N.Y. Comp. Codes R. & Regs. Tit. 2 § 102.6 - Financial institutions

(a) Regardless of whether it has executed a direct deposit of salary enrollment form, a financial institution's acceptance and handling of a payment issued pursuant to this Part shall constitute its agreement to the provisions of this Part.

(b) A financial institution in executing a direct deposit of salary enrollment form shall be responsible for:

(1) the completeness and accuracy of the data entered by it in its portion of the direct deposit of salary enrollment form; and

(2) verification of the identity of the recipient and any joint tenant on the account, if applicable, who initiate and execute the direct deposit of salary enrollment form through such financial institution, and that the account number entered by the recipient on the direct deposit of salary enrollment form corresponds to an account bearing the name of the recipient and if a joint tenant has signed the form, that the joint tenant is also named as a depositor on the account. A financial institution that executes a direct deposit of salary enrollment form on which the recipient's signature or the joint tenant's signature is forged shall be liable to the State under this Part for all payments made on the basis of such form. However, if the State fails to take corrective action after it has been notified that a payment has not been received by the correct recipient due to forgery, the State shall be liable for any payments based on the forged direct deposit of salary enrollment form and made after the date of such notice.

(c) A financial institution receiving a payment shall credit the amount of such payment to the account indicated by the account information specified in the payment instructions. If the financial institution is unable to credit the amount of a payment to the account indicated by the account information in the payment instruction because such an account does not exist on its books, or because in processing the payment instruction it has reason to believe the account indicated by the account number information in the payment instruction is not the account designated by the recipient, it shall either:

(1) return the payment to the originating depository financial institution with a statement identifying the reason therefor; or

(2) credit the amount of the payment to the account designated by the recipient where the financial institution is able to positively determine that the account is the account designated by the recipient on the direct deposit of salary enrollment form.

A credit to any other account by a financial institution will constitute a breach of its warranty made by reason of subdivision (i) of this section.

(d) A financial institution shall promptly return to the State through the originating depository financial institution any payment received by such financial institution:

(1) after termination of a direct deposit of a salary enrollment form pursuant to section 102.5(e) of this Part and before the execution of a new direct deposit of salary enrollment form. If a payment is received after a new direct deposit of salary enrollment form is executed, but before the form is transmitted to the personnel office or payroll office of the recipient's agency, the financial institution may credit the payment to the account indicated on the new form and transmit the new form to the recipient's agency promptly;

(2) after termination of a direct deposit of salary enrollment form pursuant to subdivision (c) of this section has become effective;

(3) after the death of the recipient. A financial institution may limit its liability if the financial institution did not have knowledge of the death of the recipient at the time of the deposit or withdrawal of any payments made after the death of the recipient, and the financial institution fulfills the requirements set forth in section 102.8 of this Part; or

(4) after the closing of the recipient's account.

(e) A financial institution to which a payment is sent under this Part does not thereby become a State depositary and shall not advertise itself as one because of that fact.

(f) If any change in account numbers is made by a financial institution, the financial institution will be responsible to the recipient for any lost or late payment caused by the financial institution's actions in processing the change in accordance with applicable State and Federal statutes.

(g) Each financial institution by its action of handling a payment under this Part shall be deemed to warrant to the State that it has handled the payment in accordance with the requirements of this Part. If the warranty is breached, the financial institution shall indemnify the State for any loss sustained or liability incurred by the State, but only to the extent that such loss was the result of the breach. The State will give the financial institution prompt written notice of any claim of loss. This provision does not deny the financial institution the opportunity to cure the defect and to defend, settle or otherwise compromise the claim.

(h) At his sole discretion, the State Comptroller may terminate the participation in this program of any financial institution which the State Comptroller finds to be causing unacceptable administrative difficulties including but not limited to unreasonable delays in making recurring payments available to recipients. In the event termination is contemplated, the State Comptroller shall send to the financial institution by certified mail a notice of intention to terminate setting forth the facts and circumstances justifying termination of the financial institution's participation in this program. The financial institution shall have 30 days in which to respond in writing to the State Comptroller. If after considering the response of the financial institution, the State Comptroller determines that termination is proper, or in the event the financial institution fails to respond within 30 days, the State Comptroller shall send by certified mail a notice of termination to the financial institution. Such termination shall become effective 30 days after the date such notice is mailed.

Notes

N.Y. Comp. Codes R. & Regs. Tit. 2 § 102.6