Thursday , June 20, 2024

J.P. Morgan Agrees to Provide Account Validation to Prevent Wayward Treasury Department Payments

The United States Treasury Department has selected J.P. Morgan to provide account-validation services to federal-government agencies when they disburse funds to consumers. Under the terms of the five-year contract, which was awarded after a competitive selection process, the banking giant will validate the accounts of consumers receiving payments from federal agencies prior to disbursing the funds. Payments can include Social Security and Medicare payments, unemployment-insurance payouts, and tax refunds.

Improper payments sent to fraudulent accounts or the wrong account due to clerical error by federal government agencies totaled an estimated $247 billion during fiscal 2022, according to the U.S. Government Accountability Office. Improper payments include overpayments, underpayments, and payments that should not have been made, the GAO says.

During fiscal 2022, the Bureau of the Fiscal Service, which manages all federal payments and collections and provides government-wide accounting and reporting services, disbursed $5.27 trillion in payments. Transaction volume during the period totaled 1.4 billion.

Under the new contract, J.P. Morgan will verify consumers’ account information before payments are disbursed, using a network of customer information and industry data the bank accesses for payment processing. On average, J.P. Morgan moves more than $9 trillion in payments daily, the bank says.

“It is an honor to be selected to provide account-validation services to the U.S. federal government agencies,” Takis Georgakopoulos, global head of payments for J.P. Morgan, says in a statement. “This is a significant testament to our capabilities and it is particularly gratifying that this work will help to provide money to Americans faster, safer, and more accurately while also saving taxpayer dollars.”

Prior to receiving the contract for account validation, J.P. Morgan provided other services to the Treasury Department, including serving as an adviser to the Treasury Department as it digitizes its payment systems and modernizes operations to pay money to, and receive money from, consumers and businesses, the bank says.

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