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Financial Institutions Reporting Guide
Common Terms
Financial Institution: Acts as an agent that provides financial services for its clients or members. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, savings & loan associations, credit unions, stock brokerages, asset management firms, and similar businesses.
 
Abandoned Account: An account with no positive owner contact for three years.
 
Inactive or Dormant: A status given an account by the financial institution when there is no customer contact or account activity for a period of time set by the financial institution.   An account with this status usually has additional levels of security controls over deposits or withdrawals and may be subject to additional fees.
 
Positive Owner Contact: Documented contact by the owner.  Examples include:
  • deposits
  • withdrawals
  • letters
  • phone calls
  • address changes
  • positive owner contacts with a related account
 
Positive owner contact does not include service charges, automatic interest transfers, and changes made by the bank such as zip code or area code updates.  Normally, non-returned mail is not evidence of positive owner contact.  For automatically renewing time certificates, we will accept unreturned first class mail renewal notices sent by the financial institution as evidence that the time certificate is not unclaimed.

 
Corporate and Personal Trust
Larger institutions may have a trust department. There are several types of property reported in this area including: uncashed checks, undeliverable stock, underlying shares and unredeemed bonds and interest payments. 
 
Corporate Trust: The financial institution acts as an agent on equity and debt issues for companies and pays stock and bond holders.
 
Personal Trust: Includes managing individual trust accounts and making payments from those trust funds.
 
Equity
 
While the corporation remains liable to report abandoned stock or dividends as unclaimed property, often trust departments report the unclaimed property as a service.
Unclaimed dividends and undelivered stock certificates are abandoned after three years. Underlying shares and dividends to date are abandoned when there are three years of uncashed dividends and no contact with the owner.
 
Debt
 
Unclaimed matured bonds and unredeemed bond coupons or interest payments are abandoned three years from the date payable when held by a fiduciary or agent If you plan to return the property to the issuer for reporting, please be aware that state and local governments report such items two years following the date payable.
The bond trustee or paying agent has the option of reporting the unclaimed property or returning the items to the issuer. If you return the property to the issuer, please advise the issuer of the reporting requirements.

 
Fees and Ceasing Interest
When interest is ceased or fees are charged for inactive accounts, impacted customers are usually unaware of the fees and cannot correct the situation, complain, or move their funds if they disagree.  Incorrectly charged inactivity fees or ceased interest may be considered unclaimed property and subject to reporting.
 
The Uniform Disposition of Unclaimed Property Act and related Administrative Rules have several requirements before inactivity fees are charged or interest stopped on accounts.
 
1. Enforceable written contract

Your contract must clearly and prominently define the terms allowing inactivity charges or ceasing of interest. Clearly define inactivity and when the charge will begin or interest will cease.
Common problems include:
  • Inactivity or dormancy is never defined or definitions and terms vary between contract or agreement, fee schedule, and written procedure. 
    • An example: The bank's depositor contract defines an account as "dormant" after one year of inactivity.  The fee schedule shows an inactive fee of $2.00 per month after an account is dormant for one year.  The bank assumes it can take the fee after one year of inactivity but the agreement implies a total of two years for it to be charged- one year to dormancy + one year after dormancy
  • Contract terms are too vague or broad for the customer to determine the conditions or fee. For example, the inactive fee information refers to internal bank documents or other sources that are not readily available to customers such as an internal procedure or the back of a signature card.  Another example would be to indicate that inactive fees start when an account is made inactive, without ever defining how the bank determines inactivity.
 
2. Inactive charge or ceased interest is regularly imposed
 
Problems include:
  • Charges are not taken as permitted against qualifying customers at the appropriate time and only retroactively imposed on reportable accounts just before filing the report.
    • An example: the credit union has a permissible $5 monthly inactive fee when accounts have no positive owner contact for one year.  Unfortunately, the credit union did not take the fee each month from impacted accounts. During due diligent efforts, several accounts are reactivated about four months prior to reporting.  Preparing the remaining accounts for reporting in October, the credit union discovered the missed fee and retroactively takes the inactivity fees from the remaining accounts.  This would not be regular imposition of the fee because it was not regularly imposed and not charged against the reactivating accounts.
  • Some bank branches administer fees or interest cessation on their account holders inconsistent with bank policy or procedures.
3. Give written notice to the owner's last known address that account is inactive 

4. Send first class mail notice ninety days before imposing inactive or dormant charge
 
5. No reversal of charges or waiver of interest
 
If a financial institution routinely reverses inactivity charges or reinstates interest for returning owners, the state would expect the same benefit for the reported accounts.
 
Problems encountered include:
 
  • The written procedures regarding fees and stopping interest are not followed.
  • The rules and regulations and/or procedures are written to create a "grace period" amounting to a waiver, (i.e., if the depositor comes back after the fees have been imposed but before the items are reported, all inactive fees are waived).

 
Internal Control
Inactive or dormant property is at greater risk for undetected theft or misuse because the owner is not monitoring the account. Additional internal controls and management review will prevent improper access to these accounts. Examples of internal controls include:
 
  • Require special authorization to view inactive accounts.
  • Attempt to locate qualifying inactive accounts as soon as practical.
  • Suppress mailings to inactive or dormant accounts to prevent external fraud.
  • Require dual authorizations for any transaction or owner information change to an inactive account.
  • Ensure that a second employee verifies reactivations of inactive accounts.
  • External manager or internal auditor reviews branch reports of activities to inactive or dormant accounts.
  • Maintain unclaimed property reports in a locked file with limited access.
  • Separate reactivation/refund and reporting functions.
  • Rotate responsibilities for abandoned safe deposit box contents.
  • Hold periodic internal audits of inactive accounts and procedures.

 
IOLTA Accounts
Legislative changes in effect beginning November 2010
 
Inactive Interest on Lawyer Trust Accounts (IOLTAs) at financial institutions must be remitted to the Oregon State Bar starting with the unclaimed property report due by Nov. 1, 2010.  Until claimed, the IOLTA funds paid to the bar will help fund legal services to the poor under the Legal Services Program.
 
Affected holders may need to send two reports to the Department of State Lands Unclaimed Property Section (DSL/UP): one listing only IOLTA funds without payment; and one for any other unclaimed property reportable with remittance to DSL/UP.

A copy of the IOLTA funds report must be sent with your payment to the Oregon State Bar by the due date.
 
For financial institutions the abandonment period for IOLTA deposit accounts remains three years. For 2010, file a separate unclaimed property report for IOLTA accounts with a last positive owner contact before July 1, 2007. The funds and a copy of the report should be remitted to the Oregon State Bar.  Report IOLTA bank accounts as a co-owned property, and attorney/firm specifics and IOLTA unknown as the co-owner. 
 
Oregon State Bar
Remit IOLTA accounts to the Oregon State Bar with a copy of your unclaimed property report to:
 
Oregon State Bar
P.O. Box 231935
Tigard, OR  97281-1935
 
The property code for lawyer trust accounts and IOLTAs is: TR88 Lawyer Trust Accounts-OSB. This code should be used only when funds are remitted to the Oregon State Bar.
 
Department of State Lands – Unclaimed Property Section Submit your unclaimed property report of lIOLTA accounts without payment ​to the address below:
 
Oregon Department of State Lands
Unclaimed Property Section
775 Summer Street NE, Suite 100
Salem, OR 97301-1279
 
If you have other property to remit to DSL/UP, do not comingle the items on a single report. You will need to file two separate reports.
 
Paper forms are available online.  
 
FREQUENTLY ASKED QUESTIONS 
 
Do I need to perform due diligence before reporting?
Yes, if the amount is $100 or more, you will need to complete due diligence efforts at least 60 days before reporting. You can find out more about due diligence on the DSL Web site.
 
How will the owners claim IOLTA property?
If the property is not listed on the DSL/UP owner search, you can direct owner inquiries to the Oregon State Bar.  Once DSL/UP has added the names to the owner search database, claimants may file their claim inquiry via DSL/UP.  Inquiries against IOLTA property will be referred to the Oregon State Bar for review and approval. 
 
What if I am reporting unclaimed funds held in a IOLTA account and the owner has a last known address in another state?
Generally, unclaimed property is reportable to the state of the owner's last-known address as shown on your records. To avoid confusion, you should report any out-of-state owners from an IOLTA account directly to the appropriate state.  State laws differ on abandonment periods and reporting so you will need to follow their reporting requirements.  A good resource is the National Association of Unclaimed Property Administrators’ Web site: http://unclaimed.org
 
Our bank has only the attorney or firm name that opened the account in our records. How do I report the owner information?
Report the IOLTA as a co-owned property, with the attorney/firm specifics and IOLTA unknown as the co-owner. 
 
What if the attorney or firm has other abandoned bank accounts in addition to the IOLTA account? The other accounts will be reported and remitted to DSL/UP as normal.  You will need to segregate the IOLTA account on a separate report for remittance to the Oregon State Bar.
 

 
IRAs and Other Savings Plans
Planned savings accounts are not payable or distributable until distribution of all or part of the funds would be mandatory. Once this occurs, the accounts begin to age for unclaimed property reporting.  IRAs are specifically covered under ORS 98.332.  If there is no positive owner contact after two years, the account is abandoned.
 
IRAs and Keoghs: The mandatory payout age for an account holder is 70 1/2.  Report the property if there is no positive owner contact and the owner is at least 72 1/2.  If the owner is deceased, the account is reportable two years after the date of death if there is no contact with the heirs or personal representative for the estate.
 
Roth IRAs and Educational IRAs (Coverdell): If you have evidence that the owner is deceased, and there is no contact with heirs or the personal representative of the estate, the account is reportable after two years. Other than the situation of a deceased owner, Educational and Roth IRAs are not reportable as unclaimed property at this time, because they do not contain a mandatory payout provision.
 
Health Savings Accounts and Uniform Transfer to Minors Act accounts are covered under ORS 98.308 and have a three-year aging period.
 
Health Savings Accounts (HSA): Report the property if there is no positive owner contact on this or any related account after three years.  If the owner reclaims the property and uses the funds for non-qualified expenses, they would suffer unpaid taxes and a penalty.  When reporting, identify the account number of these accounts as "Acct# HSA."
 
Uniform Transfers to Minors Act (UTTMA, UTMA): These accounts are abandoned after three years with no positive owner contact. The property must be identified as a UTMA account when reporting.  Example: (first owner name) John Doe, Custodian UTMA & (second owner name) Jane Doe, minor.

 
Official Checks

 
Important points:
  • You may not deduct any charges imposed for failure to present the check or other written instrument for payment unless you have an enforceable written contract with the owner of the instrument allowing the charge and you regularly impose the charge.
  • Money orders and travelers checks are reportable to the state where purchased.
  • If you provide a payroll service for companies, payroll service checks are reportable after three years. Return these checks to the issuing company for reporting or report them directly. Because of the short timeframe to return checks to client companies for reporting, many financial institutions report for the companies.
  • "Buried" checks can go unreported when a number sequence repeats. If you expect all the older checks to be at the top of the outstanding check report, and it sorts by number, you may find buried pockets of older checks deep in the report where the number sequence has repeated.
  • If you issue checks on the financial institution's account for members, do not redeposit stale-dated check amounts back to the member account without authorization from the member. Unless the member indicates the check is lost or not used for the purpose intended, the owner is the payee.

 
Related Account Activity
If the apparent owner of an apparent inactive account has multiple accounts with a financial institution, it is important to check related accounts for recent activity.
 
If the customer has a related account with positive owner contact within the last three years, use the most recent related activity for aging on all of the customer's accounts.
 
Examples of related account activity:
 
A customer's savings account has had no customer-generated activity in the last three years. However, the customer maintains an automatically renewing time certificate of deposit.  If the renewal notices are sent first class mail and are not being returned by the post office as undeliverable, the unreturned renewal is considered to be a positive owner contact.
 
A customer has a savings account that has had no activity for several years but they maintain an active checking account. The activity on the checking account would prevent the savings account from being abandoned and reported as unclaimed property.
 
Depending on your system, the accounts may be linked in your database. If you do not have linked accounts, you may have to review your dormant suspect accounts for related accounts with more recent activity. Related accounts may include:
 

Loans Savings accounts Checking accounts
Safe deposit boxes Time certificates IRAs or other retirement accounts
 
Positive owner contact can take many forms, including a phone call from an owner requesting information about one of their accounts. Your employees should note the phone call in a comments field or logbook. This is evidence of positive owner contact.
 
Use care when updating inactive accounts based on non-transaction owner contacts.  Allowing employees to reactivate an inactive account based on a telephone call record is an internal control issue. When an account is inactive, we suggest that you obtain written confirmation from the owner or have a second person follow up with a phone contact to the customer to verify the first employee's record.
 
Due Diligence is Required 
Contacting inactive account owners is essential.  The law requires holders to make reasonable, good faith efforts.


 
Safe Deposit Box Contents
All tangible and intangible property held in a safe deposit box (SDB) is abandoned two years after the lease or rental period has expired. Report the owner names and inventory information by November 1st.  Delivery of physical contents should be made the following January.
 
If we are unable to locate the owner of the SDB, the department sells the safe deposit contents at auction after one year.  The sale proceeds are credited to the owner.
 
Common problems:
 
  • Property is aged from the drill date of the safe deposit box not the expiration of the lease or rental period.
  • Failure to identify and drill delinquent boxes on a regular schedule often causes late reporting.
  • Property description is incomplete.
  • Inventory report is illegible.

 
Savings and Checking Accounts
Saving and checking accounts are abandoned if there is no positive owner contact for three years. You must pay interest on interest-bearing accounts until you remit the property to the state, unless you are permitted to stop interest by contract.
 
The dramatic increase in mergers and upgraded computer systems in the banking industry may cause problems with aging and reporting unclaimed savings and checking accounts.  Below are common problems discovered during audits:
 
  • A computer conversion caused the date used for aging accounts to be refreshed incorrectly.
  • Merged branches from another financial institution had a conversion date problem. 
  • The unclaimed property selection program did not select accounts older than the current reporting requirement. For example, the program asks for accounts with the last activity between July 1, 2005 and June 30, 2006 for the 2009 report. Accounts with activity dates prior to July 1, 2005, do not appear on the report.
  • The financial institution removed old information from the computer system, including erasing outdated messages and adding new fields. The changes updated the customer contact date even though no positive contact occurred.
Human error can undo the best unclaimed property tracking system and inactive account procedures.
 
Common problems include:
 
  • A branch manager incorrectly assumes that non-returned mail is always positive owner contact and believed that only accounts with bad addresses are reported. Indirect evidence of owner contact, such as a statement mailed but not returned by the post office, is not positive owner contact.  Oregon does accept unreturned maturity rollover notices as evidence of contact for automatically renewing time certificates.
  • Branch employees continued to update inactive owner address fields with "Bad Address," contrary to the institution's new computer system procedures.   The employee entries updated the positive owner contact date incorrectly.



 
Time Certificates of Deposit
The primary types of time certificates of deposit (TCDs) are:
 
1. Automatically Renewing Time Certificates
Send renewal notices by first class mail.  For auto-renewing TCD's, we will accept non-return of the renewal notice as evidence of positive owner contact. If the renewal notice comes back undeliverable and there is no other contact or related account activity with the owner, these certificates are abandoned three years after the expiration of the most recently approved rollover. 
 
2. Matured Time Certificates of Deposit  (non-renewing)
If there is no positive contact with the owner or related account activity, non-renewing certificates are abandoned three years after maturity.

Reporting Time Certificates

Automatically renewing TCDs may become abandoned and reportable prior to the next rollover date. If the bank forfeits interest or charges a penalty for closing the TCD before rollover, you need to postpone reporting and report the TCD at its next maturity. This procedure may require the bank to file several reports throughout the year as "abandoned" TCDs mature. Most financial institutions waive forfeitures and penalties when reporting abandoned TCDs to avoid reporting several times each year. 

 
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