Industry Spotlight: Financial Institutions

Laurie Andrews
November 23, 2021

The last time I wrote to you about recent trends with unclaimed property and financial institutions, I talked about the increased audit activities and unique challenges that financial institutions face. Read the April 2021 article here. Regardless of your industry, I am sure you have heard the Consulting Team at Sovos share just how important it is to conduct a risk assessment to ensure you are in compliance with unclaimed property laws and to ensure your policies and procedures are current in the event an auditor comes knocking on your door.

In addition to talking about the usual topics of audit, risk assessments and policies and procedures, I think it is important to talk about the customer, the customer experience and how customer accounts can be preserved from escheatment. After all, unclaimed property laws are meant to be a consumer protection.

If we talk about how to preserve a customer’s account from escheatment, the obvious answer is contact with the owner or qualifying activities conducted by the owner on the account. What qualifies as owner-generated activity that can be used to preserve an account from escheatment does vary by jurisdiction. For example, some states allow recurring transactions to preserve an account while others do not.
Another way to potentially preserve an account from escheatment is through a practice of attribution (i.e. householding, account linking, cross-referencing, etc). This is the practice of applying contact or activity from one active account to all other accounts owned by the same customer.

With regards to attribution, some states have statutory requirements, some have published guidance in their regulations or manuals, while others have agreed to the use of it through third-party auditors. Applying attribution between accounts owned by the same customer may help improve your customer’s overall experience and could even be a time and cost-saving measure. There may be reduced costs for due diligence, advertising (depending on the state) and time spent by resources handling customer complaints, while also preserving assets under management.

However, when systematically applying attribution, you must ensure that you aren’t erroneously preventing accounts that qualify for escheatment to be preserved. A few examples for your consideration:

  • While a jointly owned account can be preserved if either owner has another account with activity, you must be mindful to not apply activity from one single owner to the other single owner using the jointly owned account as a pass through for the activity.
  • A customer who is a power of attorney should not have their personal account used to preserve activity of the person who granted power of attorney.
  • If you are aware that an owner is deceased, you should review any accounts that are being preserved from escheatment because some state statutes indicate that a deceased owner cannot indicate interest in their property. In fact, Illinois and Vermont even shorten the dormancy period when the holder has reason to believe the owner is deceased.

Lastly, if you don’t have contact or qualifying activity on a customer’s account to preserve an account from escheatment, make sure you are sending the statutorily required due diligence communications. Of course, you are permitted to do even more to maintain contact with owners such as phone, email or mail campaigns.

Take Action: Unclaimed Property Financial Institutions

If you have questions about audits, risk assessments, attribution or need help reviewing your current policies and procedures, please reach out to the Sovos Consulting Team

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Laurie Andrews

As Principal Consulting Director, Laurie assesses clients’ unclaimed property gaps in compliance, performs risk assessments, analyzes liability and fraud, and also collaborates with clients and third-party auditors during state examinations. With over 15 years of service with the Pennsylvania Department of Treasury, Laurie has an extensive unclaimed property background, focusing on fraud prevention, claims, and research.
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