for a total of $800, which was the amount on the reclamation. Two of the payments (totaling $400) had arrived within 45 days after the death. The FI, which had first learned of the death when it received the reclamation, responds within 60 days and sends DT the $300 balance in the account. The limited liability amount is $700 ($300 account balance plus $400 from payments received within 45 days after the death).

Several examples of calculations for limiting the FI’s liability are in the Reclamations chapter of Treasury’s “Green Book” at https://www.fiscal.treasury.gov/fsreports/ref/greenBook/greenbook_home.htm

E. Process for FI’s under limited liability

1. Outstanding total has been repaid

If the total of all payments issued after death has already been returned by a survivor, the FI must do the following:

  • Complete the Notice of Reclamation;

  • Attach proof of the survivor’s repayment; and

  • Send to DT so it arrives within 60 days of the Notice.

2. Account balance is equal to or greater than the total reclamation amount

If the account contains the full amount listed in the Notice of Reclamation, the FI must do the following:

  • Return the exact amount of the outstanding total within 60 days of the Notice; and

  • Return the completed Notice within 60 days.

3. Account balance is less than the total reclamation amount

If the account contains less than the amount listed in the Notice of Reclamation, the FI must do all of the following:

  • Return the amount of the account balance;

  • Title II only -- Provide the names and addresses of any persons who withdrew funds (i.e., last withdrawers) from the account after the death on the FMS-133. If that is not possible, the FI must explain in writing why this information is not available; and

  • Complete and return the FMS-133.

NOTE: Federal regulation prohibits FIs from providing last withdrawer information for Title XVI reclamations.