Financial institutions, like other entities, must comply with state unclaimed property laws, which include sending customers due diligence notices and reporting dormant accounts to the states on an annual basis.
Banking property, including checking accounts, savings accounts, and certificate of deposits are considered dormant absent owner-generated activity within a period of time defined by the state (typically 3 or 5 years). The recent adoption by several states of revised unclaimed property laws modeled on the 2016 Revised Uniform Unclaimed Property Act (RUUPA) and the continued introduction of similar legislation (North Dakota and Indiana in early January 2021), illustrates the ever-changing nature of these laws and the need to monitor legislative changes. States adopting a “RUUPA” – like law may adopt the shorter dormancy period (3 years) for most property types, alter the 60-180 due diligence timeframes and/or add the requirement that notice be sent to the owner via first class mail and email (if the owner has consented to electronic mail communications from the holder).
Taking a proactive approach to the escheatment process by communicating early and often with your customers decreases the population of reportable property, meaning less costs associated with due diligence (certified mail, return receipt requested, is required in some states, particularly above a certain dollar threshold) and with the reporting process itself.