What must an RDFI do after learning of a recipient’s death to limit liability?

What must an RDFI do after learning of a recipient’s death to limit liability?

• A. Repay all beneficiaries immediately
• B. Return post-death payments promptly
• C. Notify the bank's main office
• D. Cease all transactions to the account

Answer: (B)

The most appropriate action for a Receiving Depository Financial Institution (RDFI) after learning of a recipient's death is to return post-death payments promptly. This is critical because continuing to process transactions or payments after the account holder has died can result in unauthorized transactions, leading to potential liability issues for the RDFI. When an RDFI becomes aware of a death, it has a responsibility to halt any further withdrawals or payments that might be processed from the deceased's account. By returning payments that were made after the date of death, the RDFI protects itself from claims of unauthorized transactions and ensures compliance with applicable laws and regulations regarding the deceased's estate. This proactive step helps to alleviate potential financial and legal repercussions that could arise if payments are allowed to continue unchecked. The other options, while potentially relevant, do not directly address the most immediate and effective action the RDFI should take to limit liability in this situation.

The most appropriate action for a Receiving Depository Financial Institution (RDFI) after learning of a recipient's death is to return post-death payments promptly. This is critical because continuing to process transactions or payments after the account holder has died can result in unauthorized transactions, leading to potential liability issues for the RDFI.

When an RDFI becomes aware of a death, it has a responsibility to halt any further withdrawals or payments that might be processed from the deceased's account. By returning payments that were made after the date of death, the RDFI protects itself from claims of unauthorized transactions and ensures compliance with applicable laws and regulations regarding the deceased's estate. This proactive step helps to alleviate potential financial and legal repercussions that could arise if payments are allowed to continue unchecked.

The other options, while potentially relevant, do not directly address the most immediate and effective action the RDFI should take to limit liability in this situation.