Zil Money is a fintech, not a bank. FDIC coverage is provided through our partner banks Texas National Bank.

Account Closure Policy

 

Policy Name	Account Closure Policy
Policy Version	v. 3.0
Policy Owner	Compliance
Policy Approvers	Justin Timlin (COO) and Amber Devolk (CCO)
Review Frequency	Annually
Approval Date	November 30, 2025
Effective Date	November 30, 2025

1. Purpose

This policy outlines the comprehensive compliance requirements and operational procedures associated with Zil Money Corporation (“Zil Money”)’s product offering to customers regarding account closures. Zil Money (“Company”) partners with Bank Sponsor (“Bank”) as a BaaS provider and bank partners to enable them to offer financial products and services to their end customers. This Account Closure Policy sets out how the Company will manage end customer account closures with the utmost caution, mitigating risk, ensuring regulatory compliance, and aligning with Bank partner’s requirements.

2. Scope

This Policy governs Company account closure activities and applies to all employees, regardless of tenure, position, or employment status. When Company engages an affiliated or non-affiliated vendor or third-party service provider to perform services on behalf of Company, Company is responsible for ensuring that the entities have adequate and effective controls in place to substantially meet the strict requirements of this Policy.

3. Bank’s Program Management Oversight

Company agrees to adhere to Bank’s policies, procedures, and requirements as detailed in the Master Services Agreement (MSA) and onboarding documentation, including all program management requirements.

Bank is required to comply with its bank partner(s) requirements which may be subject to change. As such, the contents of this Policy may change and Company is responsible for staying updated and adapting to these changes in a reasonable timeframe, as notified by Bank.

This document does not supersede the MSA or any other agreement between the Company and Bank. The Company should refer to these agreements for a complete understanding of its responsibilities.

4. Voluntary Account Closure Procedures

Voluntary closures occur when a customer explicitly requests the termination of their account relationship with Zil Money.

4.1 Customer Request Verification

· Authentication: All closure requests must be authenticated using multi-factor authentication (MFA) or secure messaging within the authenticated user portal.
· Confirmation: Upon receiving a request, the Company will confirm the details with the customer, ensuring no pending disputes or unresolved issues exist.

4.2 Closure Timeline (SLA)

Voluntary closures must be processed within three (3) business days of receiving a fully authenticated request, provided all pending transactions have settled and the account balance is zero.

4.3 Final Statements and Notifications

The Company will notify the Bank of the requested closure, send a formal confirmation notice to the customer via their registered email, and provide a final account statement detailing the zero balance and closure date.

5. Involuntary Account Closure Procedures

Involuntary closures are initiated by Zil Money or the Bank due to risk, compliance, or operational concerns.

5.1 Grounds for Involuntary Closure

Accounts may be involuntarily closed for reasons including, but not limited to:

· Fraud or Suspicious Activity: Confirmed or highly suspected fraudulent behavior, money laundering, or structuring.
· Violation of Terms: Breach of the Terms of Service, Acceptable Use Policy, or engaging in prohibited high-risk activities without authorization.
· Inactivity: Accounts dormant for a period exceeding 12 consecutive months with a zero balance.
· Negative Balance: Accounts maintaining a negative balance for more than 60 consecutive days.

5.2 Review and Escalation

The Company will identify accounts requiring involuntary closure and review them on an ongoing basis. All involuntary closures related to fraud or suspicious activity must be escalated to the Compliance Officer for review prior to execution.

5.3 Notification Requirements

Unless prohibited by law (e.g., tipping off rules under AML regulations), the Company will provide the customer with a 30-day written notice prior to involuntary closure. For cases involving confirmed fraud or severe risk, the account will be frozen immediately, and closure will be executed without prior notice.

6. Death of Account Holder Procedures

The handling of accounts upon the death of an account holder requires extreme caution, adherence to state probate laws, and coordination with legal representatives.

6.1 Immediate Actions Upon Notification

· Account Freeze: Upon receiving credible notification of an account holder’s death, the account must be immediately frozen to prevent unauthorized access, withdrawals, or automated debits.
· Pending Transactions: All pending outbound transactions must be halted. Incoming deposits (e.g., direct deposits, Social Security) must be reviewed; government benefits received after the date of death must be returned to the issuing agency.

6.2 Required Documentation

Before any funds can be disbursed or the account formally closed, the Compliance Department must receive and verify:

· A certified copy of the Death Certificate.
· Court-issued Letters Testamentary or Letters of Administration naming the executor/administrator.
· Valid government-issued ID of the executor/administrator.
· A formal written request for fund disbursement from the authorized representative.

6.3 Probate Coordination and Escheatment

The Company will coordinate exclusively with the legally appointed executor or administrator. If no claim is made on the account within the statutory period defined by the account holder’s state of residence, the funds will be subject to unclaimed property laws and remitted to the state (escheatment).

7. Bankruptcy Procedures

When an account holder files for bankruptcy, Zil Money must comply with federal bankruptcy laws, including the automatic stay provision, to protect both the debtor’s estate and the Company’s interests.

7.1 Immediate Actions Upon Notification

· Account Freeze (Chapter 7): Upon notification of a Chapter 7 (liquidation) filing, the account must be immediately frozen. No funds may be disbursed without authorization from the bankruptcy trustee.
· Account Review (Chapter 13): Upon notification of a Chapter 13 (reorganization) filing, the account is reviewed. While a full freeze may not be required, the Company must ensure no setoffs or collections of pre-petition debts occur.
· Automatic Stay Compliance: All collection activities for negative balances or outstanding fees must cease immediately upon notification of any bankruptcy filing.

7.2 Coordination with Bankruptcy Trustees

For Chapter 7 cases, the Company will only take direction regarding the account balance from the court-appointed bankruptcy trustee. Funds will be remitted directly to the trustee upon receipt of a formal turnover demand.

8. Fund Disposition and Pending Transactions

8.1 Handling Pending Transactions

At the time of closure initiation:

· Authorized Pending Debits: Transactions authorized prior to the closure request will generally be allowed to settle, provided sufficient funds exist.
· New Transactions: The account will be restricted from initiating new transactions.
· Incoming Transfers: Incoming ACH or wire transfers received after closure initiation will be rejected and returned to the sender.

8.2 Fund Disposition Procedures

Once all pending transactions have settled (typically a 5-7 business day holding period):

· Electronic Transfer: Remaining funds will be transferred via ACH to a linked, verified external bank account owned by the customer.
· Check Issuance: If an electronic transfer is not possible, a cashier’s check will be mailed to the verified address on file.
· Approval: Fund dispositions exceeding $10,000 require secondary approval from a Senior Analyst or Compliance Officer.

9. Joint Accounts and Outstanding Obligations

9.1 Joint Account Closures

· Voluntary Closure: Either joint account holder may request closure. The Company will notify both parties, but consent from both is not required to execute the closure.
· Death of a Joint Holder: Upon proof of death of one joint holder, the account will remain open and ownership will transfer fully to the surviving joint holder(s), subject to state-specific right of survivorship laws.

9.2 Outstanding Obligations

If an account has a negative balance or outstanding fees at the time of closure:

· Deduction: The Company reserves the right to deduct outstanding fees from the final account balance prior to disbursement.
· Collection: If the balance is insufficient to cover obligations, the account will be closed with a negative balance, and the debt may be referred to a third-party collection agency, unless prohibited by bankruptcy stay.

10. Regulatory Holds and SAR/UAR Filings

10.1 Regulatory Freezes

Accounts subject to subpoenas, levies, garnishments, or regulatory freezes will not be closed until the legal order is satisfied, released, or the regulatory body authorizes the closure. Funds will be held or remitted as directed by the legal order.

10.2 SAR/UAR Filings

The Company will submit a Unusual Activity Report (UAR) to the Bank for closures due to fraud or suspicious activity. If an account is closed due to suspicious activity that warrants a Suspicious Activity Report (SAR), the closure must be executed in a manner that avoids ‘tipping off’ the customer. The customer will be informed only that the Company has elected to end the business relationship in accordance with the Terms of Service.

11. Account Reinstatement

Once an account is fully closed, it generally cannot be reopened. Customers wishing to resume services must undergo the full onboarding and KYC/KYB verification process as a new applicant.

Exceptions for reinstatement may only be granted within 30 days of closure if the closure was executed in error by the Company, and requires written approval from the Chief Compliance Officer (CCO).

12. Training

Training employees to adhere to the requirements of this policy is a crucial element in building a strong Compliance Program and a lasting culture of compliance. Company requires all employees, affiliates, and service providers to receive training as is appropriate for their roles and/or responsibilities. Reporting of completion of training is required to be made to Bank, as appropriate. For more information on training schedules and requirements, see the Compliance Training Policy.

13. Record Retention

Company will maintain documents accessible to all persons who are legally entitled to access them for the period required by law (typically 5 years post-closure under BSA/AML regulations), or as required by Bank’s Document Retention Policy, whichever is longer, in a form capable of being accurately reproduced for later reference. This includes all closure requests, death certificates, bankruptcy notices, and final statements.

14. Exceptions

Generally, there are no exceptions to this policy. However, in certain circumstances, Bank’s Head of Compliance (or designee) may reasonably determine that a Policy exception is warranted based on specific request from Company. If an exception is granted, Company will keep a log of any exceptions approved.

Notwithstanding the foregoing, under no circumstances does Company allow Policy exceptions that would result in a violation of law.