CBN to collect unused account balances and unclaimed money

Banks should move money from accounts that have been inactive for up to ten years to a trust fund account, according to a proposal from the Central Bank of Nigeria.

The standards for the management of dormant accounts, unclaimed balances, and other financial assets in Nigerian banks and other financial institutions were recently exposed drafts.

According to a circular that was attached to the exposure draft, the CBN developed the guidelines in response to requests for clarification from banks and other stakeholders regarding the handling of dormant and inactive accounts by national banks.

The circular, which was signed by Chibuzor Efobi, the director of the top bank’s financial policy and regulation department, also requested inputs to be given within three weeks.

According to the proposal, all unclaimed funds must be transferred by banks and other financial institutions into a pool account for the Unclaimed Balances Trust Fund, which would be based at the CBN.

The balances would be invested in government assets like Treasury Bills and refunded to the beneficiaries with no later than ten days’ notice, according to the apex bank.

CBN said, “The Central Bank of Nigeria shall open and maintain an account earmarked for the purpose of warehousing unclaimed balances in eligible accounts. The account shall be called ‘Unclaimed Balances Trust Fund Pool Account.”

The proceeds of uncleared and unpresented financial instruments belonging to customers or non-customers of FIs, as well as unclaimed salaries and wages, commissions, and bonuses, are among the eligible accounts and financial assets. These include current, savings, and term deposits in local currency; domiciliary accounts; deposits toward the purchase of shares and mutual investments; prepaid card accounts and wallets.

A judgment debt for which the judgment creditor has not collected the full amount of the judgment award is another example. Other examples include proceeds of expired local and/or foreign currency drafts that beneficiaries have not presented for payment; funds received from a correspondent bank without sufficient information regarding the rightful beneficiary; and/or a recall of funds made to the remitting bank to which the Nigerian bank’s account has not been debited.

Any bank or financial organization that violates the new criteria would be subject to a fine of at least N2,000,000, according to the central bank.

It further stated that any violation of CBN’s direction would result in additional fines of N200,000 daily until the directive is followed or as otherwise determined by CBN.

The CBN said the objectives of the guidelines are to “Identify dormant accounts/unclaimed balances and financial assets with a view to reuniting them with their beneficial owners; hold the funds in trust for the beneficial owners; standardise the management of dormant accounts/unclaimed balances and financial assets; and establish a standard procedure for reclaim of warehoused funds.”

Also, the CBN announced that it would publish a yearly list of the owners of the unclaimed sums that had been moved to the pool account as well as instructions on how to retrieve funds that had been stored.

The Federal Government announced plans to borrow money from deposit money banks’ inactive account balances and unclaimed profits in the Finance Act 2020, which was just signed into law. Information was revealed in the Finance Act in accordance with Part XII of the Corporations and Associated Matters Act.

The Socio-Economic Rights and Accountability Project filed a lawsuit in 2021 after receiving backlash from stakeholders in response to the action.