NASSAU, The Bahamas – The Government tabled new legislation today that will govern the treatment of dormant accounts in the financial sector. The amendments will set the timeframe for people to claim and access funds in their dormant accounts at 17 years, and establish provisions for the use of funds after those claims are extinguished.

The Government also signaled plans to use the funds to invest in the Disaster Relief Fund discussed during the budget debate. This demonstrates a seriousness about fiscal sustainability and economic resilience in the face of climate change and the devastation of natural disasters.

Legislation on dormant accounts has not changed since 1989 even though the need to update and modernize has been well established. The draft legislation was initially circulated for consultation in 2014 in response to weaknesses and challenges identified by the banking sector identified by the commercial banks, offshore banks and the Central Bank.

“Instead of allowing the necessary changes to linger unaddressed, the Government is enacting the badly needed reforms. It has also developed a responsible and forward-looking policy on the use of these funds. To suggest something nefarious is absurd,” said Dr Hubert Minnis, Prime Minister and Acting Minister of Finance. 

The primary objectives are to improve the framework for managing dormant accounts, establish fair rules for determining when claims to dormant accounts are extinguished, and to create provisions for the transfer and use of extinguished claims for the benefit of all Bahamians.

“Bahamians need to be reminded that a clear process is still in place to access funds from their dormant accounts. The amendments do not prevent anyone from keeping their money if they claim ownership within 17 years. That is a considerable amount of time for people to use the standard channels already regulated by the law to check up on their money and claim their rights,” said Prime Minister Minnis.  

The proposed amendments only kick in when accounts have gone unused for 17-years and the account holders are nowhere to be found. Before that, commercial banks and the Central Bank are still responsibility for holding and administering those funds until they are claimed by the depositors or their estate. Strict regulation includes rules for banks to make concerted efforts to contact account holders.

The amendments favorably compare to other jurisdictions reviewed by the government, including Australia, Barbados, Canada, Ireland, the United Kingdom, Switzerland and the United States, which use seven years as their standard for when funds are reverted to the government.

As of end-June 2018, there were 42,452 dormant accounts valued at $88.7 million (Bahamian Dollar equivalent), of which $41.3 million had been held in dormant status for 17 years or more. A substantial amount of the total funds - nearly $70 million – belong to offshore foreign currency accounts. While 81.3% are Bahamian dollar accounts, they only represent 21.3% of the total value. The majority of them are valued at $500 or less.

When the law is enacted, the Government would immediately come into receipt of $41.3 million from those long-standing dormant accounts. Funds would revert to the Consolidated Fund. However, rather than using the funds from the extinguished dormant accounts to meet its normal budgetary operations, the Government proposes to invest the funds in the planned Disaster Relief Fund.

 “Any responsible government must plan accordingly and when presented with an opportunity such as this, it must resist the temptation for short term measures, and instead do the right thing with this windfall, and for the right reasons,” said Prime Minister Minnis.    

“Bahamians can rest assured that the enabling framework for this Fund will come to Parliament and be enshrined in legislation. No matter who sits in the seat of governance in the future, this should not devolve into some sort of slush fund to be used irresponsibly for narrow political ends; at least not without the public being fully aware.,” continued Prime Minister Minnis.