Unclaimed Funds: How Your Financial Institution Should Best Handle Them

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Does your financial institution have unclaimed property? It’s a rhetorical question: Every financial institution has unclaimed property. The question is just how much in unclaimed funds or assets do you have.

When you combine the overall total for all FIs in the country, the figure is easily in the tens of billions of dollars. In the bigger picture, it’s estimated that 1 in every 10 Americans has unclaimed property waiting for them to claim, according to the National Association of Unclaimed Property Administrators (NAUPA)?

The question becomes, then, how do you best go about returning this unclaimed property to the proper recipients? And what do you do if you can’t? You first need to understand what assets fall under the “property” banner.

What does unclaimed property mean?
Unclaimed property is a fairly broad term, but it does have a specific definition. The NAUPA describes it as intangible and tangible investments or possessions held by a financial institution that haven’t been accessed for a year or longer. By “access,” this also means any kind of activity generated, such as deposits or withdrawals.

Here is a partial list of what unclaimed property typically includes:

  • Checking accounts
  • Savings accounts
  • Traveler’s checks
  • Stocks
  • Payroll checks
  • Uncashed dividends
  • Certificates of deposit
  • Annuities
  • Contents of safe deposit boxes
  • Unredeemed money orders 

How much unclaimed money is in the U.S.?

The estimates of how much property is currently considered unclaimed vary on a year-to-year basis, but according to SmartAsset, the figure is likely in the $49 billion territory. Only a small portion of that — roughly $3 billion, based on NAUPA’s calculations — is returned to its owners annually.

States, as you know, are the entities that receive unclaimed property after a certain period has passed. Each has its own rules for how much time must pass before property must be reported. Businesses as a whole — not just FIs — are required by law to turn over whatever unclaimed property of customers they have as well.

In short, the buck stops with states when it comes to returning unclaimed funds or abandoned property to the rightful owner(s). However, this doesn’t absolve financial institutions from trying their level best toward reaching this successful end. Indeed, to quote the Securities and Exchange Commission, FIs are duty-bound to “make a diligent effort” toward ensuring that the lost gets found.

Given the sheer size of the challenge, it’s clearly easier said than done. Consider adopting some of the following strategies:

Spread the word
It may not even dawn on your customers that they have unclaimed funds or property waiting for them. Sheer lack of awareness may be the single biggest reason why cash, annuities, money orders and the like take so long to find a home.

Whether you communicate via marketing materials, your website or word of mouth, getting the message out about unclaimed property — and how to track it down —can give your customers the inclination to find out for themselves.

Urge customers to use available online resources
The internet is teeming with websites, tools and information that provide customers with the solutions to have much of the detective work done for them. All 50 states have websites people can visit to track down missing money or property. Most of these are managed by state governments, such as the Office of the State Comptroller in New York, the Office of the State Treasurer in Wyoming and Texas Unclaimed Property in the Lone Star State. NAUPA also devotes a portion of its pages to each state’s unclaimed property divisions and how to contact them.

Hire a third-party to handle what you cannot
Escheatment for safe deposit boxes is a state requirement when owners cannot be tracked down. And it can be a rather labor-intensive endeavor that may entail more resources than you bargained for, depending on how many safe deposit boxes you have, the number of branches you operate and your geographic footprint. You may want to consider contacting an outside party that specializes in escheatment services. 

BranchServ is one such provider. We offer numerous services to financial institutions throughout the country and escheatment just so happens to be one of them. From aggregating your escheatment needs, to tackling safe deposit box opening methodically, to managing the reporting requirements established by your state, we’ll get the job done right and on time. We have a comprehensive understanding of all state escheatment regulations on the East Coast (from Maine to Florida) and the Gulf Coast. 

At BranchServ, we can help make escheatment one of your easiest ongoing achievements by simply leaving the work to us. Contact us today to learn more.