Compliance Center: Credit Union Responsibilities When Returning Federal Payments

Five things you must know:

One: A credit union is liable for all benefit payments received after the death of a member, unless you meet the qualifications for limiting this liability.

You can limit your liability if:

  • You certify that you did not have knowledge of the member’s death at the time of the deposit;
  • You return all post-death benefit payments you receive after learning of your member’s death; and
  • You respond to the government’s Notice of Reclamation within 60 days.

If you meet these criteria, the credit union’s Federal Reserve account will only be debited for the amount of the post-death benefit payments received within 45 calendar days following your member’s death.

Two: A credit union must immediately return any post-death benefit payments as soon as you become aware of your member’s death.

You must notify the federal agency as soon as you learn of your member’s death. An ACH return using return code R15 (beneficiary deceased) constitutes proper notification.

A credit union is considered to be aware of a member’s death when:

  • You receive information that the member has died and you have had a reasonable opportunity to verify the information; or
  • lf you would have learned of the death if you had followed commercially reasonable business practices.

Once a credit union is aware of the death of a member, you do not have to wait to receive a Notice of Reclamation—you may immediately return all subsequent post-death payments.  

Three: How to Respond to a Notice of Reclamation

If the full amount listed on the Notice of Reclamation is returned, the credit union does not need to complete and return the form.

lf funds are available, but not sufficient to satisfy the reclamation, a partial payment should be submitted along with the completed Notice of Reclamation.

lf additional benefit payments are deposited after the Notice of Reclamation is received by the credit union, the additional amounts should be returned as well.  

Four: What to do if a post-death payment has already been withdrawn

lf the credit union (which has qualified for limited liability) responds to the Notice of Reclamation, but all or part of the post-death payments were already withdrawn from the account before the credit union learned of the death, the reclamation process will be suspended while the agency attempts to collect the outstanding balance from the withdrawers.

lf the agency is unsuccessful in collecting the outstanding total, the credit union’s Federal Reserve account will be debited for the post-death payments received within 45 days of the member’s death.  Note that the government does not authorize the credit union to try and recover the funds from the withdrawer.

lf the withdrawers tell the credit union that they have already repaid the government,  obtain a copy of the front and back of the check and return it with the Notice of Reclamation.

The credit union may be asked by a survivor of the deceased member not to return post-death benefit payments because the survivor may still be entitled to the payment. ln this case, the government advises the credit union to return the payment and direct the survivor to contact the appropriate benefit agency.  

Five: What if the member is not dead?

lf the credit union obtains satisfactory proof that the member is alive, you are still required to complete and return the Notice of Reclamation in order to avoid your Federal Reserve account from being debited the amount listed on the Notice.

Once you have satisfactory proof that your member is alive, you must correct the error on the Notice of Reclamation, sign Certification #1 on the back of the Notice, return the Notice with a copy of the proof of the error and advise your member to contact the federal agency to restart the payments. Returning the corrected Notice of Reclamation is not enough to restart the monthly benefit payments.


Compliance Question of the Week

We received a Notice of Reclamation from the Social Security Administration, but the member is still alive. In fact, he’s standing right in front of me. What should I do?

You are still required to complete and return the notice of reclamation.

  1. Correct the error in the fact of the death on the Disbursing Office Copy of the Notice of Reclamation. You would check the first box market ‘Recipient/beneficiary did not die; financial institution will not take further action.’ in the section, ‘THIS BLOCK FOR FINANCIAL INSTITUTION USE’ on the second page of the Notice of Reclamation.
  2. Sign Certification #1 on the back of the Disbursing Office Copy of the Reclamation, certifying that a correction has been made.
  3. Timely return the Notice of Reclamation with a copy of proof of error in fact of death to the Government Disbursing Office.*
  4. Advise the recipient to contact the authorizing Federal agency to restart payments.

* Acceptable proof would be:

  • Driver’s license, picture ID or other evidence similar to that required for cashing a check, if the recipient or beneficiary appears at the RDFI.
  • A signed, dated, and notarized statement attesting to the fact that the recipient or beneficiary is alive if, he/she is unable to appear at the RDFI.
  • A written statement from the authorizing Federal agency verifying that the recipient or beneficiary is alive.

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Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News, Federal.