North Carolina Governor Josh Stein has signed Senate Bill 595 into law.

The prior framework in North Carolina focused primarily on reporting suspected financial exploitation to law enforcement and adult protective services. The new law adds a practical tool: financial institutions may now delay or refuse certain transactions when financial exploitation is suspected. A “financial institution” is defined to include a banking corporation, trust company, savings and loan association, credit union, or other entity principally engaged in lending money or receiving or soliciting money on deposit.

Key elements:

• Institutions may pause a disbursement or transaction for up to 30 business days when they believe financial exploitation of an older adult (age 65+) or disabled adult is occurring, may have occurred, or was attempted.
• The determination must be based on observable acts or omissions or information received from law enforcement or a government agency.
• Institutions must promptly begin an internal review of the facts and circumstances that led to the delay.

The law clarifies that financial exploitation includes acts or omissions aimed at controlling or diverting an older or disabled adult’s money, assets, or property through deception, intimidation, or undue influence. It also expressly includes misuse of authority under a power of attorney, guardianship, or conservatorship.

Institutions may delay or refuse:

• Withdrawals, transfers, or disbursements
• Changes in ownership
• Instructions from an agent acting under a power of attorney
• Adding or changing beneficiaries

A delay may be shortened once the institution is satisfied the transaction is unlikely to result in financial exploitation. Unless a court directs otherwise, the delay may be extended for an additional 30 business days if concerns persist.

The law expressly authorizes communication with a “trusted contact” when financial exploitation is suspected. Trusted contacts may include:

• Individuals the customer has designated
• Joint account holders, authorized signers, beneficiaries, or agents under a POA
• Attorneys, trustees, conservators, guardians, or other fiduciaries
• Family members closely associated with the older or disabled adult

Institutions may limit the communication to disclosing their suspicion of financial exploitation.

Financial institutions must maintain records of any delay or refusal for at least five years, including:

• Date the delay or refusal was placed
• Name and address of the affected customer
• Business location of the financial institution
• Name and title of the employee who suspected financial exploitation
• Relevant facts and circumstances

Institutions and employees are immune from civil, criminal, or administrative liability when acting in good faith and with reasonable care. To meet this standard, institutions must have:

• Training for employees who perform or approve transactions, conducted within one year of employment
• Written procedures for internal review of suspected exploitation
• Policies addressing when and how suspected exploitation is reported to supervisory personnel

The law confirms that:

• Refusing a transaction under these circumstances does not constitute wrongful dishonor under the UCC.
• A reasonable belief that paying a check would facilitate exploitation is a valid basis to doubt collectability.
• A delay or refusal does not violate Article 4A (funds transfers), and a payment order is not considered received until the hold is removed and the institution presents it for processing.