pc
nid 92761
Mar 12, 2026
ataylor@vixio.com
South Dakota
Division of Banking
financial services
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2053 charsSouth Dakota Division of Banking Implements Financial Exploitation Prevention Legislation
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.
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2186 charsSouth Dakota Legislature Enacts House Bill 1238: Preventing the Financial Exploitation of Vulnerable Adults
On March 12, 2026, the governor of South Dakota signed House Bill 1238 into law. The law permits banks, credit unions, and other financial institutions to temporarily delay or refuse transactions if they reasonably believe financial exploitation of a consenting adult, senior adult (age 65 or older), or vulnerable adult may have occurred, is occurring, or is being attempted. The law provides immunity for institutions and their employees who act in good faith under its provisions.
Key provisions of the bill include:
Establishes key definitions: The bill defines terms such as “consenting adult,” “senior adult,” and “financial exploitation,” providing clear legal parameters for when financial institutions may act to prevent exploitation.
Authority to delay or refuse transactions: A financial institution may delay or refuse a transaction, prevent account ownership changes, block transfers to another person, refuse instructions under a power of attorney, and prevent beneficiary designation changes when financial exploitation is reasonably suspected.
Discretionary, not mandatory: Institutions and employees are not required to act; they have discretion based on the information available at the time.
Third-party notification allowed: Institutions may notify a reasonably associated third party (e.g., family member, authorized contact, co‑owner, fiduciary, or attorney) of suspected exploitation, unless the third party is believed to be involved in the exploitation or law enforcement requests no notification.
Time limits and extensions: The authority to delay expires after 30 business days, when the institution is satisfied no exploitation will occur, or by court order. Institutions may extend the delay based on a reasonable belief that exploitation may continue.
Immunity and no wrongful dishonor: Institutions, their holding companies, and their employees, officers, and directors are immune from civil, criminal, or administrative liability for acting or for not acting in accordance with the law. A refusal to engage in a transaction does not constitute wrongful dishonor of an item under South Dakota’s commercial code.
The law takes effect July 1, 2026 .