Saving Customers from Themselves

Answered by:

Question:

We have a customer that we are certain is involved in a scam, which involves her sending money to these perpetrators. Does the bank have the authority to put a hold on her account for suspicious transactions with questionable people?

Answer:

Dan Persfull:

No. The Bank can contact joint account owners, or in the case of an elderly/disabled customer, adult perspective services. The Bank opens itself up to potential liability if it starts making decisions like this. However, you can refuse to send wire transfers that you believe are for fraudulent purposes. If it gets to that point, your only other option is to terminate the relationship and hand the customer a cashier's check.

Answer:

Randy Carey:

It really depends on State law. In Texas, under the law, a financial institution may place a hold on any transaction under certain circumstances and must have policies to address this practice.

FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE Z. MISCELLANEOUS PROVISIONS RELATING TO FINANCIAL INSTITUTIONS AND BUSINESSES
CHAPTER 281. PROTECTION OF VULNERABLE ADULTS FROM FINANCIAL EXPLOITATION

Sec. 281.004. TEMPORARY HOLD ON TRANSACTIONS IN CERTAIN CASES OF SUSPECTED FINANCIAL EXPLOITATION OF VULNERABLE ADULTS. (a) Notwithstanding any other law, a financial institution:

(1) may place a hold on any transaction that involves an account of a vulnerable adult if the financial institution:

(A) submits a report of suspected financial exploitation of the vulnerable adult to the department under Section 281.002(b); and

(B) has cause to believe the transaction is related to the suspected financial exploitation alleged in the report; and

(2) must place a hold on any transaction involving an account of a vulnerable adult if the hold is requested by the department or a law enforcement agency.

(b) Subject to Subsection (c), a hold placed on any transaction under Subsection (a) expires on the 10th business day after the date the hold is placed.

(c) The financial institution may extend a hold placed on any transaction under Subsection (a) for a period not to exceed 30 business days after the expiration of the period prescribed by Subsection (b) if requested by a state or federal agency or a law enforcement agency investigating the suspected financial exploitation. The financial institution may also petition a court to extend a hold placed on any transaction under Subsection (a) beyond the period prescribed by Subsection (b). A court may enter an order extending or shortening a hold or providing other relief.

(d) Each financial institution shall adopt internal policies, programs, plans, or procedures for placing a hold on a transaction involving an account of a vulnerable adult under this section.