Tuesday, 9 March 2021

Financial expert welcomes BoG’s directive on unclaimed and dormant accounts

 

Adnan Adams Mohammed

A financial expert has extolled the Bank of Ghana’s (BoG) directives on unclaimed Balances & Dormant Accounts steps it has taken so far.

Pursuant to Section 92 of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930), the central bank, last week, issued a directive to banks to help create processes and procedures for reclaim of funds by dormant account holders or their legal representatives among others with exception to accounts that are subjects of litigation, fraud, investigations by a regulatory authority or law enforcement agencies, and others.

This news come as a welcomed one to some finance and banking experts and have commended the move by the Central Bank, explaining that it is in line with the laws of the Bank and Specialised Deposit-Taking Institutions Act.

“This is just what we call the Section 92 of the Banks and Specialized Deposit-Taking Institutions, so the BoG is just moving a step proactively to ensure that the institutions comply with the laws and ultimately it is to protect depositors”, Dr Richmond Frimpong, Executive Director at the Financial Literacy Foundation reacted positively to the directives.

“If you look at the category of institution that this cover it is almost all the way from Micro Finance institutions up-down to the high stream balances and usually the challenge of unclaimed balances and the dormant account has been huge and it sits somewhere quiet because of a number of reasons, so it not even just for dormant accounts but unclaimed balances quite substantial and it covers current accounts, savings accounts, credit cards and even time deposit and I think it’s a good initiative and it is a good move.”

He further stated, “we can say that the Banks will not be too excited about it but as long as it gets to the BoG and there is oversight over those funds then its good.”

Reacting to some possible factors that could cause a bank not to comply with the directive, he said he does not think any bank will do that but if they should then it means they are disrespecting the regulatory body.

The Bank of Ghana issued a directive last week on unclaimed balances & dormant accounts for banks and specialized deposit-taking institutions.

The directive seeks to ensure that balances in accounts that have been left unattended to for over a period of time are managed under a special account.  The account is referred to as the dormant account register.

The directive by the Bank of Ghana which is pursuant to Section 92 of the Banks and Specialised Deposit-Taking Institutions Act, 2016, explained that a dormant account could be a current or savings account with credit balances 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 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 rollovers or two years, a regulated financial institution shall initiate actions to re-identify the customer, renew consent to continue the instructions and update the customer’s records.

The directive shall however not be applied to accounts that are subjects of litigation, fraud, investigations by a regulatory authority or law enforcement agencies, and others.

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.

Where an account becomes dormant and the balance is less than an amount determined by the Bank of Ghana, the regulated financial institution may transfer the account to the dormant account register or close the account after due notice to the customer of the decision to close the account and transfer funds to the customer or the Bank of Ghana where the customer could not be reached.

The Bank of Ghana stated that a dormant account shall continue to be covered under the Ghana Deposit Protection Scheme until transfer to the Bank of Ghana.

The directive requires a regulated financial institution to take adequate steps to contact an account holder at least three months prior to an account falling into dormancy and also take all necessary steps to identify a dormant account holder prior to initiating dormant account reactivation.

Importantly, in an effort to locate a dormant account holder, a regulated financial institution shall also not disclose the account balances and any other sensitive information to any third party.

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

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

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

 

According to the BoG financial institutions that breach provisions of this directive shall be liable to an administrative penalty of not more than ten thousand penalty units.

Notwithstanding the penalties specified, the Bank of Ghana may impose any other penalty or take any remedial action that the BoG considers appropriate.

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