Nigeria: CBN Introduces Policy to Manage Dormant Account Balances: What You Need to Know

Last week, the Central Bank of Nigeria (CBN) unveiled a significant policy initiative known as the “Unclaimed Balances Trust Fund (UBTF) Pool Account,” which will transfer balances from dormant accounts to the central bank. This move follows a previous similar attempt by the federal government in 2021, which faced substantial public resistance.

The concept of managing dormant assets was initially proposed in a circular dated October 7, 2015. This proposal aimed to address abuses related to dormant and inactive accounts and establish operational standards. The Banks and Other Financial Institutions Act, 2020 (BOFIA 2020), empowered the CBN to take on this responsibility. After eight years, this idea was revisited in an April 6 circular by the CBN, underscoring the need for action.

The new policy echoes a 2020 initiative by former President Muhammadu Buhari, who signed the Finance Act 2020 into law. This Act introduced the Unclaimed Funds Trust Fund, mandating that any unclaimed dividends or funds in dormant accounts, which have been inactive for six years, be transferred to the Trust Fund.

Concerns and Government Response

There are concerns that the government might misuse unclaimed dividends and dormant account funds, which are considered private property. The government has assured that the funds will be treated as a special debt owed to the rightful owners and will be available for reclamation along with any accrued interest.

Toni Kan, a PR expert with experience in the UK Social Investment sector, explained that such measures are not unique to Nigeria. He referenced the UK’s Dormant Assets Scheme, managed by Reclaim Fund Ltd (RFL) since 2011, which has allocated billions to charitable causes.

CBN’s Objectives and Plans

According to a circular dated July 19, 2024, the CBN’s UBTF Pool Account aims to:

1. Identify dormant accounts and unclaimed balances for potential reunion with their owners.
2. Hold the funds in trust for the owners.
3. Standardize the management of dormant accounts and unclaimed balances.
4. Establish a procedure for reclaiming warehoused funds.

Dormant accounts are defined as those inactive for a minimum of ten years. The CBN will manage these funds by maintaining the UBTF Pool Account, keeping records of beneficiaries, investing the funds in Nigerian treasury bills and other approved securities, and refunding principal and interest to beneficiaries within ten working days of a request.

Public Disclosure and Transparency

The CBN will annually publish the names of owners of unclaimed balances that are transferred to the UBTF Pool Account. It will also provide details on the procedure for reclaiming these funds and invite the public to verify outstanding balances through notices in national newspapers.

CBN’s Rationale

CBN Governor, at the 296th Monetary Policy Committee (MPC) meeting, highlighted the vulnerability of dormant accounts to fraudulent activities. He noted that these accounts are often targeted by fraudsters, posing risks to both the financial system and individual account holders.

The CBN’s approach mirrors the RFL’s model but is tailored to the Nigerian context, aiming to safeguard dormant assets and enhance financial integrity.

The CBN’s new policy reflects a commitment to improving financial management and transparency. By addressing dormant accounts and unclaimed balances, the central bank aims to prevent fraud, streamline asset management, and ensure that funds are available for rightful owners or beneficial causes.