What are your business obligations for managing unclaimed accounts?
November 10, 2022
Over time, most businesses lose contact with a handful of customers and clients who fall through the cracks without closing their accounts. These dormant accounts are more than just a nuisance. They can be a costly administrative burden unless they’re dealt with promptly.
Each year, millions of dollars go unclaimed in B.C. as unpaid wages, overpayments to debt collectors, dormant credit union accounts, outstanding proceeds from courts, pension plans, estates and forgotten real estate deposits. In fact, there’s a staggering $178 million sitting in orphaned accounts in B.C. waiting to be claimed by the rightful owners, according to BC Unclaimed, a not-for-profit organization charged with administering the province’s unclaimed property program.
“Businesses and organizations have an obligation under the Unclaimed Property Act to return unclaimed funds to the rightful owners in a timely manner,” says Sherry MacLennan, Executive Director of BC Unclaimed. “All companies should have policies and procedures in place to track and process unclaimed accounts to comply with the Act.”
Responsibilities Under the Unclaimed Property Act
Under the Unclaimed Property Act, holders of forgotten funds must make a reasonable effort to locate and notify the owner of a dormant account if there has been no access or activity for a specified period of time ranging from one to 10 years, depending on the type of account involved. If they can’t locate the owner, holders are required to maintain a database of unclaimed funds they hold. That database must be easily accessible to the public, meet privacy obligations and include the necessary information about each account.
This all takes time, money, and resources. There’s also the matter of dealing with inquiries and substantiating outstanding claims.
Simply ignoring dormant accounts on your books isn’t a prudent option. If your company or organization is audited, unclaimed property on your books may prompt the auditor to delve a little deeper into your financials. Also, if you’re contemplating selling your business, dormant accounts sitting on your books may be unattractive to potential buyers.
Non-Profit Society Relieves Companies of the Administrative Burden of Managing Dormant Accounts
BC Unclaimed has served as a “lost and found” for unclaimed money in B.C. since 2003. Transferring unclaimed funds to the non-profit Society fulfils a company’s legal obligations under the Unclaimed Property Act and releases the business from the responsibility of managing dormant accounts.
BC Unclaimed’s staff actively searches for the owners of forgotten funds and maintains a free online database of unclaimed account holders that people can search to see if they have unclaimed money waiting for them.
Since its inception, BC Unclaimed has returned more than $19.3 million in unclaimed funds to the rightful owners.
Provincially regulated credit unions, debt collectors, real estate agencies, companies in liquidation, B.C. courts and municipalities are required under B.C. law to transfer unclaimed funds to the Society if the rightful owners cannot be contacted. Banks, which are federally regulated, follow a different process.
Other organizations holding trust funds, insurance policies, brokerage accounts and closed pension plans may also transfer their unclaimed property accounts to BC Unclaimed if the rightful owners cannot be contacted.
Using Dormant Funds to Support Community and Social Programs
In 2021, BC Unclaimed received $4,070,621 in unclaimed funds from financial institutions, companies, courts, tax offices and the Public Guardian and Trustee of British Columbia to be reunited with the legitimate owners. BC Unclaimed also ensures that unclaimed monies are utilized for good – each year a portion of unclaimed assets are transferred to the Vancouver Foundation. The transfers enrich communities across B.C. through health, environmental, safety and Indigenous initiatives, among others.
Vancity has worked with BC Unclaimed since it was established. Over the last five years, the credit union has remitted more than $1.7 million in dormant accounts to BC Unclaimed to be returned to the rightful owners.
Credit union accounts are designated dormant after ten years of no activity.
Vancity accounts are reviewed annually for inactivity. The credit union’s computer system flags an account after nine years of no transactions. A notification is then sent to the credit union members’ last known address, informing them of the inactive account.
“It’s our obligation to remind people that this money exists and help reunite them with their unclaimed funds,” says Ritu Linfoot, Vancity’s Director of Operations and Enterprise Risk Management. “We can’t reactivate a dormant account on behalf of a person. It must be member generated.”
If there is no response to the notification and the credit union can’t contact the member, funds from the dormant account are transferred to BC Unclaimed through its secure online portal.
“Everything is electronic,” notes Ursula Ettinger, Manager, Central Administration and Payment Systems at Vancity. “The process works extremely well. It really is seamless.”
Credit union staff often work closely with BC Unclaimed when a member files a claim but doesn’t have the appropriate documentation. In this case, the Society will refer the claimant back to Vancity to obtain the appropriate records to verify the claim.
Business closures and insolvencies are other areas where the credit union interacts with BC Unclaimed staff. “When a business closes after unclaimed funds are submitted, there are instances where the business number has lapsed,” says Ettinger. BC Unclaimed requires an active business license to process a claim from a company. If a valid claim can’t be processed, the credit union can recall those funds from the Society and reunite the claimant with their forgotten funds.
“It’s hard enough to save money today. You don’t want to leave anything on the table,” adds Linfoot. “Reuniting people with their unclaimed funds is the right thing to do.”
More from BC Unclaimed
BC Unclaimed is celebrating our 20th anniversary and introducing a whole new look and feel for the organization.
Sherry MacLennan has joined BC Unclaimed as the not-for-profit’s new Executive Director.
After more than a decade as Executive Director of the BC Unclaimed Property Society, Alena Levitz has accepted a new position.