Reclaiming Dormant Account Balances From UBTF

With nearly 20 million bank accounts that are inactive in the country, the Central Bank of Nigeria (CBN) recently released Guidelines on Management of Dormant Accounts, Unclaimed Balances and Other Financial Assets in Banks and Other Financial Institutions in Nigeria.
The guideline amongst others, standardises the management of dormant accounts, unclaimed balances and financial assets, and outlines the procedure for the administration of these balances, funds, and assets by banks and other financial institutions in the country.
A bank account is said to be dormant where there has not been any withdrawals or account holder initiated transaction for a specified period of time. In Nigeria, a bank account becomes dormant after a period of six months.
Data from the Nigeria Interbank Settlement System (NIBSS) show that there are 19.799 million bank accounts that are dormant as at the end of the first quarter of this year, representing 6.81 per cent of all bank accounts in the country.
With the latest directive by the apex bank, account balances in bank accounts that have been dormant for a period of 10 years will be transferred into the pool account. However, banks are expected to publish on their websites, details of all dormant accounts, six months prior to their eligibility for transfer to CBN.
The guideline stated that eligible accounts are dormant accounts balances that have remained with the FIs for a period of 10 years and beyond. These include current, savings and term deposits in local currency as well as domiciliary accounts.
Likewise, deposits towards the purchase of shares and mutual investments; prepaid card accounts and wallets; Government Owned Accounts; proceeds of uncleared and unpresented financial instruments belonging to customers or non-customers of financial institutions, unclaimed salaries and wages, commissions, and bonuses will be eligible for transfer.
Others include proceeds of stale local and/or foreign currency drafts not presented for payment by beneficiaries; funds received from a correspondent bank without sufficient details as to the rightful beneficiary and/or a recall of funds made to the remitting bank to which the Nigerian bank account had not been debited; a judgment debt for which the judgment creditor has not claimed the amount of judgment award; and any other deposits or financial assets that may be designated by CBN.
However, accounts that are subject of litigation; a judgment debt for which the judgment creditor has not claimed the amount of judgment award and the case is still active in court; accounts under investigation by a regulatory authority or law enforcement agency; and encumbered accounts including, but not limited to, collaterals and liens are exempted.
The funds from the dormant accounts are to be transferred to the Unclaimed Balances Trust Fund (UBTF) Pool Account which will be managed by a committee that is to be established by the CBN. The committee is expected to oversee the operation of the UBTF Pool Account, issue regulations, guidelines and circulars on the administration of dormant/unclaimed balances and financial assets, monitor and enforce compliance and manage the funds in line with the provisions of BOFIA 2020.
The committee will also establish standard procedures for reclaim of warehoused funds, resolve escalated complaints relating to reclaim of warehoused funds and publish annually on its website, the list of owners of unclaimed balances that have been transferred to the ‘UBTF Pool Account.
To ensure that their accounts are not dormant, account holders as well as beneficial owners in banks and other financial institutions are expected to inform financial institutions of changes in their names, addresses, phone numbers, emails, next-of kin and in the case of corporate entities, their directors, authorised signatories, business addresses and any other customer update.
In the case where the fund has been transferred to the UBTF, account owners and beneficiary owners are to submit application for reclaim and provide appropriate information and proof of ownership for the reclaim of balances transferred to CBN.
On the part of financial institutions, to reclaim the funds, they are to require the account owner/beneficial owner to complete a reactivation form in person and obtain from the account owner evidence of ownership of the dormant account with valid means of identification, evidence of present place of residence, and affidavit on the accuracy of the information to reactivate the dormant account.
Asides these, they are to verify the information provided on the reactivation form and reactivate the dormant account with the approval of two authorised officers with one being at least the branch operations manager. They are however not allowed to charge any fee for reactivation of dormant account.
The dormant account funds are to be invested in Nigerian treasury bills (NTBs) and other securities as may be approved by the Unclaimed Balances Management Committee. According to the guideline, the fund invested is to be refunded to the beneficiaries along with interest (if any) not later than 10 working days from the date of receipt of the request. “Where it is imperative to extend the timeline, a notice of extension shall be communicated to the requesting FI stating reasons for the extension.”