03.18 – Dormant Accounts

A UK Financial Institution may apply its existing normal operating procedures to classify an account as dormant. Where normal operating procedures are not applicable, then the UK Financial Institution may classify an account as dormant for the Agreement where:

  • there has been no activity on the account in the past three years,
  • the account holder has not contacted the Financial Institution regarding that account or any other account in the past six years,
  • the account is not linked to an active account belonging to the same account holder.

The UK Financial Institution should classify the account based upon existing documentation it already has in its possession for the account holder. Where this review determines that the dormant account is reportable, then the UK Financial Institution should make the appropriate report notwithstanding that there has been no contact with the account holder. Where the Financial Institution has closed the account and transferred the customer’s account balances to a pooled ‘unclaimed balances account’, however, described, maintained by the bank there will be no customer account to report.

Where the Financial Institution has closed the account, and there is no customer account to report, ‘reactivation’ will be treated as the opening of a New Account. The Financial Institution would then have to establish the account holders’ status as if the account were any other type of New Account.

Although a dormant account will still be reportable, in the case of a Financial Institution, who is a QI, there may be withholding implications to the dormant status. An account will no longer be dormant where:

  • under normal operating procedures the account is not considered dormant.
  • the account holder contacts the Financial Institution in relation to that account or any other account held by the account holder with that Financial Institution including a former account holder whose account balances have been transferred to an unclaimed balances account.
  • the account holder initiates a transaction on the dormant account or other any other account held by the account holder with that Financial Institution.

Dormant Funds

When a fund is closed, but there remain residual debtors, and recovery actions are being pursued, the fund will be not an Investment Entity for the purposes of this Agreement.