A woman received her deceased father’s retirement pension for more than 17 years and ended up being ordered to pay compensation to Spanish Social Security. The decision, however, did not fall solely on the author of the scheme: the Supreme Court also confirmed the subsidiary civil liability of the bank where the money was deposited.
According to Noticias Trabajo, a Spanish website specializing in legal and labor matters, the understanding was due to non-compliance with the annual control planned to confirm the so-called proof of life of the beneficiaries, an essential procedure to prevent pensions from continuing to be paid after the death of the holders.
The pensioner’s daughter had been authorized to operate the account since 1993. After her father’s death, on April 11, 1998, she decided not to report the death to Social Security and continued to withdraw the amounts deposited monthly, including extraordinary payments. According to the same source, the scheme continued until June 20, 2015, the date on which the bank blocked withdrawals due to lack of required documentation. Only then was the irregularity fully identified.
Almost two decades of improper withdrawals
The records indicate that between April 1998 and June 2015, 171,529.62 euros were improperly credited to the account. Later, when the pension was formally terminated, in June 2016, it was found that 186,690 euros had entered the account over all those years.
According to Noticias Trabajo, the bank returned 47,069 euros, corresponding to the period between July 2012 and June 2016, years that were not administratively prescribed.
The final compensation in favor of the National Social Security Institute was set at 139,620.92 euros. The woman had previously handed over 75,000 euros, but it remained to be determined who would be responsible for the missing amount, if the defendant was unable to reimburse the State.
Why the bank was held responsible
The Madrid Provincial Audience sentenced the woman to one year in prison and a fine for Social Security fraud, simultaneously declaring BBVA’s subsidiary civil liability. The banking entity appealed, arguing that it was up to the Administration to verify the death and that the rule imposing annual survival control was excessive or inadequate.
According to the publication, the bank also claimed that the obligation to confirm the holder’s survival should fall on the paying organization, and not on the institution where the account was domiciled.
The Supreme Court rejected these arguments. The Noticias Trabajo website explains that, for magistrates, by voluntarily adhering to the system of paying pensions by account allowance, the banking entity assumes regulatory duties, including that of annually reporting the survival of the beneficiaries.
The court emphasizes that this obligation exists precisely to prevent prolonged fraud like the one that occurred in this case.
An omission that allowed the fraud to last for years
According to the publication, the Supreme Court considered that the lack of control on the part of the bank allowed improper withdrawals to continue for almost two decades, generating significant losses for public coffers. For the judges, if the institution had fulfilled its duty to verify proof of life, the scheme would have been stopped much sooner.
The decision reaffirms that financial entities involved in pension processing have an obligation to ensure adequate control mechanisms, making them responsible when their omission contributes to the perpetuation of fraud.
And in Portugal?
In Portugal, the control of pensioners’ proof of life is different from the Spanish model and is mainly based on interoperability between Social Security, the Civil Registry and the Institute of Registries and Notaries. Pensions cease, as a rule, automatically when the death is registered, as communication between systems is mandatory and occurs electronically.
Pensioners residing abroad are subject to a specific regime that periodically requires the presentation of proof of life, precisely to avoid continued payments after the death of the beneficiary. As regards banking entities, unlike what happens in Spain, they do not have a direct and generalized legal obligation to verify the survival of pension holders.
The primary responsibility lies with Social Security, which uses automatic data crossing to detect irregularities. Even so, if a bank has actual knowledge of the death and, even so, continues to allow transactions or payments associated with installments that have already ceased, it may incur civil liability under the general rules of the Civil Code, whenever relevant fault or omission is verified.
In terms of restitution of amounts unduly paid, financial responsibility falls, first and foremost, on those who received the amounts without a legal basis, and there is no specific regime in Portugal that automatically imposes subsidiary liability on banking institutions in a manner similar to those defined by Spanish jurisprudence.
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