Cases of fraud associated with the improper receipt of pensions continue to generate public attention, especially when they involve shared responsibilities between beneficiaries and financial institutions. The theme of this article focuses on a decision by the Spanish Supreme Court that confirmed BBVA’s obligation to assume part of the amounts paid irregularly, for not having requested the necessary proof of life over almost two decades.
The Supreme Court confirmed the conviction of a woman who unduly received her father’s retirement pension for more than 17 years, forcing her to return 139,620.92 euros to Spanish Social Security.
If the perpetrator of the offense does not pay the missing amount, subsidiary liability will fall on BBVA, as it never requested the so-called “proof of life”, a document used to prove that the beneficiary of a pension is still alive.
Beginning of fraud and omission of death notification
The pensioner died while still being entitled to a retirement pension, transferred through an account where his daughter, Encarna, had been authorized since 1993. Instead of reporting the death to Social Security, he decided to hide it, allowing the monthly pensions and respective subsidies to continue to be deposited into the account.
For almost two decades, it raised money regularly, thus maintaining the scheme, according to Spanish digital newspaper Noticias Trabajo.
The fraud continued until 2015, when Social Security identified the error and demanded the return of the amounts received unduly. Although BBVA returned 47,069 euros, corresponding to the four years not prescribed, the Administration still claimed 139,620.92 euros. The defendant returned 75,000 euros before the trial, but the question remained as to who should bear the remaining amount.
Subsidiary responsibility assigned to the bank
The Madrid Provincial Audience sentenced the woman to one year in prison and a fine for an offense against Social Security, but also declared BBVA’s subsidiary civil liability. The court considered essential the fact that the bank had failed for 17 years to request proof of life from the pension holder, a mechanism designed to prevent precisely situations of this type.
“Proof of life” is mandatory for pensioners and can be requested by financial institutions from residents in Spain when there are doubts about the beneficiary’s continuity. The bank, however, never did so, according to the same source.
BBVA appealed successively, arguing that it was up to Social Security to verify the death through civil registries and arguing that the 1996 rule that imposes this control on financial institutions would be illegal or unconstitutional. He further claimed that the loss resulted from the Administration’s lack of control, and not from its own actions.
The Supreme Court rejected the appeal and held the bank responsible
The Supreme Court rejected the bank’s arguments in full. The decision highlights that financial institutions act as voluntary collaborators of Social Security, benefiting from this cooperation, and that by adhering to this model they also accept control duties, including annual verification of the pensioner’s survival.
The judges state that BBVA “generated a legally disapproved risk” by not requiring proof of life for almost 20 years, allowing the scheme to continue without being detected. If the bank had complied with its regulatory obligations, the public loss would have been much smaller or non-existent.
The sentence, available on the Spanish judiciary portal, confirms that BBVA must respond subsidiarily for the amount of 139,620.92 euros, deducting the amounts already returned by the author, in accordance with the .
Framework of the case in the Portuguese reality and applicable legal basis
In Portugal, the regime applicable to pensions and the control of their regularity finds a legal framework in the Basic Law of Social Security and the General Regime of Social Security Pensions, complemented by rules of the Penal Code and the Civil Code relating to the refund of undue benefits. Whenever there is an undue payment of a pension after the death of the beneficiary, Social Security may demand the return of amounts received irregularly, in accordance with article 60 of Law no. 4/2007, and it is also possible to hold third parties responsible who have benefited or contributed to the loss.
At the criminal level, the appropriation of undue amounts from Social Security may constitute the crime of qualified fraud (article 218 of the Penal Code) or fraud in obtaining a subsidy (DL 28/84, art. 36), depending on the conduct. In civil matters, a person who receives amounts that they knew were not owed to them is obliged to repay them due to unjust enrichment, in accordance with article 473 of the Civil Code.
Financial institutions that maintain accounts associated with deceased holders may also be called upon to cooperate with Social Security through the mechanisms provided for in Decree-Law No. 322/90, which regulates the payment of pensions, although Portuguese legislation does not impose on banks such an explicit duty to require proof of life as that which resulted from the Spanish rule of 1996. Still, cases like this reinforce the importance of communicating death and periodically checking bank movements associated with pensions. public.
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