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#2158430 - 12/27/17 01:50 PM Social Security ACHs
GrannieTwo Offline
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Joined: Nov 2010
Posts: 180
Central IL
Yesterday, due to an error when the Social Security Admin. set up an ACH we discover the following. We have a customer who is allowing others to use his account number to obtain their social security. We discovered this when one of theses non customers gave the SSA our customers savings account number which was coded as a checking account. It was then listed in our ACH unprocessed. When I talked to our customer he said, that he gives the person the money after their SS posts. I said what would happen to this if you pass away? And what would happen if they passed away? I explained that we were receiving funds for people that we have no information on. I told him this needed to stop and that we would be closing his account. Here is my question because I am not an ACH guru nor work for the SS office, but what would happen if one of these non customers did pass away. IMHO this is so wrong but it also concerns me that others may be doing this. And what if he is cashing over $1,000 for one person, isn't he then a money service business. I apologize if this is in the wrong forum. I would appreciate any feedback and thanks ahead of time.
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#2158439 - 12/27/17 03:00 PM Re: Social Security ACHs GrannieTwo
banker1976 Offline
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Mid-Atlantic
When we come across these situations, on any ACH not just SS, we will return the ACH to the sender.
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#2158442 - 12/27/17 03:08 PM Re: Social Security ACHs GrannieTwo
GrannieTwo Offline
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Central IL
Thank you banker1976, but how do you catch this if no error is made?
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#2158463 - 12/27/17 04:13 PM Re: Social Security ACHs GrannieTwo
BrianC Offline
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Joined: Nov 2004
Posts: 6,685
Illinois
NACHA rules do not require that we match names and account numbers. We are allowed to rely on the account number the ODFI supplies.

Some institutions that use monitoring software may set parameters to identify customers that receive a large number of transactions from the same originator. (It is almost tax season again and customers have been known to receive tax refunds for multiple persons into their account.)
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#2158471 - 12/27/17 04:35 PM Re: Social Security ACHs GrannieTwo
Elwood P. Dowd Offline
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Next to Harvey
Quote:
what would happen if one of these non customers did pass away.


Your bank would eventually get a reclamation notice from SSA. The SSA would want all payments made after the date of death returned to them. In candor, I have no idea whether you would have a workable defense. Although Brian is correct, the current Green Book does not require banks to match names and account numbers, you would be dealing with a huge government agency not subject to any effective oversight as to whether or not they were being "fair" with your bank.

Your response is the correct one: "This stops now; we are returning all payments with names that do not correspond to those in the account title."
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#2158478 - 12/27/17 05:18 PM Re: Social Security ACHs GrannieTwo
GrannieTwo Offline
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Joined: Nov 2010
Posts: 180
Central IL
Thank you Brian and Ken, we are a small bank and we review all things by hand. Something to think about and maybe our core processor could help. Happy New Year!
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#2160118 - 01/11/18 04:40 PM Re: Social Security ACHs GrannieTwo
Deputy Dawn Offline
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Deputy Dawn
Joined: Feb 2007
Posts: 485
Pennsylvania
A question on the specific customer & multiple deposits - do you have any reason to suspect elder financial abuse?

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#2161546 - 01/23/18 07:25 PM Re: Social Security ACHs GrannieTwo
GrannieTwo Offline
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Joined: Nov 2010
Posts: 180
Central IL
No, it isn't elder abuse, it was his partner and his daughter that didn't have checking accounts, so he (our customer) gave them his number and routing number to deposit into his account.
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#2161572 - 01/23/18 08:58 PM Re: Social Security ACHs GrannieTwo
John Burnett Offline
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John Burnett
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Cape Cod
Back to the business about not being required to check names on incoming ACH. That is true as far as it goes, however, behind the Green Book is a Fiscal Service, Department of the Treasury, regulation, Federal Government Participation in the Automated Clearing House, 31 CFR Part 210, specifically §210.8(d), that has some teeth in it. I've copied it below, adding emphasis:

(d) Notice of misdirected payment. If an RDFI becomes aware that an agency has originated an ACH credit entry to an account that is not owned by the payee whose name appears in the ACH payment information, the RDFI shall promptly notify the agency. An RDFI that originates a Notification of Change (NOC) entry with the correct account and/or Routing and Transit Number information, or returns the original ACH credit entry to the agency with an appropriate return reason code, shall be deemed to have satisfied this requirement.

So, no, you aren't required to go looking for these problems, but when you identify one, you have to act. The item should have gone back as a return ACH item, using the R03 return code to indicate the name mismatch.

Your actual customer put the bank in the position of providing banking services to persons it does not know, whose identity it never verified, and who never signed a contract for a deposit account. And if the bank ever received a levy against your customer's accounts, all the money in the account would be subject to the levy, regardless of whose funds were deposited there.
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#2161605 - 01/24/18 12:04 PM Re: Social Security ACHs John Burnett
Elwood P. Dowd Offline
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Next to Harvey
Way cool; thanks!

Quote:
"This stops now; we are returning all payments with names that do not correspond to those in the account title."
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#2243813 - 10/08/20 05:58 PM Re: Social Security ACHs John Burnett
Goldrose Offline
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Posts: 66
Sorry to dig up an old post... but John, looking at Green book, my question is in regards to the definition of "Account Requirements: All federal government benefit payment enrollments must be established for a deposit account at the financial institution that is in the name of the recipient or beneficiary with the following exceptions: ..... "

What if an individual receives Soc Sec to their business account- the name on the account is "Doe, Inc." John Doe is the sole owner, incorporator, chairman etc. and is a signer on the account. Would this match the definition of "in the name of the recipient," since he is a signer on the account, or does it not because the account title is Doe Inc. and the business is a separate legal entity from him.

SSA office told us it was up to him, since it's Soc Sec, not SSI, but it would be in his best interest to put it in his personal account so no other signers of the business can misuse his funds, and our on risk based decision to accept it or not. (I was not confident in the answer we were given from SSA, the person answering did not seem 100% certain of their answer.)
Last edited by Goldrose, CBAP; 10/08/20 06:00 PM.
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#2243823 - 10/08/20 08:54 PM Re: Social Security ACHs GrannieTwo
Complycated Offline
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This would not count as a match here. We would return it R03. A corporation is a separate legal entity from the individual whether he is the owner or not.

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#2243841 - 10/09/20 01:36 PM Re: Social Security ACHs GrannieTwo
John Burnett Offline
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John Burnett
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Cape Cod
SSA doesn't decide such matters. This is a Treasury Department regulation you're dealing with (Treasury published the Green Book), and Treasury says that a bank cannot knowingly accept Treasury ACH direct deposit of benefit payments to an account not in the name of the benefit recipient.

Legally, in your hypothetical, Doe, Inc., is a different legal "person" from John Doe, and it doesn't matter than John Doe is its only owner, board member, president, treasurer and janitor.

Doe, Inc., is the owner of the account. John Doe is the benefit recipient. They are not the same person.

Note that you don't have to actively look for mis-matches between account ownership and benefit recipient. You can, in the absence of knowledge of a difference, post Treasury direct deposits by account number. But if the bank is aware of the mismatch, it should return the direct deposit and contact its customer.
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