Lions and Tigers and Due Diligence, Oh My!

sovos etm
September 1, 2016
Let’s talk a bit about the complexity of Unclaimed Property Due Diligence. Think about it; there are more than 50 unclaimed property reporting jurisdictions. Each of these can have varying due diligence requirements. Trying to stay on top of constant changes will make you quickly realize the difficulty of performing proper due diligence.
Due diligence, in its most simplistic form, is the process of attempting to connect with the owner of property being held. Most states require that a holder of property perform due diligence mailings once a dormancy period has been met. These are often simple notification letters to the owner of the property in an attempt to let them know that their property is at risk of being escheated to the state of the owner’s last known residence. In addition, some jurisdictions have specific requirements as to the content of the mailing.
So now we have: 50+ jurisdictions, multiple letter format requirements, and multiple due diligence mailing date requirements. All of these varying requirements can add up to a lot of opportunity for error.
Have you considered the consequences of not performing proper due diligence? It is, in fact, mandated by state law and the penalties alone can be consequential. Couple the penalties with the media and corporate social stigma of not following state statute. The underlying business implications are not insignificant.
The additional benefits of performing Due Diligence are numerous: positive customer relations, fraud prevention, as well as preventing material misstatement on financials, to name a few.
Here are some best practices to consider:
  1. Collect as much contact information as possible
  2. Put policies and procedures in place to improve the maintenance and updating of name and address information
  3. Perform periodic contact (internal due diligence or customer service contact)
  4. Put a good unclaimed property system in place that can help you manage the variables of due diligence to maintain compliance
And above all, make unclaimed property management and reporting a priority. Don’t push it to the back burner and attempt to heed the lion and tiger problem last minute. Do your due diligence to maintain proper due diligence! You will be glad you did!

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