All the information I have found states that a financial institution is not required to monitor such accounts. What should we do, if anything, when transactions are questionable?
Do we have a responsibility to report it and to whom?

I am also struggling with Rep Payee accounts currently. We have a new customer who is insisting that we issue debit cards for two such accounts. It has always been our policy to not allow cards on these accounts, as we are unable to shut off the ATM withdrawal function. There is a 12 year old Banker Guru post that she dug up from the public section of Bankersonline that represents this policy as "a little paternalistic". What are others doing for cards on Rep Payee accounts?

Soonermom,

While it's true that you are not required to monitor accounts of any type in order to protect third parties, you cannot ignore financial exploitation when you find it. FinCEN has made it clear that banks are expected to report financial exploitation of the elderly and many states have reporting requirements that go beyond the elderly and include "disabled adults" or other broader categories. Outside those boundaries you could consider contacting the government agency responsible for the payments and suggesting they request an accounting, something they have the legal right to do. That would be a judgment call.

Jenschf09,

"A little paternalistic" was me. That's hardly a stinging criticism. As I said there, it's a decision your bank is entitled to make. Faced with a new customer who is "insisting" I do something, I would know the prohibition was appropriate and engrave it in granite.

Thank you, thank you. I cannot close my eyes to what I see. Even if I do not care about individuals being exploited, I am protecting the bank, a government insured entity holding funds belonging to many that must be protected.

Jenschf09,

In the last few months, we also discussed whether we should continue issuing cards for those accounts. Our decision was to continue.

Ken,

I want to make sure I have this correct. We can contact the Social Security office and suggest they look into the account?? This would not be violating any Financial Privacy laws??

As for issuing cards, one place you should not go is issuing a card to the beneficial owner of the funds (the SSA beneficiary). The SSA (and the VA with respect to veteran's benefits managed by a custodian or other fiduciary) expects that the beneficiary will not have account access (the Rep Payee or custodian can provide an allowance).

I said it would be a judgment call; no warranties were offered.

Filing a SAR with FinCEN may be a legal requirement, but nothing is going to happen to stop the activity as a result. I don't know the circumstances or whether the law in your state would allow or require reporting to the state or whether anything would be done in response. There is an array of possibilities...

If there was no state reporting or the state would not move and the facts were compelling, yes, I would contact the agency making the payment and suggest they audit the activity, nothing more. If anyone can provide a citation regarding a law that would violate I am certain they will jump at the chance.

This is part of our logic for not issuing cards. We have good reason to believe that the Rep Payee intends to hand the cards over to the protected individual for quick access to cash.

By the way, no criticism was detected in the reference to the earlier comment. Just frosts me a bit to have a depositor telling us how to apply our own policy based on a google search that turned up a comment taken a bit out of contect.

There is irony in the fact your customer used a quote from me as evidence that your bank was wrong. Maybe he will come back for an update and find:

Learned something this morning...

To make a response above more specific, I would not only report a representative payee's abuse to SSA, I would report it to SSA's Office of the Inspector General (OIG). As Retread pointed out to me a few years ago, OIG folks may fall under the heading of "law enforcement. If so, once I've filed my SAR, at a minimum I can draw the specific report to their attention.

The VA has a similar mechanism.

We have an entity who serves as representative payee on several accounts. This entity has several employees they also have as signers on the accounts. Now they are requesting debit cards for each signer. This entity seems to have a high turnover of employees, and this creates a lot of work changing/replacing signers. I am not in favor of issuing debit cards to these accounts...the risk to the bank and the account owner is huge, IMO. However, we have a couple rep payee accounts in which we have issued debit cards to in the past, that have only one rep payee signer. I'm concerned if we state it is our policy, those exceptions to the rule (issued previously) might cause some regulatory criticism. Any thoughts?

I'll be a bit impolite and note first that the issue would not exist had no "exceptions" been made in the past... "No" would just mean no.

You can accurately say that you never do this when you are dealing with an institutional representative and just say "no." This practice would amount to an unconscionable acceptance of risk on the part of the institutional representative and, if things go badly, I'm certain they will say that your bank is in some way responsible.

Your regulator might be more likely to question the exception rather than the rule.

Okay...thanks Ken!

Thank you Ken for the suggestion of reposting to the Office of Inspector General. A reminder that abuse on Representative Payee accounts may be subject to your state Elder Abuse laws and should be reported as such. In our state, there is potential civil liability for Elder Financial Abuse if we fail to act if a person reasonably should have known about the abuse. We do not issue cards on fiduciary accounts for this reason. Electronic transactions make the abuse much more difficult to detect.

I am on our Governor's Elder Abuse Prevention Workgroup. We're currently looking at Financial exploitation, and I brought up the issue of SSA Rep Payee account abuse. From my experience, there seems to be little or no oversight by SSA. A probate judge in our group has also reported issues with professional conservators that are bonded & insured not being granted Rep Payee status. We hope to meet with local SSA officals to discuss some of these issues. Not sure we'll get much, but you have to start somewhere.

See #1925624 above.