The revised Guidelines on Management of Dormant Accounts, Unclaimed Balances, and Other Financial Assets in Banks and Other Financial Institutions in Nigeria 2024 (the “Guidelines on Management of Dormant Accounts”) revised the 2015 guidelines.
Fundamental changes under the Guidelines on Management of Dormant Accounts require banks and other financial institutions not to charge account maintenance fees and related charges on a dormant account.
The Guidelines on Management of Dormant Accounts distinguished dormant accounts from inactive bank accounts.
Background
The Central Bank of Nigeria (CBN) derives its powers over dormant bank accounts, unclaimed balances, and other financial assets under BOFIA (Banks and Other Financial Institutions Act) 2020.
Section 72 of BOFIA 2020 divested the interests in dormant accounts of up to ten years from the financial institutions. It enabled the CBN to manage and administer funds transferred into the Unclaimed Balances Trust Fund (UBTF) Pool Account on an interest-yielding basis.
Meaning of Dormant Bank Accounts, Unclaimed Balances, and Other Financial Assets
Baba Iyabo died in 1993, during the aftermath of Nigeria’s June 12 election, also known as Oso Abiola in South Eastern Nigeria.
Baba Iyabo’s family did not know that Kerewa Breweries paid Baba Iyabo’s retirement benefits and gratuity in May 1993. There was no bank alert or other customary customer services that digital financial consumers currently access.
Given the porous KYC (Know-Your-Customer) regime in 1993, Narostreet Bank Plc. failed to contact Baba Iyabo’s family, and the enormous amount of money remains untouched and underutilized.
Under the Guidelines on Management of Dormant Accounts, the CBN will publish Baba Iyabo’s name on its website, and her children or grandchildren may claim the funds instead of the bank utilizing the unclaimed funds in his dormant account.
Although BOFIA 2020 describes a dormant bank account, it does not define it. Neither did BOFIA 2020 define unclaimed balances and other financial assets.
Unclaimed balances include account balances and other financial assets that remained dormant for a minimum of ten (10) years in the books of financial institutions and qualify for transfer to CBN.
A dormant account under the Guidelines on Management of Dormant Accounts is a bank account that has remained inactive for at least one year.
Guidelines on Management of Dormant Accounts define other financial assets as any established claim from a customer on their assets with a financial institution other than dormant account balances.
Objectives of the Guidelines on Management of Dormant Accounts
Key objectives of the Guidelines on Management of Dormant Accounts include:
a) Identifying dormant accounts, unclaimed balances, and other financial assets.
b) Ensuring the accountholder or beneficial owners receive such funds
c) Empower the CBN to hold such funds on trust in an interest-yielding basis
d) Standardize management of dormant accounts, unclaimed balances, and other financial assets, as well as reclaim procedures for warehoused funds.
Eligible Bank Accounts
Every dormant account, unclaimed balance, and other financial asset in a financial institution supervised by the CBN, such as current account, enterprise savings account, savings account, merchant acquiring an account, prepared card account, wallet, virtual account, domiciliary account, and uncleared financial instruments.
The expansive description under the Guidelines on Management of Dormant Accounts includes:
e) unclaimed salaries and wages, commissions, and bonuses
f) proceeds of stale local or foreign currency drafts not presented for payment by beneficiaries
g) Funds received from a correspondent bank without sufficient details as to the rightful beneficiary or a recall of funds made to the remitting bank to which the Nigerian bank account had not been debited
h) judgment debt for which the judgment creditor has not claimed the amount of judgment award
Indeed, the Guidelines on Management of Dormant Accounts excludes the following properties:
i) Accounts that are subject to litigation
j) judgment debt for which the judgment creditor has not claimed the amount of judgment award and the case is still active in Court;
k) accounts under investigation by a regulatory authority or law enforcement agency
l) Encumbered accounts include collaterals and liens.
CBN’s Roles under the Guidelines
The CBN shall open and maintain an account for warehousing unclaimed balances in eligible accounts. The account shall be called “Unclaimed Balances Trust Fund Pool Account”.
A committee established by the CBN shall oversee the operation of the Unclaimed Balances Trust Fund Pool Account, issue regulations, guidelines, and circulars on the administration of
dormant/unclaimed balances and financial assets.
Monitor and enforce compliance under the Guidelines on Management of Dormant Accounts, manage the funds in line with the provisions of BOFIA 2020, establish standard procedures for reclaim of warehoused funds, resolve escalated complaints relating to reclaim of warehoused funds, publish annually on its website, the list of owners of unclaimed balances transferred to the ‘UBTF Pool Account, and publish on its website, the procedure for the reclaim of warehouse.
Where a consumer initiates a funds claim process, the CBN shall refund the principal and interests to the consumer or beneficial owners within ten days or under any other extended timelines.
Financial Institutions Roles
In addition to a financial institution’s traditional roles, financial institutions must bear the costs of maintaining inactive and dormant accounts and arising correspondence with customers.
Financial institutions must notify the account holders in writing every quarter after an account becomes inactive/dormant.
Publish, on their websites, details of all dormant accounts six months before such accounts are eligible for transfer to CBN, and such websites should include a “Search” function.
How to Reactivate Dormant Account
A financial institution may activate a dormant account after the account holders or the beneficial owners fill out a reactivation form in person and the financial institution performs satisfactory customary KYC.
Moreover, a financial institution must not charge any fee for reactivating a dormant account in Nigeria.
Reclaim Procedure for Unclaimed Balances
Where the Beneficial of Iyabo’s Baba Iyabo’s family (seeks to reclaim the unclaimed balances after they confirm the names on CBN’s website – when that function is implemented -, they must fill out an Asset Reclaim Form and additional KYC at the financial institution’s office.
The CBN determines the interest or profit and loss ratio for interest-yielding or Non-Interest Banks.
Conclusion
Beneficial Owners under the Guidelines on Management of Dormant Accounts include an account holder or any other person who enjoys the benefits of ownership of an asset or account, including their next-of-kin or legal representatives.
Given the administration of estate laws in Nigeria, the legal representatives such as Executors or Administrators are legitimate BO (beneficial owners) of any funds in the Unclaimed Balances Trust Fund Pool Account.
Finally, the Guidelines on Management of Dormant Accounts accord with emerging global trends in unclaimed financial assets.
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