In New York State (and maybe others), upon receipt of an Information Subpoena and Restraining Notice, a bank is required to freeze account assets of a customer. Absent any subsequent court directive to the contrary, this asset block expires at the end of 1 year from date of receipt.

Currently, our procedure requires that the customer contact us before we will unblock the funds. However, if we don't hear from the customer the block will stay on the account beyond the 1 year expiration date.

I feel that maintaining the block beyond 1 year is in violation of this law. Others at my bank opine that we are in compliance as long as we release the block when the customer contacts us.

But why should the customer have to contact us? What if they don't and then because of the block a check bounces or they are prevented from withdrawing needed funds at an ATM? I say we have potentially created liability if the customer can articulate damages...Others say its just a customer service issue.

I KNOW I can be hard headed, so I would appreciate any of your thoughts on this matter.

Thanks

Let me first say that I am not familiar with your state laws, but I have to side with your reasoning. I would ask, where in the law does it give the financial institution more authority to impose harsher penalties on the customer than federal law allows? What is the benefit to your bank to keep the funds frozen? Per the law, you would not be held liable for releasing the funds after 12 months, right? So why penalize the customer any further? I would think that your bank could face trouble if the customer tried to get to their money.

Ultimately it sounds like you are at an impass with your coworkers, and probably no matter how much support you get here they are not going to change their minds. If you have an bank attorney that you could run this by, I would.