Financial industry alarmed by new Bill on unclaimed assets If you migrated from Kenya and left a fixed deposit account in a bank you have not transacted for a long time — dividends you have not claimed for years or a life insurance policy that matured while you were way — move quickly and claim your money before a new law now pending in Parliament catches up with you.

Parliament is about to pass a Bill that will create a new government agency, the Unclaimed Assets Authority, with powers to take over all unclaimed assets sitting in dormant accounts with either commercial banks or insurance companies or unpaid dividends sitting on the books of quoted companies.

If you migrated overseas a long time ago and left behind a deposit with a utility company such as Kenya Power or Nairobi Water Company Ltd, the monies will be deemed as abandoned assets under the new law and handed over to the new government agency.

Monies kept for long periods in safe deposits boxes with commercial banks will also be declared abandoned and remitted to the new government agency.

The list of assets to be treated as unclaimed assets and handed over to the government agency include mature life insurance policies, travellers cheques, money orders, and bankers cheques which have not been cashed for long periods.

Perhaps the most controversial aspect of the Unclaimed Assets Bill — a private members motion by Laisamis MP Joseph Lekuton — is the proposal to grant the proposed new government agency powers to sell the abandoned assets at public auction to the highest bidder after only three years.

The implication of this is that an owner or beneficiary whose assets are handed over to the proposed authority shall not be entitled to interest or dividends on the assets once they have been liquidated.

Banks and insurance companies are also alarmed at the intention to make the proposed law retroactive.

If it is passed, the new law would apply even to dormant bank accounts and matured life policies that existed before the new law comes into effect.

The Unclaimed Assets Bill was tabled for first reading on May 10, 2011.

On Thursday, the leader of government business and vice-president Kalonzo Musyoka listed it among the urgent Bills to be processed during the current session of Parliament.

This action has sent shock waves through board rooms of big banks and insurance companies who are uncomfortable with the prospect of having to hand over unclaimed assets to an authority under the control of political appointees.

Their point is that the Bill as as presently crafted may force them to hand over assets to the new government agency, yet they would remain liable to any owners who emerge later to lay claim to the assets.

Under the Limitation of Actions Act, assets can only be treated as abandoned after a period of seven years. Banks and insurance companies maintain that it is a bad Bill because it seeks to circumvent the law of contract by breaking the six-year limitation.

Industry sources have told the Sunday Nation that players are planning meetings to lobby for amendments to the Bill to introduce a longer period after which unclaimed assets can be declared abandoned.

They will also be seeking an amendment to state clearly that once assets have been handed over to the authority, the owners cannot claim anything from them.

Kenya has not had a comprehensive law governing the handling and disposition of unclaimed assets.

Indeed, the country does not have so much as a rudimentary system of monitoring unclaimed assets sitting in dormant bank accounts or dividends that remain unpaid for years.

In 2007, then minister for Finance Amos Kimunya amended the CMA Act by providing that any dividend unclaimed for a period of seven years must be transfered to the Investors Compensation Fund. However, the compensation fund is yet to take root.

Initially, it was estimated that the value of unclaimed assets sitting within the financial system, the corporate sector and even utilities was in the region of Sh200 billion. But an empirical study by a government task force on unclaimed assets in 2007 came up with a much lower figure.