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KeepUP™ Blog

4/18/19 9:12 AM

Unclaimed Property Fraud Affects Holders and States

On-line fraud is becoming more prevalent when it comes to unclaimed property claims. 

In a recent case of fraud, the State of Arkansas was found to have paid more than $40,000 to at least one person who used stolen identities to make fraudulent claims through the State’s online claims tool.

Auditor of State Andrea Lea indicated that the fraud used stolen identities to allow the fraudsters to pose as owners of unclaimed property held by the Auditor's office and claim the property for themselves.

A spokesman for the Auditor's office, said that whoever submitted the fraudulent claims had access to the type of documents, such as a passport or driver's license, that the office required as proof of identity for people filling out online claims, and that "this person was an expert criminal". 

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Topics: Due Diligence, Best Practices, Fraud

3/13/19 8:12 AM

Unclaimed Property Regulations - What You Don't Know Can Hurt You

Many people are aware that all states and jurisdictions have abandoned property statutes.  These statutes are the basis for how holders report, what they report and various related matters.  A knowledge of these statutes can make the often-complex filing process a little easier to understand.

However, many unclaimed property statutes also include language permitting the state to make complimentary regulations that further define and explain issues that may not be specifically addressed in the statute.  States regularly update their regulations and these updates may not receive significant exposure. This lack of exposure may create problems for holders because an understanding of both statute and regulations is necessary for a holder to be confident that they are in compliance with a state’s unclaimed property requirements.

One recent example of a regulation occurred in December 2018, when Tennessee proposed a regulation that clarifies the obligations of both the Unclaimed Property Division and holders of unclaimed property. It rewrites pre-existing unclaimed property rules with updated provisions.  The purpose of these proposed rules is to bring the Unclaimed Property Division's rules into compliance with new statutory changes to the Tennessee Code Annotated since the Uniform Unclaimed Property Act was passed in 2017.  The document detailing the proposed regulations states: 

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Topics: Reporting, Best Practices

2/28/19 8:07 AM

Unclaimed Property Risk Associated with Third-Party Administrators

Companies are generally familiar with the unclaimed property that they generate and the process for reporting and remitting that property to the various states.  Having good policies and procedures that help you identify, evaluate, mitigate and ultimately report unclaimed property housed on your books and records allow for companies to comply with state statutes.

But what happens when any unresolved liabilities are not recorded on your books and records?

This situation occurs when a company uses the services of a third-party administrator (TPA).  Companies use TPA’s for a variety of property types, including stocks and bonds, payroll, rebates, gift cards and benefit programs.

In these cases, the TPA’s maintain the records and the company may have limited to no visibility about any unresolved liabilities.  Why is this a problem?  Unless the contract between a company and a TPA includes specific language transferring the escheat responsibility to the TPA, states will consider the company the holder of any related unclaimed property and expect the company to report that unclaimed property.  Obviously, this is a problem if the TPA has all the relevant books and records. 

What should a company that employs TPA’s do to ensure it remains compliant with the unclaimed property statutes?

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Topics: Compliance, Recordkeeping, Best Practices

2/14/19 8:41 AM

Unclaimed Property Holder Due Diligence v. Asset Recovery Letters

Each year in the United States, billions of dollars are escheated to the states. Nationwide, the total value of escheated properties in state custody may well exceed $40- $50 billion. However, even more unclaimed property sits dormant at government agencies, counties, municipalities, courts and other local agencies that will never be reported to the states as unclaimed property. 

Before an item is reported to the states as unclaimed property, outreach in the form of statutorily mandated due diligence letters must be mailed to the last known address of the owner.  However, property held by counties, municipalities, or courts may not be subject to state unclaimed property laws. In these instances, no communication to the owner is required. However, companies may receive letters indicating they are the owners of funds being held by these entities (an “Asset Recovery” letter.) Asset Recovery letters are typically sent by third party firms attempting to help your organization recover monies you did not know you were owed.   

So how does an organization distinguish between a statutorily required due diligence letter and an asset recovery letter?

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Topics: Due Diligence, Best Practices, Corporate Asset Recovery

12/11/18 8:35 AM

Fall Unclaimed Property Filings Are Done! No Time To Rest.

Holders breathe a sigh of relief when December rolls around.  Fall unclaimed property filings are mostly complete with only a couple of December deadlines remaining.  Time to sit back and relax through the holidays, right?  Not if you want to make your spring and summer unclaimed property reporting seasons run smoothly.

The first spring unclaimed reporting deadlines start in March and roll on from there in a steady stream until the summer reports due at the beginning of July. Mixed in between now and those spring and summer deadlines are holidays, year-end close, financial reporting requirements, quarter closes, and all your other day to day tasks and deadlines not related to unclaimed property. Below are a few things that you and your unclaimed property team can start doing now to keep ahead of the game.

  • Reissue checks for the due diligence responses you received during the fall mailings. Besides just being a good business practice, reissuing these items sooner rather than later will help keep down the complaints from property owners regarding delays in receiving their money. These properties have been dormant for years. Now that the owners know about them, they want their money as soon as possible.
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Topics: Compliance, Due Diligence, Reporting, Best Practices

11/28/18 7:32 AM

Corporate Asset Recovery: Third-Party Checklist

Amounts owed to you (unclaimed property) can go unclaimed for a myriad of reasons.  Your company could have moved locations.  They could have changed their process or contact point for payment receipt.  A check could literally be lost in the mail.  Once those items are lost and go unreconciled they turn in to unclaimed property. Unclaimed property can be funds held by a state/jurisdiction resulting from statutory escheat requirements or they can be outstanding balances held by a government entity (that will never be escheated) until you or your organization come forward. 

Whether your unclaimed property is held by a state unclaimed property department or government entity, it is important to know there are two ways to get your property; search and claim it yourself or utilize a Third-Party Recovery Firm.

A Third-Party Recovery Firm is a company who assists owners in the identification and recovery of unclaimed property.  For the most part, Third-Party Recovery Firms will contact your organization about funds they have located.  If you or your organization has decided to utilize a third-party to recover unclaimed property it is important to consider the following checklist:

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Topics: Best Practices, Corporate Asset Recovery

10/16/18 9:45 AM

Unclaimed Property - Q3 2018 Blog Round-Up

As we’re entering the home stretch of the fall filling season, it is important for companies to ensure that they are reporting accurately and comprehensively.  We have been seeing an ever-increasing volume of audits and state enforcement, added sophistication in state report review processes, as well as, assessments of penalties and interest.  Many companies who have been reporting unclaimed property for years are now being targeted for unclaimed property audits as gaps in their reporting processes are being identified. 

It is now more important than ever that companies ensure that they review their unclaimed property policies and procedures to bring them up to speed with the changing regulations and landscape.  All it takes is one missed property type to have the auditors on your door step.  Our mission with our regular blog posts is to help you identify areas of potential non-compliance and industry changes that may impact your company to assist your organization with maintaining compliance.

Our entire team is not only committed to serving our clients and the unclaimed property holder community, they are the creators of our KeepUP™ blogs. This diverse group of individuals lends their expertise to create educational and informative articles for the holder community. In case you missed them, here is a roundup of Q3 posts.

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Topics: Compliance, Reporting, Best Practices

9/27/18 9:08 AM

RUUPA Impacts on Foreign Transactions

With most unclaimed property transactions being wholly domestic, it’s relatively straight-forward to determine the reporting obligations for most properties.  However, managing foreign transactions continues to be an, at times, confusing topic for U.S. holders of unclaimed property.  We have previously addressed the considerations for handling foreign transactions, but how do more recent changes, such as the introduction of RUUPA, impact the reporting obligations for foreign transactions?

Revisiting the Types of Foreign Transactions:

  • Domestic to Foreign: The holder is located in the United States and the payee is located in a foreign country. 
  • Foreign to Domestic: The holder is located in a foreign country and the payee is located in the United States.
  • Foreign to Foreign: Both the holder and payee are located outside of the U.S.

Wholly foreign transactions tend not to be impacted by domestic escheat laws, so U.S. holders will be most focused on domestic to foreign transactions – those where the owner's last known address is in a foreign country, and to a lesser extent, foreign to domestic transactions. 

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Topics: Compliance, Reporting, Best Practices

9/20/18 8:54 AM

Deeper Dive Into Unclaimed Property With Escrow Refunds

It has been a few years since we blogged about escrows which usually requires a refreshed look at the industry. However, not much has changed in terms of unclaimed property laws surrounding those outside of RUUPA (the Revised Uniform Unclaimed Property Act, which was finalized in late 2016) that changed the dormancy on some escrow account types.  Let’s take a deeper dive into the causes of escrow balances becoming unclaimed and some things that can be done upstream in the life cycle of the account aging and becoming dormant.

RESPA (Real Estate Settlement Procedures Act) was established in 1974.  There have been some revisions with Dodd Frank in 2013 but it basically has kept the verbiage that is causing so many cases of unclaimed escrow refund checks.  The act states that within 30 days of an escrow overage analysis, the mortgage company must send a refund check if the overage is $50 or greater.  Under $50, companies are allowed to maintain the balance in escrow.  So rather than applying any overage to the mortgage or holding it in escrow while reducing the monthly payment, checks are mailed out to unsuspecting owners. 

The good news is that as these payments exceed $50, most would require the mailing of a statutorily mandated due diligence/last contact letter. Unfortunately, owners receive these letters between two and five years after the check was issued and most owners ignore the letter. This results in a substantial sum of money being sent to the states as unclaimed property.

Below are a few tips for holders that manage escrow accounts to reduce the amount of unclaimed escrow refunds:

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Topics: Compliance, Best Practices, Escrow Balances

8/29/18 9:11 AM

What Should a Company Do With Unclaimed Property?

How do holders know if they have unclaimed property?
  • Do you have any of these types of aged/old liabilities on your accounting records?
    • Payments due to vendors
    • Credits / Account balances owed to customers
    • Wages / Compensation due to employees
    • Other types of unreconciled/undischarged liabilities (insurance claims, dividend payments, etc.)

If you answered “yes” to any of these then you likely have unclaimed property to report. However, many businesses 1) write-off these liabilities or 2) just continue to carry them on their books, month-after-month.  These are not recommended practices because reporting unclaimed property is the law. Non-compliance puts an organization at risk for audit where fines and/or penalties can be imposed which may have a significant financial impact to your company.

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Topics: Compliance, Due Diligence, Reporting, Best Practices