HB 1238 Toolkit

South Dakota House Bill 1238 (HB 1238) — An Act to protect financial institutions taking action to prevent the financial exploitation of consenting, senior, or vulnerable adults — takes effect July 1, 2026.

The new law provides financial institutions with additional authority and protections to help prevent the financial exploitation of consenting, vulnerable and senior adults. Specifically, HB 1238 allows banks to delay or refuse certain transactions when there is reasonable concern that exploitation may be occurring, while also providing liability protection for institutions and employees acting in good faith.

Because banks are often the first line of defense against scams and financial abuse, we encourage member institutions to begin preparing now for implementation. This may include:

Reviewing internal fraud and escalation procedures
Training frontline employees to recognize red flags
Evaluating documentation and reporting protocols
Coordinating with compliance and legal counsel as appropriate
Developing forms & modifying internal systems

To assist members, the SDBA has prepared this toolkit highlighting key provisions of the law, common red flags, and recommended operational considerations.

Financial exploitation — particularly targeting seniors and vulnerable adults — continues to rise nationwide. HB 1238 provides community banks with important tools to help intervene earlier and better protect customers from fraud and abuse.

The SDBA will continue to support members through education and resources in the months ahead. Please contact the association with any questions.

HB 1238 Guide

What Banks Should Know - PDF

HB 1238 Template Forms

Suggested Use Notice

These sample forms and templates are provided for general informational and operational guidance related to South Dakota HB 1238. Financial institutions may adapt, modify, expand, or combine these materials as appropriate for their institution’s size, structure, staffing, products, services, and internal procedures.

These materials are not intended to establish mandatory policies, operational requirements, or legal advice. Member banks should consult with legal counsel and compliance professionals regarding implementation of HB 1238 within their institution.