You may be well versed in managing domestic transactions within the framework of the United States unclaimed property laws, but what happens when a foreign country is involved? While somewhat limited compared to U.S. unclaimed property laws, foreign escheat laws can, and do, impact the reporting obligations of U.S. organizations. There are several factors to consider when determining how to handle a foreign transaction.
These include, but are not limited to:
Generally speaking, foreign escheat laws are far less numerous and stringent than U.S. requirements, and are often limited to “financial” industries such as banking, securities, and insurance. That being said, foreign governments are increasingly eyeing the “revenue” generated by U.S. unclaimed property programs and evaluating ways to reproduce those programs in their own countries.
Canada is perhaps the country where most holders experience overlap and have questions regarding unclaimed property obligations. Canada’s federal escheat law applies exclusively to federally chartered banks in Canada and does not impact US organizations. However, Canada’s provincial laws, while less robust than U.S. state laws, can have an impact on U.S. organizations. Currently three Canadian provinces have some form of unclaimed property law. Alberta’s Unclaimed Property and Vested Property Act (2008) is very similar to typical U.S. state laws governing unclaimed property, while British Columbia and Quebec require reporting of more limited property types, or by specific holder types. U.S. holders with payees located in Canada should consult with unclaimed property advisors and attorneys to determine the applicable reporting obligations in the Canadian provinces.
Other countries with unclaimed property laws in effect, which are commonly encountered by holders in the United States include:
If your organization generates any foreign transactions, it is important to incorporate a mechanism into your unclaimed property process to monitor for them. When foreign transactions are identified, understand the escheat laws in the relevant countries, as well as the law regarding foreign transactions for your particular state of domicile. Any reporting requirements are highly dependent on the transaction details, the holder state of domicile, and the foreign country involved.
Working with an unclaimed property advisor can help you create an approach and process to maintain compliance with any statutory requirements for your foreign transactions.
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