Commercial Reclamations: Do I Have to Send the Money Back?

Amy Donaghue

By: Karen Sylvester, AAP, CAMS, CRCM, NCP, Director, Compliance Education

Your account holder passed away two months ago, and you received a commercial reclamation from a pension company requesting the last two payments back. As a Receiving Depositary Financial Institution (RDFI) what are your responsibilities in this situation?

Section 2.10 Reclamation Entries and Written Demands for Payment of the ACH Rules will answer most of your question. As an Originator of credits entries that may be requested to be returned as a person passes away, there are timing requirements that must followed to initiate those transactions. To initiate a reclamation entry, the payment must not be entitled to the Receiver after death. The reclamation entry must identify the party that was credited and be in the exact amount as the original entry. The reclamation entry must be originated within five banking days of the Originator learning of the death of the Receiver and must not contain an effective date prior to that of the original entry. An RDFI may receive a live entry to “Reclaim” the funds or they may receive a written demand for payment.

As an RDFI receiving this entry, what are your responsibilities and liabilities? If the transactions come in via the ACH Network as a “Reclaim” entry you may not even realize the transaction has posted unless it hits your non-post list. If you receive it via a written demand for payment (also known as a Commercial Reclamation letter), your responsibility is the amount of the reclamation or the amount in the account – whichever is LESS. If there are funds in the account, the money should be returned. If there are not funds in the account, respond accordingly to the demand letter.

Since commercial reclamations have less liability on the financial institution, you may wat to check that all applicable Federal Benefit payments have been returned appropriately prior to acting upon a commercial reclamation.

Want to Learn More? We're Got You Covered!

What are your responsibilities after learning of an account holder's death? Register for our webinar recording of ACH Reclamations: Rules & Initiatives to find out what steps you should be taking when you learn of an account holder's death, understand your liability for both commercial and federal government post-death payments and learn about Treasury initiatives to further automate the reclamation and non-receipt processes. Together, we will walk through real-life scenarios to determine liability under the Green Book (31 CFR Part 210) and the ACH Rules, depending on the type of payment received. Register now!