Banking Crisis Leading to More State Unclaimed Property

The Great Recession and general economic turmoil in the past four years has led to 425 banks closing (and counting!) their doors since January 2008. The FDIC acts as the receiver of the assets of the failed banks, attempting to return funds to the account owners. But as with other holders, the FDIC is not always able to return funds with their rightful owners, leading to unclaimed property.

Under federal law, the FDIC is required to notify account owners, using the last known address on the bank records, within 30 days. If no action is taken by the account owner, the FDIC is required to send a second notice within 15 months. If the owners still have not taken action, then the FDIC shall transfer to the appropriate state the funds remaining unclaimed.

However, unlike other unclaimed property remittances, states may only hold this money for ten years. After ten years, if no claim is made by the rightful owner, the funds revert to the ownership of the FDIC. The FDIC becomes the owner of the funds, and all claims are barred. 12 U.S.C. § 1822(e)(5)

Unclaimed property may be made up of a series of state laws, but this is another example of the interplay between federal and state law. Federal and even local laws cannot be ignored when establishing a corporate unclaimed property compliance program.

More coverage:
Pennsylvania Treasury: PA Treasurer McCord: Nearly Half a Million Dollars from Failed U.S. Banks Possibly Owed to Pennsylvanians