FR 2024-29988

The recent regulations issued by the Bureau of the Fiscal Service under the SECURE 2.0 Act of 2022 primarily aim to share information about unredeemed U.S. savings bonds with states to help locate bond owners. The ultimate goal is to ensure that these individuals, or their heirs, can redeem the bonds. However, the scope for using this information is limited to just locating the bond owners and not for other purposes like claiming ownership through state escheatment laws, which are laws intended to allow states to take possession of unclaimed properties.

Summary and Impact

The document outlines a set of rules implemented to ensure states have access to certain details about unredeemed savings bonds, such as names and addresses, thus helping them in their efforts to reunite these bonds with their rightful owners. It's a complex legal and administrative framework resting on the broader goal of improving efficiency in bond redemption and protecting bondholder rights.

For the general public, the immediate impact is heightened privacy protections, as the regulations restrict public release of bond information to prevent fraud. There appears to be careful consideration of how the information dispersal is handled, limiting it to state use for the specific purpose of locating bond owners.

From a broader perspective, this policy may bring positive outcomes by enhancing the capacity for bondholders or their descendants to finally redeem long-forgotten bonds. For many individuals, particularly those unaware of the bonds being held in their name, this effort may result in unexpected financial benefit.

Stakeholder Considerations

Specific stakeholders like state treasurers and legal representatives have raised concerns mentioned in the document. They argue against the restriction on using shared information for escheating bonds, suggesting that it might actually be more efficient and cost-effective to escheat. There are fears that without the ability to take control of the bonds, the process will halt at the information-sharing stage.

States face challenges due to a lack of federal funding for locating bond owners, placing a possible financial strain on state resources. This could be seen as an unfunded mandate requiring states to perform specific tasks without accompanying federal support.

Concerns and Ambiguities

Significant issues include the complexity of understanding regulatory language, which can be challenging for those without a legal background. This complexity could lead to inconsistent applications across different states, especially regarding what constitutes a "reasonable search" for a last-known address. Clarifying these points could improve statewide consistency and understanding.

Privacy advocates might see the strict control over the public dissemination of information as a positive step, as it aims to protect individual data and reduce risks of fraud related to counterfeit savings bonds. However, public transparency is thus limited, potentially hindering broader public access to information that some argue could facilitate reunification of bondholders with their assets.

In conclusion, while these new rules offer a means to better connect owners with unredeemed savings bonds, they introduce certain practical challenges and raise questions about state burdens and the transparency of information. Stakeholders continue to grapple with these complexities and limitations that the regulation imposes, reflecting ongoing tension between federal intentions and state-level implementation capabilities.

The document contains a significant financial reference related to redemptions of counterfeit savings bonds. Since 2021, there have been over $40 million in redemptions of counterfeit savings bonds. This figure highlights the scale of fraudulent activity and the financial impact it has had on the Treasury. This falsely redeemed amount underscores the importance of safeguarding against fraud and ensuring the integrity of savings bond procedures.

Financial Implications and Issues

The reference to $40 million in counterfeit redemptions has several broader implications for the regulations set forth in the document. First, it underscores the potential financial risks posed by improper access to bond records. Any misuse of savings bond information shared with States could potentially exacerbate the problem of fraudulent redemptions, which would further strain Federal resources.

Additionally, the document addresses the lack of Federal funding to assist States in locating savings bond owners. This financial gap could lead to what some might consider an unfunded mandate on the States, requiring them to allocate their own resources to perform locator services without additional financial support from the Federal government.

Relation to Compliance and Fraud Prevention

The information on counterfeit redemptions also directly ties into the document's emphasis on privacy and fraud prevention. By restricting the public release of savings bond information and ensuring that all record-sharing agreements include stringent security measures, the Treasury aims to safeguard against further losses.

While the document does not allocate specific new funding to address these risks, the recounting of the $40 million lost in fraudulent activities serves as a justification for the proposed changes. It also highlights the need for States to comply fully with the established security protocols to prevent such financial losses.

Ultimately, while the document outlines the significant financial losses due to fraud, it does not propose additional financial allocations or appropriations. Instead, it places the onus on States to undertake these responsibilities, potentially at their expense, raising concerns about the adequacy of resources available to combat such large-scale fraudulent activities effectively.