A number of changes are already
being proposed by the Cayman Islands Government to the newly-approved Dormant Accounts
Law, which allows the government to take assets from privately held accounts
that have been unused for a certain period of time.
The new Dormant Accounts
(Amendment) Bill, 2010, extends the dormancy period created by the original law
from six years to seven years.
That means an account – before it
is taken by government – must not have been used for a period of seven years
before being declared dormant. For the purposes of the amended law, account
activity means deposits or withdrawals, presentation of an account passbook for
crediting of dividends or interest on certain deposits or cheques, or a written
notice from the account holder indicating interest in the monies held.
Interest paid on any sum of money
or account fees charged are not considered account activities that would stave
off dormancy, according to the amended law. All references to trusts in the section
that deals with account activities from the current law have been removed in
the amended version.
The amendment also makes a significant
change in that it would no longer send funds taken from private accounts to the
general revenue of the Cayman Islands. Rather, it requires those monies to be
dealt with as trust assets.
According to the Public Management
and Finance Law, trust assets are to be managed in separate accounts maintained
by the Ministry of Finance.
The changes would also eliminate
all references from the current law to financial institutions and instead refer
to the entities that hold dormant accounts as account providers. Under the amendment, account providers
include; class A insurers, banks, some licensed trust companies, credit unions,
building societies, or any other type of financial institution that Cayman
Islands Cabinet members determine to be an account provider. Cabinet members
can make that designation in any case where it is deemed to be in the national
interest to do so.
The notification period for the
dormant account holders – other than the extension of the dormancy period to
seven years – has remained the same under the Dormant Accounts (Amendment)
Bill. Account providers must take certain steps to contact holders of dormant
accounts by 31 July of the year that account has reached the seven-year
threshold.
If no account activity is noted, or
if no attempt to contact the account provider is made by 31 December of that
year, the funds can be transferred to government by 31 March of the following
year. The law absolves the account provider of any liability for the funds once
they are transferred to government, however there is a process whereby the
account holder can get their money back from government.
Banks also have to report their
lists of dormant accounts, making those public in both a local newspaper and on
their web sites. An annual report from each institution is also expected to be
sent to government and the Cayman Islands Monetary Authority, whether or not
the entity holds any dormant accounts.
Failure to following reporting
guidelines can lead to fines for the account providers. However, the current
sections of the law that also provide for jail time for offences have been
removed from the amended version of the bill.
Lawmakers are expected to take up
the amendments to the Dormant Accounts Law later this month.
Related Videos
