Tuesday, 9 March 2021

Banks to face 10,000 penalty units

 


By Elorm Desewu

The Bank of Ghana is likely to charge banks that violate the unclaimed or dormant account directives up to ten thousand penalty units.

According to the unclaimed balances and dormant accounts directive from the Bank of Ghana, the bank may impose any other penalty or take any remedial action that it considers appropriate

The directive says a Regulated financial institution should establish and implement internal control policies and procedures to oversee the management and protection of accounts specified as dormant and also monitor accounts that show tendencies of inactivity and initiate actions to protect same from fraudulent activity.

The objectives of this Directive are to: operationalise Section 143 of the Banks and Specialised DepositTaking Institutions Act, 2016 (Act 930), to establish processes and procedures for reclaim of funds by Dormant Account Holders or their legal representatives; and ensure that funds of customers of regulated financial institutions that become dormant are adequately protected.

Pursuant to Section 143 of Act 930, the following would be classified as dormant: a current or savings account with a credit balance and their derivatives with no ‘customer-initiated activity’ by the account holder or a third party on the account holder’s behalf for a period of two (2) years; a time deposit account with no customer-initiated activity by the account holder or a third party on the account holder’s behalf for a period of two (2) years after the maturity date of the deposit; a prepaid card account and or any other funds belonging to a customer or non-customer of the regulated financial institution that has not been accessed or operated for a period of two (2) years.

In the case of fixed deposits or investments scheduled by a customer to roll over upon maturity and the roll-over has persisted for more than three consecutive roll overs or two years whichever is longer, a regulated financial institution would initiate actions to re-identify the customer, renew consent to continue the instructions and update the customer’s records.

Where the regulated financial institution is unable to contact the fixed deposit account holder pursuant to subsection 7, the regulated financial institution shall transfer the funds to the dormant account register.

According to the Directives, customer-initiated activity would include cash or cheque deposits, withdrawals, transfers to or from account including standing orders, direct debit/credit and payments out of the account made by the account holder or their legal representative. A customer initiated activity would not include regular or automated inflows such as interest payments that accrue on the account and bank charges.

A regulated financial institution should not allow a third party withdrawal from an account that has received only inflows (including non-customer initiated credits) for a period of two (2) years without contacting the account holder.

Where a customer has two or more accounts with the same regulated financial institution and any but not all of the accounts have not been operated for a period of two years, the account involved may be protected and not classified as dormant provided that the customer is notified of the inactivity of that account(s) and response received.

A regulated financial institution would maintain all records of account information and transactions prior to transfer to a dormant account register. The reference of the records would be at a minimum, the last transaction at the beginning of the two years before becoming dormant initiated by the Dormant Account Holder or a third party on behalf of the Dormant Account Holder.

A Dormant account would continue to be covered under the Ghana Deposit Protection Scheme until transfer to the Bank of Ghana. A regulated financial institution would take adequate steps to contact an Account Holder at least three (3) months prior to an account falling into dormancy.

Where an account has been in the register of dormant accounts for a period of three (3) years and has been advertised as required, the balance on a dormant account would be transferred to the Bank of Ghana in accordance with section 143(6) of Act 930.

A regulated financial institution would display a poster in all banking halls on the process of reclaim of funds of dormant accounts transferred to the Bank of Ghana. This would include information on how accounts of customers may be regarded as dormant.

A regulated financial institution that receives a request from a dormant account holder of funds transferred to the Bank of Ghana would take steps to validate and seek the claim on behalf of the claimant at the Bank of Ghana.

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