Unclaimed Financial Assets Authority (UFAA) is lobbying for a change in the law to allow it to have a slice of interests paid on unclaimed money. 

The move by the agency is aimed at making good use of the yearly collected idle financial assets that are currently valued in excess of Sh54 billion.

It argues that this will help it meet its financial obligations and reduce the financial burden to the exchequer since it incurs huge costs during the reunification of assets with the rightful owners.

“As we hold this money, the law provides that we invest them like any other fund but does not allow payment of interests. There is a cost in the reunification of assets and that investment income, through approval of the National Treasury, can help offset some of the cost to the authority,” said UFAA Chief executive John Mwangi.

The agency often hires private firms to conduct audit years and identify institutions that are absconding on remitting unclaimed assets as required by the UFAA Act 2015. 

Bank accounts

Unclaimed assets include shares and dividends abandoned for three years, cheques or drafts unclaimed for more than two years, savings untouched for five years, and money in bank accounts that have been dormant for five years.

Any entity that fails to submit unclaimed assets is often penalised 25 per cent of the assets held by UFAA. This is in addition to levies of between Sh7,000 and Sh50,000 for each day that the assets stay before being surrendered to the authority.

Unclaimed assets are usually invested in Treasury bills at a low-interest rate, giving the government access to cheap funds when owners abscond initiating claims. Currently, UFAA has invested through the Central bank of Kenya (CBK) in all the unclaimed assets in the form of cash amounting to Sh24 billion since 2016.

The amount has been collected from over 1,000 institutions mainly comprising insurance companies, banks, pension schemes, law firms, mobile phone money wallets and Saccos, among others.

About Sh2 billion worth of unclaimed assets come from mobile money, according to Mwangi. The agency has only made payments of assets valued at about Sh1.5 million out of the Sh54 billion, signalling the low rate of claims.

This challenge rests on the unfriendly claim process exacerbated by a tedious system built with so many firewalls right from the initial stages even where small valued assets are involved, forcing claimants to rescind.

“The challenge is the nature of the assets and the claimant process is vigorous. We are pushing national policy to have this issue looked at,” added Mwangi.

Need for numerous documents to lodge a claim, including compulsory certification by lawyers puts the first hurdle due to costly financial involvement, especially if it involves a small-valued amount.

Those making their own personal claims are required with ID, KRA PIN certificate, form 4A (duly commissioned original owner claim form), Form 5 (duly commissioned indemnity agreement), and a holder’s official letter obtained from the entity that submitted the unclaimed asset.

Verification documents

The agency is also struggling with understaffing, having only 33 staff to serve its nine departments which are handling a huge volume of verification documents involving claimants and numerous banks that process billions of shillings.

The single highest valued asset currently held by UFAA is Sh30 million from defunct State agencies. Others are deceased cases which are in excess of Sh1.9 billion cumulatively. 

The agency partnered with Huduma Centre in March to help in rolling out unclaimed financial assets and ease pressure on its lean workforce.