TITLE: South Dakota Division of Banking Implements Financial Exploitation Prevention Legislation
BODY:
On June 1, 2026, the South Dakota Division of Banking issued a memorandum notifying financial institutions of House Bill 1238 (HB 1238), legislation designed to prevent financial exploitation of senior and vulnerable adults. Governor Larry Rhoden signed HB 1238 into law, and it becomes effective on July 1, 2026.
HB 1238 permits South Dakota banks and other financial institutions to temporarily refuse or delay transaction processing when they reasonably believe financial exploitation of a consenting, senior, or vulnerable adult may have occurred, is occurring, may be attempted, or is being attempted. This authority extends to situations where a financial institution receives information from state agencies or law enforcement supporting such reasonable belief. The legislation grants financial institutions discretion to act based on available information and does not impose mandatory obligations to intervene.
The act comprises seven sections addressing key operational elements. Section 1 establishes definitions for consenting adults, senior adults, and vulnerable adults. Section 2 outlines the authority to delay or refuse transactions. Section 3 clarifies that action remains discretionary. Section 4 permits financial institutions to notify third parties reasonably associated with affected adults regarding potential exploitation. Section 5 establishes time limits for exercising these authorities. Section 6 provides comprehensive immunity protections for financial institutions, their bank holding companies, employees, agents, officers, and directors against civil, criminal, or administrative liability for actions taken or decisions not to act in accordance with HB 1238. Section 7 specifies that transaction refusals under HB 1238 do not constitute wrongful dishonor under South Dakota Codified Law Section 57A-4-402.
The Division of Banking encourages financial institutions to review HB 1238 in detail and contact the division at 605-773-3421 for additional information or clarification regarding implementation requirements.