we do not check obituaries but what steps do most banks take when they determine that a customer has died based on discovery of a obituary?

Nothing - you do it once it is a practice. You miss one - you open yourself up to potential problems.

I'll offer an alternate opinion.

Even if you are not seeking information about customers' deaths, once you become aware of a death, you cannot act as if you don't have that knowledge.

You don't have information of the death of a specific customer until someone walks into the bank with a copy of the death certificate and you verify that the person on the death certificate is your account holder.

Until you can verify it though would a system alert and debit card freeze be warranted to ensure it is verified before allowing money to leave.

Randy-

Of course, there are certain actions that the bank will not take without official notice, such as paying out funds to a claimant or returning a SS deposit. Nevertheless, the bank is on notice when it has knowledge, and as terpsfan points out, you want to take reasonable steps to protect the funds until official confirmation is received.

What is your thoughts on being an employee seeing a obituary fitting the following and returning government ACH payments?

Notification of death by any source constitutes notification for all Federal benefit payments received by the recipient. The following are some examples of ways that the RDFI may learn of the death of their account holders:
• Receipt of a Death Notification Entry (DNE) - A DNE is a notification of a benefit recipients death sent from an originating government agency [e.g., SSA, RRB, or OPM] to the RDFI.
• Receipt of a federal government Notice of Reclamation, (Fiscal Service-133).
• Any contact or request to withdraw funds from an Estate, Executor, Administrator, Public Administrator, Personal Representative, Conservator or other representative of such Estate. Note: Any release to an executor or other party clearly acting on behalf of the deceased person or his/her estate will be deemed by the government to have demonstrated the RDFI’s knowledge of the death.
• A pertinent reference to or from a Probate Court, a funeral home, or Letters Testamentary. Any oral or written report of death.
• Any death information obtained by the RDFI’s inquiry into a dormant account, or through other RDFI internal screening processes.
• Any personal awareness of the death by the RDFI’s staff.
• Any notice received in the mail from any source.

My concerns is if even though our staff does not review obituaries if someone comes across one that even though we do not have a death certificate that we maybe should return the government ACH payments.

Any personal awareness of the death by the RDFI’s staff