Labor Department Demands Banks Lock Down Pandemic Unemployment Funds Before States Claim Them
Department of Labor
The U.S. Department of Labor and its Office of Inspector General have jointly ordered financial institutions to immediately preserve and freeze prepaid debit card accounts tied to fraudulent COVID 19 unemployment insurance claims.
These federal agencies are formally demanding that banks lock down identified accounts through December 31, 2026.
This prolonged freeze gives federal investigators time to track and recover taxpayer dollars stolen during the pandemic.
The core operational shift halts the escheatment process.
Under normal rules dormant funds eventually revert to state unclaimed property agencies.
Once transferred to state coffers recovering this stolen money becomes significantly harder or impossible for federal authorities.
Vice President J.D. Vance is spearheading this coordinated effort through the White House Task Force to Eliminate Fraud.
Financial institutions must now proactively cooperate with investigators to keep these fraudulent funds identifiable and recoverable.
Banks are required to coordinate directly with the Labor Department and the OIG regarding compliance and preservation efforts.
The mandate explicitly targets financial institutions that administer prepaid debit card accounts on behalf of state workforce agencies.
The freeze applies exclusively to specific accounts identified in a confidential attachment provided to the banks.
