When must an RDFI return all payments received?

When must an RDFI return all payments received?

• A. Immediately upon receipt
• B. At the end of the month
• C. Upon learning of death
• D. After 10 banking days

Answer: (C)

The correct answer is centered around the obligation of a Receiving Depository Financial Institution (RDFI) to return payments when they become aware of the death of the account holder. In the context of ACH transactions, payments made to an account of a deceased individual are not authorized. Therefore, when the RDFI learns of the account holder's death, it is required to take immediate action by returning all entries received for that account to ensure compliance with the rules governing ACH transactions and to prevent unauthorized access to the funds. This is rooted in both ethical considerations and compliance with regulations that govern the handling of accounts upon the death of an account holder, protecting against any potential misuse of funds and preserving the integrity of the financial system. The timely return of payments in this scenario helps mitigate any undue financial burden on the decedent’s estate and ensures adherence to legal standards. Other options suggest timelines or conditions under which returns should occur that do not align with the urgency required in cases of death, which is a significant and immediate event affecting the validity of further transactions associated with the deceased's account.

The correct answer is centered around the obligation of a Receiving Depository Financial Institution (RDFI) to return payments when they become aware of the death of the account holder. In the context of ACH transactions, payments made to an account of a deceased individual are not authorized. Therefore, when the RDFI learns of the account holder's death, it is required to take immediate action by returning all entries received for that account to ensure compliance with the rules governing ACH transactions and to prevent unauthorized access to the funds.

This is rooted in both ethical considerations and compliance with regulations that govern the handling of accounts upon the death of an account holder, protecting against any potential misuse of funds and preserving the integrity of the financial system. The timely return of payments in this scenario helps mitigate any undue financial burden on the decedent’s estate and ensures adherence to legal standards.

Other options suggest timelines or conditions under which returns should occur that do not align with the urgency required in cases of death, which is a significant and immediate event affecting the validity of further transactions associated with the deceased's account.