Financial Transactions in a Deceased Person’s Name to Be Blocked Starting the Day After Death Is Reported

[Financial News]  Starting on the 11th, when a family member reports a death, withdrawals from deposits, loans, credit-card payments and other financial transactions in the deceased person’s name will be automatically blocked from the following day. Financial companies previously could take up to about two months to confirm a death. With the new system, death information will be transmitted daily across the financial sector, significantly reducing the risk of financial accidents caused by identity theft.
The Ministry of the Interior and Safety (MOIS), the Financial Services Commission (FSC), the Financial Supervisory Service, and Korea Credit Information Services announced on the 6th that they will fully launch the Rapid Financial Transaction Blocking System for Deceased Persons on the 11th.
At present, some financial companies receive death information from MOIS through Korea Credit Information Services once a month.
Because a death can be reported up to one month after it occurs and the information has been updated monthly, financial companies could face a gap of up to about two months before confirming the death.
Once the new system is launched, MOIS will provide death information once a day, while financial companies will verify in real time whether customers have died during both in-person and non-face-to-face transactions.
Once a death is confirmed, transactions will be blocked immediately. The system will also expand from selected banks to all 4,890 financial companies across the sector, including banks, insurers, credit-card companies, securities firms, savings banks and mutual finance institutions.
The scope of blocked transactions is also broad. In addition to deposit withdrawals, most financial transactions conducted in the deceased person’s name will be blocked, including loan disbursements, credit-card payments, insurance payouts, stock trading, mobile banking and ATM use. However, deposits into the deceased person’s account will remain permitted, taking into account the inconvenience heirs would otherwise face in separately pursuing debt-collection procedures.
Family members do not need to submit a separate request to block financial transactions. Once a death is reported at a community service center or another designated office, the relevant information will be automatically linked to Korea Credit Information Services and financial companies, initiating the blocking process.
If money is urgently needed for the deceased person’s medical or funeral expenses, the existing “exceptional withdrawal” system may be used. After submitting relevant documents, such as a family relations certificate, to the financial company, the company will pay the expenses directly to a hospital, nursing facility or funeral home.
There are also matters that surviving family members should address in advance. Automatic transfers for utility bills, insurance premiums and other payments linked to accounts in the deceased person’s name may also be suspended when the accounts are blocked. Financial authorities advised families to change the automatic-transfer account or payment method to prevent overdue charges.
Financial assets subject to inheritance can be identified through the Financial Supervisory Service’s “Heirs’ Financial Transaction Inquiry Service” and MOIS’s “Safe Inheritance One-Stop Service.”
Controls will also be strengthened to prevent death information from being used for purposes other than blocking transactions. Korea Credit Information Services will revise its credit-information management regulations to prohibit the use of death information for other purposes or its provision to third parties. Financial companies will be required to electronically record and manage the handling of death information and related financial transaction details. The Financial Supervisory Service plans to inspect financial companies’ information-management practices and internal controls.

[email protected] Bomi Lee Reporter