Government could collect some $4 million in revenue from dormant bank accounts this year “if all goes well,” Financial Secretary Kenneth Jefferson said in Thursday’s Public Accounts Committee hearing.
Mr. Jefferson explained that there is currently about $13 million in dormant Cayman bank accounts.
According to the Dormant Accounts Law, a bank account is considered “dormant” if it has been open for at least seven years with no financial activity occurring during that period.
If a bank account becomes dormant under the law, account providers – banks or other financial institutions – must take certain steps to contact holders of those accounts by July 31 of the year that account has reached the seven-year dormancy threshold.
If no account activity is noted, or if no attempt is made by the account-holder to contact the account provider is made by Dec. 31 of the same year, the funds can be transferred to government by March 31 of the following year. This means that government would likely get nearly $4 million by March 31, 2019.
The law absolves the account provider of any liability for the funds once they are transferred to government. However, there is a process whereby account holders can get their money back from government.
Mr. Jefferson’s information about the dormant bank accounts came in response to a question from MLA Chris Saunders about dormant pension accounts.
Mr. Saunders said that many pensions have not been collected on for years, and that financial institutions are profiting on collecting fees from those funds.
Mr. Jefferson said that the Dormant Accounts Law currently does not cover dormant pension funds. Account providers under that law include class-A insurers, banks, some licensed trust companies, credit unions and building societies.
However, Mr. Jefferson said pension funds could be covered by the dormant accounts legislation if Cabinet makes an order to that effect. The law can cover any other type of financial institution that Cayman Islands Cabinet members determine to be an account provider, he explained.
Mr. Saunders asked Mr. Jefferson if he and his ministry would further investigate the issue of untouched pension funds, and Mr. Jefferson said he would.