Customer has been deceased for 10 years now - yes TEN years! Still receiving automatic VA benefits every month. Most of money is spent (we assume by nephew who is/was joint owner on account). Now the VA wants their money back - all of it. Yes we knew customer was deceased - just did not send deposits back (carelessness). Question....is there anything the bank can do? is there a statute of limitations on how far back the VA can make us pay it back? We are, of course, going to go after the nephew.

SCOPE OF RECLAMATION: An RDFI is not liable for any post-death benefit payments made more than six years prior to the date of the notice of reclamation, except under the following circumstance “If the account balance at the time the RDFI receives the notice of reclamation exceeds the total amount of all post-death or post-incapacity payments made by the agency during such six-year period, this limitation shall not apply and the RDFI shall be liable for the total amount of all payments made, up to the amount in the account at the time the RDFI receives the Notice of Reclamation and has had a reasonable opportunity (not to exceed one business day) to act on the notice.” [31 CFR Part 210.10(d)]

Welcome to BOL's Bankers' Threads, TTFN. I wish it were under better circumstances.

Six years of VA Direct Deposits is a big chunk of cash. I hope that someone has been charged with determining how your controls failed to nip these payments in the bud promptly upon learning of your late customer's demise, however many years ago that was. And, even more importantly, that your current controls are adequate to the task.

The CEO refuses to believe that this is our fault - swears that bookkeeping would have returned to benefits when first learned of the death of customer - however, we don't keep records that far back - and we didn't image yet so I have no way of proving if we did or not. We DID return the social security benefits and they stopped sending them. But the VA benefits.....????

We DID return the social security benefits

So how could the bank not have known?? Make sure you have him sign the reclamation certification personally if that is the case. Then he can go to jail and not some other poor smuck working at his bank.

This case illustrates that there are times when it makes sense to hold on to some records beyond their designated "destroy date."

rlcarey has bestowed a gift on your bank, saving you about 4 years in payments; I'm impressed.

Your CEO is saying that the VA was notified, but they kept sending the payments anyway? Then, your bank never noticed? I'm not certain being able to prove that would actually help you.

The weight of a CEO's insistence is the equivalent of a feather laid on a scale built to weigh a semi tractor-trailer.

Agreed. The CEO's signature will probably be worth as much to the bank as yours in this imbroglio without records to back it up. But don't put your name on that certification unless you're willing to do time for issuing a false statement to the government.

FIW- The VA does strange things. We returned 2 VA payments on a customer's account. There was no payment the following month so we stopped checking. For some reasons the payments started up again for two or three more months. We then received a reclamation, and the account was closed. Fortunately we had an honest customer that had other accounts with us. They thought the new payments were to reimburse funeral expenses. The VA was of no help; couldn't explain why the payments re-started. They also wouldn't forgive the overpayment for the customer. It was a hardship for them, so we worked out a payment plan.

Rather than just a manual review on accounts, we now place a permanent stop payment on all Fed ACH Direct Deposits for deceased depositors, just in case

Just another reason to close out accounts and open new ones instead of ever just removing names.