Treasury deceased payees screening flags $99 million in payments

Treasury deceased payees screening identified more than 4,900 federal payments worth about $99 million that were linked to people recorded as dead, the U.S. Treasury Department said Tuesday. The review covered more than 885 million transactions totaling roughly $2.77 trillion, underscoring the scale at which payment verification can affect public-sector disbursements and private-sector financial controls.

The department said the flagged payments were not released. Instead, Treasury and the Bureau of the Fiscal Service returned them to the agencies that originated the payments for further examination before disbursement.

Treasury did not state that the full $99 million was fraudulent. The finding points to the operational value of screening payments before money leaves an account, since disputed or improper payments can be harder to recover after settlement.

How did Treasury find payments to deceased payees?

Treasury said the review used broader access to the Social Security Administration’s Full Death Master File to compare prospective federal payments with more comprehensive death records. The Full Death Master File is a federal database of death information maintained by the Social Security Administration, and access to it can help agencies identify whether a payee may no longer be eligible to receive funds.

The process places verification between payment authorization and the release of federal money. In practice, agencies supply payment information, Treasury compares it against authoritative data, and questionable items can be routed back for review while the government still controls the funds.

The effort follows a March 2025 executive order that directed Treasury to tighten controls around federal payments and bring more disbursement activity through the department. The order also instructed agencies to provide the information needed to verify payments before federal funds are sent.

For financial institutions, the episode echoes a wider challenge: identity checks that work at account opening may not be sufficient over the life of an account. Customer details can change, credentials can be stolen, accounts can be taken over, and synthetic identities can blend real personal data with fabricated information in ways that pass conventional checks.

A PYMNTS Intelligence report produced with Trulioo said financial services firms lose nearly $34 billion in revenue because of failures in identity verification. The report also found that 76.1% of firms said know your customer and know your business processes had caused them to miss growth opportunities, while 76% of financial services firms generated at least three-quarters of their revenue through digital channels.

The same report said that among financial services firms using a global identification platform, 92.3% reported that KYC and KYB had become easier over time. Better-integrated identity systems can give institutions more current signals on customers and counterparties, while reducing the need to repeatedly impose heavy authentication steps on legitimate users.

The Treasury review shows how current data, linked directly to payment workflows, can stop questionable disbursements before settlement. For banks, fintechs and public agencies, the mechanism is similar: verify the recipient, test the payment against reliable records, and intervene before funds move beyond easy control.

This story draws on original reporting from PYMNTS.