32 Hoosier Banker November 2015 COMPLIANCE CONNECTION About Compliance Connection In order to address compliance inquiries from members, IBA provides Compliance Connection, an assistance program offering advice on Indianaspecific compliance questions. If the matter requires legal advice, IBA Compliance Connection will refer the bank to a law firm. Acting as IBA’s compliance counsel is Brett J. Ashton, partner with Krieg DeVault LLP, Indianapolis, and chair of the firm’s financial institutions practice group. Submit Compliance Connection questions to IBA’s Amber R. Van Til at avantil@indianabankers. org or Josh Myers at jmyers@indianabankers.org. Question: How long can an account be considered dormant before its contents will escheat to the state? Is there a different standard based on what kind of account? Answer: Escheatment is governed by Indiana’s Unclaimed Property Act (the “Act”).1 While an account may be considered dormant, usually there will be a significant delay between dormancy and the point at which the funds and/or contents in an account may have to be handed over to the state, during which banks may still decide to realize fee income. For example, for demand deposit accounts, generally when an account becomes dormant, banks may stop issuing bank statements, charge an applicable maintenance fee, and/or require some contact or act to reactivate an account, as provided for in the bank’s agreement with its customer. The Act provides, “Property that is held, issued, or owed in the ordinary course of a holder’s business is presumed abandoned if the owner or apparent owner has not communicated in writing with the holder concerning the property or has not otherwise given an indication of interest in the property.”2 While there are obvious indicia of what constitutes an “indication of interest” under the Act, such as direct customer communication, interest can also include “any activity by the owner concerning another demand, savings, or matured time deposit account or other account that the owner has with a financial institution, including any activity by the owner that results in an increase or decrease in the amount of any other account; or any other relationship with the financial institution, including the payment of any amounts due on a loan if the mailing address for the owner contained in the financial institution’s books and records is the same for both an inactive account and for a related account.”3 Banks should be cautious to ensure they review their customer relationships with dormant accountholders in all areas of the bank before determining an account is abandoned. The Act provides varying timeframes for triggering escheatment based on the property involved. In the case of a demand, savings or matured deposit, Ind. Code 32-34-1-20(c) (12) provides that the period is either three years after maturity or three years after the date of the last indication by the owner of interest in the property, whichever is earlier. This information is provided for general education purposes and is not intended to be legal advice. Please consult legal counsel for specific guidance as to how this information applies to your institution’s circumstances or situation. Escheatment of checks varies based on the type of instrument. In the case of checks, the period can range from 3 years for a consumer credit, to 7 years after issuance for money orders, to as long as 15 years after issuance for a traveler’s check.4 Once the funds have been turned over to the state, the bank’s obligations end, and the state will be responsible for publishing reports of unclaimed property to the general public and holding such unclaimed property for the prescribed period of time.5 t From the Board room Thomas N. Nugent has been appointed to the board of directors of The First National Bank of Odon. An area agribusinessman, he serves as chairman of the board of the White River Co-op, as trustee of the North Daviess School board and as a volunteer fireman. Nugent previously was a member of the Elmore Township advisory board and Daviess County Community Foundation board. He is a graduate of Purdue University. William J. Conley has been appointed to the board of directors of Home National Bank, Thorntown. He is president and chief executive officer of Boone REMC and serves on the board of the Boone County Economic Development Corp. Conley earned a bachelor’s degree from the University of Evansville and an MBA from Butler University. t Ind. Code § 32-34 et. seq. 2 Ind. Code § 32-34-1-20(c). 3 Ind. Code § 32-34-1-20(a)(2)(E). 4 Ind. Code § 32-34-1-20(c)(1) and (2). 5 Ind. Code § 32-34-1-36.
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