Keane's Unclaimed Property Blog

Federal Unclaimed Property Legislation Introduced:
State Attorney Generals May Initiate Audits of Banks

On December 21, 2017, a group of Democratic Senators introduced United States Senate Bill 2272, also known as “The Accountability for Wall Street Executives Act.” The group consisted of Dianne Feinstein of California as sponsor, along with co-sponsors Kamala D. Harris of California, Elizabeth Warren of Massachusetts, and Richard Blumenthal of Connecticut.

Under the bill, state attorney generals are authorized to issue subpoenas to investigate national banks suspected of violating state unclaimed property laws.  Such visitorial powers over national banks were previously relegated solely to federal authorities, as confirmed by the United States Supreme Court in Cuomo v. Clearing House Ass’n, L.L.C., 557 U.S. 519 (2009).

Proposed Changes to Federal Law

The bill proposes to amend the National Banking Act to state that:

  1. Lawfully authorized state auditors and examiners may, at reasonable times and upon reasonable notice to a bank, review its records solely to ensure compliance with applicable State unclaimed property or escheat laws upon reasonable cause to believe that the bank has failed to comply with such laws; and
  2. An attorney general (or other chief law enforcement officer) of a State may issue subpoenas or administer oversight and examination to national banks or officers of national banks based upon reasonable cause to believe that the national bank or an officer of a national bank has failed to comply with applicable State laws.

Current law does not empower attorneys general to issue subpoenas or administer oversight around examinations ensuring compliance with state unclaimed property laws.

Next Steps for  US S 2272

Though the bill is not likely to pass within the currently all-Republican Congress, this increased regulatory oversight by the state, designed to allow  states to ferret out suspected misconduct by  national banks, illustrates the heightened scrutiny by the states over unclaimed property laws and underscores the need for holder compliance with such laws.

Unclaimed Property Best Practices for Banks

Given the potential for further scrutiny, banks and financial institutions of all sizes are encouraged to take proactive measures to ensure they are compliant with all applicable state unclaimed property laws. This includes:

  • Reviewing existing policies and procedures for preparing annual unclaimed property reports
  • Conducting a self-audit or in-depth risk assessment to identify potential gaps in compliance
  • Re-examining existing policies for locating owners whose accounts are at risk of escheatment
  • Mailing courtesy or inactivity letters to notify owners whose accounts are at risk of escheatment
  • Analyzing all current systems to ensure all owner activity across accounts and products types is properly tracked and maintained

Keane will continue to monitor the activity of this bill throughout the Federal Legislature and provide regular updates here on our blog.

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