Three New Virginia Laws Relevant to Banks

In this article, we discuss three new Virginia laws the session produced that are especially relevant to banks.

I. Reporting Financial Exploitation of Elderly and Vulnerable Adults

Section 6.2-103.2 of the Code of Virginia becomes effective July 1, 2024. The law broadens a financial institution’s ability to report suspected financial exploitation of elderly and vulnerable adults and describes the kind of training a financial institution can provide to its staff to identify and report such exploitation.

First, the law provides some important definitions:

1. 1. An “elderly or vulnerable adult" generally means a person 60 years of age or older, or any person 18 years of age or older who is incapacitated.

1. 2. An "incapacitated person" means any adult who is impaired by reason of illness, disability, advanced age or other causes and lacks sufficient understanding or capacity to make, communicate or carry out responsible decisions concerning his or her well-being.

1. 3. "Financial exploitation" means the illegal, unauthorized, improper, or fraudulent use of the funds … or other assets of an adult for another's profit, benefit, or advantage, including a caregiver or person serving in a fiduciary capacity, or that deprives the adult of his rightful use of or access to such funds … or other assets. It includes the acquisition, possession, or control of an adult's financial resources or property through the use of undue influence, coercion, or duress; and forcing or coercing an adult to pay for goods or services against his will … or if the adult was tricked, misled, or defrauded into agreeing to pay for such goods or services.

Second, the law permits a financial institution to allow an elderly or vulnerable adult to submit and update a list of trusted persons whom the financial institution and its staff may contact if they reasonably suspect the adult is the victim or target of financial exploitation.

The law also provides liability protection for a financial institution and its staff who, with reasonable cause to suspect financial exploitation of an elderly or vulnerable adult, convey certain information about that suspicion to one or more of the following:

1. 1. A person on the trusted persons list;
2. 2. A co-owner, co-signer or beneficiary of an account at the financial institution;
3. 3. An agent under a valid power of attorney; or
4. 4. A person known by the financial institution to be reasonably associated with the vulnerable adult (but only if none of the other persons listed above are available) and the vulnerable adult is unable to designate a trusted contact.

Specifically, the law provides that “[a] financial institution or financial institution staff shall be immune from any civil or administrative liability for any act taken or omission made in good faith and in accordance with the provisions of this subsection. Information shared pursuant to this subsection is exempt from any customer consent or customer notice requirements.”

The law also provides that the financial institution staff “may limit the information provided and disclose only that there is reasonable cause to suspect that the vulnerable adult may be a victim or target of financial exploitation without disclosing any other details or confidential, personal, or financial information.” The word “may” suggests that in appropriate cases more information could also be provided.

Third, the law details the kind of training a financial institution may provide to its staff relating to identifying and reporting suspected financial exploitation. The law states that such training can be provided by the “financial institution or third party selected by … [the] financial institution” to “staff who may (i) come into contact with elderly or vulnerable adults in the course of employment or (ii) review the financial documents, records, or transactions of an elderly or vulnerable adult in connection with providing financial services” to them.

The training must do the following:

1. 1. “Instruct … on how to identify the suspected financial exploitation of an elderly or vulnerable adult, including common signs of financial exploitation, and how to report such suspected financial exploitation internally at such financial institution, to a designated trusted contact, and to the Federal Bureau of Investigation (FBI), the local department of social services of the county or city wherein such elderly or vulnerable adult resides or where such suspected financial exploitation occurs, the adult protective services hotline, and local law enforcement authorities;

1. 2. Discuss the need to protect the privacy and respect the integrity of each customer of such financial institution; and

1. 3. Be appropriate to the job responsibilities of the individuals attending such training.”

The law requires the State Corporation Commission’s Bureau of Financial Institutions to develop training guidelines and to publish the same by January 1, 2026.

Fourth, the law requires certain record-keeping with respect to the training. The financial institution must maintain the content of its training and make it “available to the financial regulatory agency with examination authority over such financial institution upon request, except that a financial institution shall not be required to maintain or make available such content relating to any individual who is no longer employed by or affiliated or associated with such financial institution”. Also, the financial institution must “maintain records of all financial institution staff who complete such training and the date of such completion” and also make those records available to the regulatory agency upon request.

Fifth, the law provides that financial institution staff who reasonably believe that financial exploitation of an elderly or vulnerable adult has occurred or been attempted can report it to the FBI, the local department of social services of the county or city where the victim lives or where the exploitation occurs, the adult protective services hotline, or local law enforcement authorities.

Last, but not least, the law provides that no staff who have received the training described above –

“shall be liable, including in any civil or administrative proceeding, for disclosing the suspected financial exploitation of an elderly or vulnerable adult pursuant to this section if such disclosure was made in good faith and with reasonable care”, and that

“No financial institution that has provided the training … shall be liable for any such disclosure by financial institution staff.”

II. Garnishment Service

Section 8.01-513 of the Code of Virginia has been amended effective January 1, 2025. Section 8.01-513 concerns how a judgment creditor is to serve a garnishment summons on an entity that may owe money to a judgment debtor (the “Garnishee”). The amendment is important to banks for two reasons. First, over the years, banks with branch operations have had issues when a summons ordering the bank to freeze an account is served in the wrong place and takes too long to reach the right place. This can result in liability for not freezing the account quickly enough, because the judgment debtor was allowed to withdraw and hide money. Second, many banks have judgments and want to garnish bank accounts and other assets to obtain recovery, but the current statute is not very clear and sometimes a recovery can be lost due to service-of-process problems. This law seeks to clear up those issues.

The law makes the Garnishee’s “garnishment designee” the primary person upon whom a garnishment summons should be served. As previously written, the statute allows only corporations and limited liability companies to have a garnishment designee, but this law allows all entities authorized to do business in Virginia to have a garnishment designee. Having a designee is achieved by filing a designation with the State Corporation Commission (the “Designation”).

Once an entity has filed a Designation, a garnishment summons to be served on the entity must be served on its designee. Exceptions are made if (a) the designee cannot be found at the address stated in the Designation, or (b) the designee also happens to be the judgment debtor. In either of those cases, and also if the entity has not filed a Designation, the summons should be served on a “managing employee” of the Garnishee – i.e., an employee who has, or reasonably appears to have, control of operations at the location where process is to be served – or, as a last resort, on the Garnishee’s registered or statutory agent. To serve a “managing employee” instead of a “garnishment designee” the judgment creditor must certify to the court that one of the exceptions noted above applies. Similarly, to serve a registered or statutory agent, the judgment creditor must certify to the court that (a) no “managing employee” can be found in Virginia, (b) the managing employee is the judgment debtor, or (c) the Garnishee has authorized service on the agent.

In sum, the amendment allows any business entity to file a Designation and thereby channel garnishment summonses to a desired location – the office of its garnishment designee – and minimize the likelihood of service-of-process problems and the liabilities and missed opportunities that can accompany them.

III. UCC Amendments for Emerging Technologies

This law will become effective July 1, 2025. The law, which was House Bill 1286, makes numerous amendments to the Uniform Commercial Code (“UCC”), as adopted in Virginia, including by incorporating provisions similar to the new UCC Article 12 and related amendments from July 2022 relating to transactions involving digital assets, such as cryptocurrencies and non-fungible tokens.

The law changes several definitions, including the current definitions of “money”, and “conspicuous” to incorporate provisions of UCC Article 9 relating to security interests that accommodate emerging technologies. The law also updates the traditional rules for attachment and perfection to apply to digital assets. For example, the definition of “chattel paper” has been updated to include a secured party’s or lessor’s right to payment that is secured by specific goods or owned by a lessee, if evidenced by a tangible or electronic record. Further, because the definition of “money” has been amended to include intangible assets, the definition of “control” has been updated to require that electronic money either be in a deposit account or evidenced through a “controllable electronic record.”

The law also updates provisions of the UCC governing sales and leases to provide rules for hybrid or bundled transactions and adds definitions for “hybrid transaction” and “hybrid lease.”

For additional information on the July 2022 changes to the UCC, Click Here.

Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.