Is the bank liable if a custoemr uses for hei spersonal benefit the funds in an acct that contains only federal benefits of another customer (the person transferring the money to his personal acct is a joint tenant on the acct belonging to the beneficiary and such acct contains only federal benefits.

The personal representative is accountable not the bank. There is no way to tell what the money is being actually used for.

And the same holds true if the other customer is not the personal representative.

However, in either case, the other customer is obligated to immediately advise both the government agency and the bank of the death of the beneficiary. The direct deposit form usually contains a 'special notice to joint account holders' and they must sign that they understand the obligation.

I alwasy thought that if the bank was aware of or had plenty of indications that the funds were not being used by the beneficiary of the gov't benefit but rather by the joint owner on the acct (who has never placed any funds into the acct), the bank might have some liability.

My presumption is that a 'representative payee' is held to the standard of ensuring that the funds are used for the benefit of the beneficiary. If there were indications that the funds were not being used for their benefit, I would consider filing a SAR.

However, I don't believe a joint account holder has any such obligation; at least from what I've read. My only thought would be if the beneficiary were an aged person and might fall under elder abuse, it might be cause to see if their are grounds for a SAR in that case (or notice to the applicable state aging agency).