Unclaimed assets refer to funds or financial resources held by institutions such as banks, insurance companies, or other financial entities that have remained inactive or unclaimed by their rightful owners for a specified period. In Kenya, these unclaimed assets are regulated by the Unclaimed Financial Assets Act of 2011 and subsequent regulations, which mandate that holders such as banks and insurance firms make all reasonable efforts to contact the owners and, if unclaimed, eventually remit these assets to the Unclaimed Financial Assets Authority (UFAA). This authority then holds the assets in a special trust fund, safeguarding the owners’ interests and ensuring they can claim their property indefinitely.
Recently, CIC Insurance and Equity Bank were fined KES 1.2 bn for keeping unclaimed assets, meaning these organizations failed to comply with their legal duties under this framework. The law requires them to either return unclaimed dividends, deposits, or funds to the owners or beneficiaries or, if the assets remain unclaimed beyond the dormancy period, report and transfer them to the UFAA. The primary mandate of the UFAA is to receive unclaimed financial assets from institutions, safeguard these assets, and facilitate their return to owners or beneficiaries. It also works to promote public awareness about unclaimed assets and how to claim them, which helps reduce instances of assets remaining dormant.
The authority collaborates with financial institutions, regulators, and the public to ensure compliance with the law and to improve transparency in handling unclaimed assets. The recent fines imposed on CIC Insurance and Equity Bank serve as a reminder for organizations to diligently adhere to the legal framework, ensuring that they fulfill their obligations in protecting and transferring unclaimed assets to the proper authorities, and thereby protect the rights of individuals to their property.
The process of handling unclaimed assets involves of several steps. The holders must identify unclaimed assets, attempt to locate and notify the owners, and file detailed reports with the authority. If owners remain untraceable, the assets must be moved to the Unclaimed Financial Assets Trust Fund, managed by the UFAA, which also invests these funds prudently. Owners or rightful claimants can apply to recover their assets from the trust fund at any time, meaning the funds are never lost but must be properly accounted for and administered.
The importance of this legal framework lies in protecting the rights of individuals and entities to their financial assets and ensuring that such assets are not misused or held indefinitely without accountability. Penalties like the KES 1.2 bn fine serve as deterrents to encourage institutions to adhere strictly to reporting and transferring unclaimed assets promptly. This improves public confidence in financial institutions and the regulatory environment, promoting good governance and trust in economic systems.
