New dormant bank accounts legislation has been proposed as a
compulsory scheme to transfer the balances of Jersey dormant bank
accounts to a 'Jersey Reclaim Fund', under the supervision
of the Chief Minister's department of the States of Jersey. The
Jersey Reclaim Fund has the aim of supporting several good and
charitable local community causes and will be classed as a special
fund with responsibilities given to the Chief Minister.
There was a consultation exercise in December 2008 which
according to the States of Jersey received a positive response but
was put on hold for undisclosed reasons. Similar legislation is
already in place in the UK and the Cayman Islands and a
consultation exercise was carried out in 2013 in Guernsey.
This legislation is not only applicable to banks regulated in
Jersey, but also to any other person providing safe custody
A dormant bank account is defined as an account where no
transactions have been carried out for the last 15 years, despite
the account being open throughout that period. Initially, the
legislation will only apply to banking cash deposits, precious
stones and metals (such as those held in safe custody boxes),
foreign currency and other limited classes. There will be scope to
broaden the accounts covered in the future. Jewellery is
specifically excluded at this stage due to its unique and
irreplaceable nature. Customers who subsequently make contact will
still be able to reclaim the value of their account upon
application to the relevant bank, which can then seek a refund from
the Jersey Reclaim Fund. The valuation of non-cash items therefore
may prove problematic.
The draft legislation provides clarification of the relationship
between dormant account legislation and claims by the Crown for
assets under the customary law of bona vacantia. In effect, the
Crown's claims made in Jersey through the Receiver General are
preserved as the Receiver General may claim the value of any
property which is bona vacantia from the Jersey Reclaim Fund.
IMPACT ON BANKS
One of the benefits for banks suggested by the States of Jersey
will be the removal of liabilities from their balance sheets which
are not, and are not likely to be, utilised. Also, there will be a
de minimis approach in customer contact prior to any transfer, with
an obligation on the bank to simply contact the customer at their
last known address. There may also be an administration benefit by
permitting banks to close unused accounts. However, bank processes
general terms and conditions may need to be amended to reflect
The transfer of dormant account balances will occur annually in
December of each year. The activity status of accounts will need to
be reviewed as at 30 June every year, and a notification of any
transferable balances will need to be made to the Chief Minister by
30 September. If banks do not have a system in place for
identifying dormant accounts, there will be a five year
transitional period. However, this only applies to situations where
there is no other review system available other than a manual check
of all accounts. Therefore if any computerised search for dormant
accounts can be made, the transitional period will not apply.
The draft legislation has been initially debated by the States
of Jersey and the final readings by the legislature are expected to
take place on 28 June 2016. If passed, the legislation is expected
to come into force towards the end of the year following approval
by the Privy Council.
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.
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