We don't have anything similar to this. I'm not sure about the regulatory issues, so I can't answer that. However, two purely practical matters jump to mind:
1) How do you plan to police/enforce the "no check writing"? Anyone can order checks from a dozen places online or by phone and start writing checks. Are you going to manually monitor this daily and close the account immediately and return all checks if they start writing checks? That seems like a lot of monitoring work and if you miss one day monitoring, you'll miss your 24 hour deadline to return the checks, so what do you do then? Do you have any way to automate/enforce that restriction? I do not think our system would present any way to do that.
2) Freezing the account if the direct deposits stop could present problems depending upon what the source of those direct deposits are. For example, if direct deposit comes monthly from social security and it's direct deposited one month (and not fully spent so there remains a balance), you can't just go freezing those funds because one spouse subsequently dies and the direct deposits stop the next month. I doubt the feds would be too happy with that and I know the customer wouldn't be!
My advice: I'd get your bank's compliance and legal departments involved and think this one through fully before designing this account. This seems like a bad idea.
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