UAE Central bank has issued a new banking system which regulates and makes provisions for circumstances in which bank accounts become dormant, and bank balances are left unclaimed.
This new system aims to regulate the handling of dormant bank accounts and to ensure that the banks follow the relevant criteria as prescribed by the Central Bank. The new system is to provide a general framework for control and protection of banks' dormant accounts and a structure regarding how to deal with inactive accounts and unclaimed balances.
This new system seeks to achieve the following:
- To enable customers or beneficiaries of bank customers to recover the balances of such dormant accounts;
- To provide a method of notification every three months to ensure accounts are not inactive;
The application of the new system to bank accounts will depend on:
- If the account has been dormant for seven years and the total amount of dirhams exceeds AED 3,000;
- If the customer holding the account does not have another active account at the same bank;
- If the address of the account holder is unknown.
Once the bank complies with the abovementioned requirements, it will transfer the amount to the "unclaimed balances account" where it will remain until the beneficiary claims such amount.
The new system provides the relevant criteria for determining the accounts receivable and unclaimed balances as follows:
- Deposit accounts – these include savings accounts, personal current accounts or demand accounts. For this account to qualify no withdrawal or deposit transactions must have occurred for six years from the date of the last transaction, an exception to this would be the fees due to the bank that is electronically posted by the system and transactions restricted by the bank. In cases of a fixed or short-term deposit account, the term in which there must not have been a deposit in the account is five years – this is where there is no automatic renewal provision.
Bank cheques – this new central bank system also provides a regulatory framework for bank cheques or cash orders which have not yet been claimed by the beneficiary or the account holder for a year, despite the bank trying to contact such holder or beneficiary. As a requirement, the bank is obliged first to publish two advertisements in local newspapers. The second being in Arabic providing the details of the unclaimed amounts. Following this, should the bank receive no response, the bank with transfer the balance to the Banks' "Unclaimed Balances Accounts." The bank will be entitled to deduct the actual fees, if any, and must inform the Central Bank.
- Shares and Guarantees – the new system provides a framework for the process of how to deal with unpaid dividends of unclaimed shareholders where such shares are unclaimed for one year. The Bank is required as per the new system to publish a declaration in two local newspapers, one Arabic and the other English, and wait for three months. After the expiry of such months, the bank will transfer the amount to the "Unclaimed Balances Account." There is a requirement for notification to the Central Bank only where the amount exceeds AED 1,000,00.
- Trust funds – in pursuance of the new regulatory system, if a trust fund has not been paid out for more than two years. The Bank shall advertise such trust in two local newspapers, and after three months, the fund must approach to the court to appoint a person to oversee the opening of the fund and to issue instructions on disposition of its contents or to select a legal guardian.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.