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“Do not save what is left after spending but spend what is left after saving.” Warren Buffet

The need for people to save money or invest for use for future eventualities has its own consequences. There is the possibility that people may either forget that they have some funds in their accounts with Banks or on their Mobile Money (MOMO) wallets, or some can even pass on to join the silent majority without any notice to the Banks or the custodian of such funds and unknown to relatives by whom they were survived.  In some cases, the funds in the accounts may be left untouched for a long time especially when the owners are deceased or for some reason incapacitated and the bank or deposit-taking institution is not notified.

There is legislative intervention in that regard to treat all such funds under the laws of Ghana. In this paper, the author by way of education discusses Dormancy of Bank Accounts, what happens to such funds which remain unclaimed with the Banks and Specialized Deposit-taking institutions. The author may in a subsequent paper discuss what pertains in the case of monies held on the mobile money accounts of customers.

Banks Specialized Deposit Taking Institutions Act 2016 (Act 930)

The current Ghanaian legislation regulating Banks and Specialised Deposit-Taking Institutions in Ghana is the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). The Act amends and consolidate the laws relating to deposit-taking; to regulate institutions which carry on deposit-taking business, and to provide for related matters.

Under Section 143 of Act 930, where an account (savings or current) is not operated for a period of two years, a withdrawal shall not be made except with the permission of two authorized officers of the financial institution. In the same way, if a time deposit has not been operated for a period of two years or more after the maturity, a withdrawal shall only be made with the permission of two authorized officers of the institution concerned.

Section 143(1) of Act 930 provides that, “Where a current or savings account has not been operated for a period of two years or at time deposit account has not been operated for a period of two years after the date of maturity of the deposit, a withdrawal shall not be made on the account except with the permission of two authorized officers of the bank or specialized deposit-taking institution involved.” An account described in subsection 1, if not operated and funds withdrawn with approval, shall be transferred to a separate register of dormant accounts in the financial institution’s books and the depositor or owner of the account notified of the transfer.

The law provides that, “An account referred to in subsection (1) shall be transferred to a separate register of dormant accounts in the books of the banks or specialized deposit-taking institution and a notice in writing of that action shall be given to the depositor at the last known address of the depositor”.  The notification of the depositor will serve as a reminder to the depositor in the event that he or she has forgotten of the account and to activate same for further operation.

Under subsection 3 of section 143, “Where an account which is transferred under subsection (2) is subject to a service charge, or is an interest bearing account, the charge may continue to be levied or the interest accrued up to the date on which the account was transferred to the register of dormant accounts.” This section ensures that the transfer done is not at the detriment of the depositor, so that if it is an interest bearing account, the interest continue to accrue on the account.

After the transfer into the register of dormant account for three years, the financial institution is mandated to cause an advertisement in at least two daily newspapers of national circulation the fact of the dormancy of the account for the three years’ period.

Section 143(4) provides for this thus, “Where an account is transferred to a register of dormant account and the account has been on the register for three years, the bank or specialized deposit-taking institution shall advertise in at least two daily newspapers of national circulation the fact that the account has been on the register of dormant accounts for three years.”

This advertisement is further to notify depositors or customers in this category and it is an opportunity for them to make a claim for their dormant deposits in this period allowed by law.

Upon being advertised, it is expected that the depositors or their personal representatives as the case may be may notice the advertisement and take steps. If the depositor is deceased and the notice is seen by relatives, they may take steps to apply for Letters of Administration to administer same or if the Letters of Administration has been obtained already, they may present same to the bank or specialized deposit taking institution to enable them have access to the account for purpose of administering same.

In the event that the depositor is deceased and died testate, the notice also assists the executors to take the appropriate steps. In the case of depositors who are incapacitated, the appropriate steps may be taken by their guardian ad litem or next friend as the case may be. In this regard the Act provides in Section 143 (5) thus, “An account may be transferred out of the register of dormant accounts on request by the depositor or the legal representative of the depositor where a depositor is dead or incapacitated.”

It is the expectation of the law that if at this stage the depositors are alive, they would see this advertisement and take the appropriate steps. Subsection 6 of the law provides that “Where an account has been in the register of dormant accounts for a period of three years and the fact has been advertised as required under subsection (4), the balance on the account shall be transferred to an account earmarked for that purpose at the Bank of Ghana.”

If the money is not claimed under subsection 5 either by the depositors themselves if they are alive, their lawful representatives or personal representatives if they are deceased, their guardian ad litem or next friend if they are incapacitated, then those balances are transferred into an account designated for such at the Bank of Ghana.

This implies that, the banks and specialized deposit-taking institution is mandated to transfer those funds into the account at Bank of Ghana. Under Section 143(7), “Where a balance has been transferred under subsection 6, the Bank of Ghana shall, on a request, refund any unclaimed balances to the depositor, if the depositor is dead, to the legal representative of the depositor,”.

After the balances are transferred to the account with Bank of Ghana, it remains with the Bank of Ghana until a refund of same is requested by the depositor or the lawful representative of the depositor. It seems to the author that the Act does not indicate what should happen to this money if it is not claimed, neither does it provide a time limitation within which claims can be made ad after which depositors or their lawful representatives can make a claim.

Unclaimed Balances and Dormant Account Directive 2021

In order to provide full operation for this, the Bank of Ghana under the power conferred upon it as a regulator under section 92 of Act 930 issued a directive called, Unclaimed Balances and Dormant Account Directive, February 2021.

The said section 92 of Act 930 has elaborate provisions on issuance of Directives but for the purposes of this paper, section 92 (1)(a) and (d) are relevant and provide that, 92(1) “The Bank may issue directives to banks, specialised deposit-taking institutions or financial holding companies generally or to a class or classes of banks, specialised deposit-taking institutions or financial holding companies where the Bank of Ghana is satisfied that (a) it is necessary to secure the proper management of a bank, specialised deposit-taking institution or financial holding company generally; (d) it is necessary to give full effect to the provisions of this Act”.

The Directive has a triune objective as follows, (a) to operationalize Section 143 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), (b) to establish processes and procedures for reclaim of funds by Dormant Account Holders or their legal representatives; and (c) ensure that funds of customers of regulated financial institutions that become dormant are adequately protected.

The Directive among others gives an indication of the exceptions to section 143 and its application. Accounts that are subject matter of litigations, subject of fraud investigation by regulatory authorities or law enforcement agencies, subject of any encumbrances by way of liens and other securities or credit due to errors such as system errors and under investigation for corrections.

In giving an indication of what constitutes a dormant account, the Directive provides that, the following shall be classified as such: (a) a current or savings account with a credit balance and their derivatives with no ‘customer- initiated activity’ by the account holder or a third party on the account holder’s behalf for a period of two (2) years; (b) a time deposit account with no customer-initiated activity by the account holder or a third party on the account holder’s behalf for a period of two (2) years after the maturity date of the deposit; (c) a prepaid card account and every other funds belonging to a customer or non-customer of the regulated financial institution that has not been accessed or operated for a period of two (2) years.

The directive provides further flesh to what constitute a dormant account and in the directive includes funds on the prepaid cards. It means that for an account to escape the categorization of dormancy, at least there must be customer initiated transactions on it within a period of two years, otherwise it joins the league of dormant accounts.

For the avoidance of doubt, the Directive explains customer initiated transactions to include cash or cheque deposits, withdrawals, transfers to or from account including standing orders, direct debit/credit and payment out of the account made by the account holder or their legal representative.” The Directive further provides that, A Customer initiated activity shall not include the regular or automatic inflows such as interest payment that accrue on the account and bank charges”.

There are instances where depositors or customers invest my way of Fixed Deposits with the banks. The investment may have options such as roll over the principal, in which case the interest is credited to the customer’s account, or roll over with interest for another period, in which case the interest is added to the principal and rolled over and this may continue for several years.

The Directive provides in this regard that, “In the case of fixed deposits or investments scheduled by a customer to roll over upon maturity and the roll over has persisted for more than three (3) consecutive roll overs or two years whichever is longer, a regulated financial institution shall initiate actions to re-identify the customer, renew consent to continue the instructions and update the customer’s records.”

The directive wants to ensure that the continuity of the investment is with the consent of the customer and not because the customer is deceased or has abandoned or forgotten about the account. When the financial institution is unable to contact the fixed deposit account holder then the funds shall be transferred to the dormant account register. In contacting the fixed deposit account holder, the author suggests that, beyond the account holder, the next of kin and other information given at the onboarding stage must be utilized and exhausted before the funds are transferred to the dormant account register.

Communication of the Dormancy Processes to Customers

The Directive provides that the bank or specialised deposit-taking institution shall take adequate steps to contact an Account Holder at least three months prior to an account falling into dormancy. This it is suggested is a proactive step and not a reactionary. The depositors are to be served with a ‘Dormant Account Notice’ (DAN) through the last known address of the Account Holder and other means including bit without limitation to, (a) Physical visitation; (b) Phone call or Short Messaging Services (SMS); (c) Email; or (d) Any agreed form of communication during the account initiations.

In making attempts to contact the Dormant Account Holder, the person nominated as next of kin, or any other designated person must be contacted if the Account Holder cannot be reached. The said persons may be contacted but the bank and specialised deposit- taking institutions must be alive to its confidential obligations and not disclose the account balances or any sensitive information to any third party.

This brings to the fore the importance of the Know Your Customer (KYC) requirements by the regulator and it is suggested that if proper KYC is done at the account initiation stage, it will not be difficult to reach the Account Holder. The said information is to notify the Account Holder whose account is heading towards dormancy or already dormant on the procedure for the reactivation of the account. This is so because, an account that goes into dormancy cannot be operated until it is reactivated.

Reactivation of Dormant Account.

The Directive provides for the processes for the reactivation of an account that has fallen into dormancy. It provides that, “A regulated financial institution shall take all necessary steps to identify a Dormant Account Holder prior to initiating dormant account reactivation.”  Any request for withdrawal or activation of a dormant account by the account holder or legal representative shall be made in writing in a manner specified by the financial institution.

As earlier indicated by Act 930, such withdrawal shall only be allowed with the permission of two authorized officers of the bank or specialised deposit taking institution concerned. The two authorized persons who can permit the withdrawal from the account after two years of dormancy. The Directive provides that, “The authorized officers shall include the branch manager and one (1) authorized officer of the regulated financial institution.

In the absence of the branch manager, the next senior officer shall act on the branch manager’s behalf. Upon the branch manager’s return to his post the transaction shall immediately be brought to the branch manager’s attention.” The Directive provides for the keeping of the evidence of request for activation or withdrawal for as long as the statutory retention period under the law.

Transfer of Unclaimed balances to Bank of Ghana

Under the Directive, “Where an account has been in the register of dormant accounts for a period of three (3) years and has been advertised as required, the balance on a dormant account shall be transferred to the Bank of Ghana in accordance with section 143(6) of Act 930”

The transfer of the unclaimed funds shall not be effected until twenty-one (21) calendar days have elapsed after the date of publication but not exceeding twenty-eight (28) calendar days and the advice bearing details of beneficiaries shall be submitted to the Bank of Ghana in the format specified by the Bank of Ghana.

All these the author believes is to give the depositors enough time to make claims before the funds falling under this category are transferred to the Bank of Ghana. Upon receipt of the funds, the Directive provides that the Bank of Ghana shall acknowledge receipt of same in a form attached to the list of accounts and items transferred by the institution.

The Bank of Ghana then must keep appropriate records of all such balances transferred to the Bank of Ghana including claims made by depositors or the legal representative. This is to ensure that at any stage in time, there is record to how much the Bank of Ghana is holding in terms of unclaimed balances transferred to it and how much has been claimed.

In the event that a depositor seeks to claim from the Bank of Ghana, the author notes that he or she may only be entitled to the amount transferred without interest. It is provided that, “The funds to which account holders or beneficiaries are entitled may be claimed from the Bank of Ghana. The amount payable shall be the exact amount received from the regulated institution and shall not include interest.”

It is unclear to the author the import of this, because one would have thought that if the financial institution concerned was keeping an interest bearing account and the funds are transferred to the Bank of Ghana under section 143 of Act 930 and the Directive, the funds with the Bank of Ghana should continue to bear interest until it is claimed and when being claimed the depositor be entitled to some part of the interest if not all. This it is suggested the regulator may want to reconsider because of the trite principle of time value of money.

Process of Reclaiming Unclaimed Balances

The Directive gives a guideline as to the procedure a depositor or his or her legal representative can use to claim the balances. First of all, there shall be a display in the banking hall of the financial institution the process of reclaim. The Directive provides that, “A regulated financial institution shall display a poster in all banking halls of the process of reclaim of funds of dormant accounts transferred to the Bank of Ghana. This shall include information on how accounts of customers may be regarded as dormant.”

It is not only mandatory for the institution to develop the process for the reclaim of funds, but same must also be displayed in all banking halls of the institutions. This it is believed, is to ensure that the process is obvious and easily accessible to all persons whose funds may be in that category. Upon a receipt of a request by a depositor or legal representative of one to claim a refund, the bank or specialised deposit-taking institution must take steps to validate and seek the claim on behalf of the claimant at the Bank of Ghana.

Once the funds have been transferred to the Bank of Ghana, it is the bank or specialised deposit taking institution that can deal with the Bank of Ghana on behalf of the depositor or the claimant as the case may be. The financial institution has five (5) from the date of receipt to validate and submit the validated claim to the Bank of Ghana. It is provided in the Directive thus, “A regulated financial institution shall submit a validated claim within five (5) working days after receipt of the claim to the Bank of Ghana in the format specified by the Bank of Ghana.”

Upon submission of the claim, the Bank of Ghana shall in consultation with the regulated financial institution validate the claim. Upon the validation of the claim, the Bank of Ghana shall transfer the funds being claimed to the claimant’s account. In this regard the Directive provides that, “The Bank of Ghana upon validating a claim or receipt of a validated claim, shall transfer to an account of the claimant domiciled at the regulated financial institution, the amount transferred to the Bank of Ghana by the regulated financial institution.”

The Directive mindful on the need to protect the funds of depositors, provides for Internal Policies and Procedures to be fashioned out by the financial institutions. The Directive provides thus, “A regulated financial institution shall establish and implement internal control policies and procedures to oversee the management and protection of accounts specified as dormant.” A monitoring obligation is also imposed on the financial institution thus, “A regulated financial institution shall monitor accounts that show tendencies of inactivity and initiate actions to protect same from fraudulent activity”.

The Directive further provides that, “A regulated financial institution shall review its dormant account register and procedures at least on a quarterly basis to ensure that controls put in place are effective to prevent abuse of such controls.” The Directive provides for sanctions for breaches of the provisions of the Directive and shall breaches shall attract an administrative penalty of not more than ten thousand penalty units. One penalty unit under Ghana law is twelve cedis (GHS12.00) according to the Fines (Penalty Units) Act 2000 (Act 572).

Advice to Depositors.

It is important to emphasize that with the enactment of Act 930 and the Directive above discussed, depositors are advised to ensure that their accounts do not fall into dormancy. One can achieve this by making a conscious effort to ensure that there is a customer initiated activity or transaction on accounts at least once a year. It is the practice of some, to avoid this tendency, to send some transfers, no matter how small it is to the account once every year just to ensure some activity on the account.

Relatives who are aware of accounts held by their deceased relatives must be interested in following up from these financial institutions. Once they confirm the existence of such funds belonging to their deceased relative, they may take steps to claim the said funds under the estate from the regulated financial institutions before same is transferred to the Bank of Ghana or from the Bank of Ghana as the case may be if it has already been transferred.

Conclusion

In conclusion, what the author has been struggling to say is that if an account becomes dormant (inoperative) for two years or more, it goes through a process and the funds are in the end transferred to an account at Bank of Ghana. Fortunately, unlike unclaimed dividends, the law does not provide for a limitation period within which a customer can claim. The author suggests that regarding unclaimed balances, the depositor is able to ask for a refund no matter how long and upon validation, the request shall be granted for the refund to be made to the customer.

Note.

In the next piece, the author will discuss how Unclaimed Balances on Mobile Money (Momo) wallets are also treated under Ghana law.