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A new law set to take effect on July 1 will allow banks and credit unions in Georgia to temporarily freeze certain accounts for up to 30 days when there is a reasonable suspicion that financial exploitation is taking place.
The legislation, signed by Governor Brian Kemp, was introduced in response to a growing number of fraud cases targeting older and vulnerable adults.
Why can banks freeze accounts under the new law?
The measure, known as the Senior and Vulnerable Adult Financial Protection and Cryptocurrency Kiosk Act, gives financial institutions the authority to delay transactions if they suspect that an account holder is being financially exploited.
The rule applies to accounts owned by an eligible adult, accounts where an eligible adult is a beneficiary, and even accounts belonging to individuals suspected of carrying out the exploitation.
Under the law, an eligible adult is defined as:
- A person 65 years of age or older
- A disabled adult
How long can the freeze last?
The initial hold can remain in place for up to 15 business days.
However, if the bank’s review continues to support the belief that financial exploitation may be occurring, the institution can extend the restriction for an additional 15 business days, potentially blocking access to funds for up to 30 days in total.
Will account holders be notified?
Yes. If an account freeze is imposed, banks and credit unions must generally notify all individuals authorized to access the account, as well as any trusted contact listed on it.
The written notification must be sent within three business days.
There is one important exception. If the financial institution reasonably believes that a person with access to the account may be involved in the suspected exploitation, it is not required to notify that individual about the freeze.
Banks must investigate suspected fraud
The legislation does not simply permit financial institutions to freeze funds and wait.
Banks and credit unions are also required to investigate the circumstances that led to the hold and review available information before deciding whether to extend the restriction.
The law also grants immunity protections to financial institutions and their employees when they act in good faith and with reasonable care while implementing an account freeze.
New rules also target cryptocurrency ATMs
The legislation goes beyond traditional banking.
It also introduces new requirements for Bitcoin and cryptocurrency ATMs operating in the state.
Under the new rules:
- Crypto kiosks must display warnings informing users that transactions are generally irreversible.
- Fees cannot exceed 18% of the transaction amount.
- New customers are limited to transactions of up to $2,500 per day.
- Existing customers can conduct transactions of up to $10,000 per day.
Supporters of the measure say the new protections are intended to combat increasingly sophisticated scams that frequently target older adults and vulnerable individuals, while also increasing safeguards around cryptocurrency transactions.
Beginning on July 1, banks and credit unions in Georgia will have new authority to temporarily restrict access to certain accounts when there is evidence suggesting financial exploitation may be taking place.