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Using escheated funds for infrastructural development in Nigeria


There are literally billions of unclaimed assets in Nigeria. Most unclaimed assets are intangible assets like money in banks, brokerage accounts and dividends accruing from shares. Bank accounts or assets can be considered “unclaimed “once there has been no “activity” for a period of years. It is no news that so many individuals over the years have abandoned their accounts leaving only small amounts of monies in such accounts.

A summation of all the abandoned money in banks will run into hundreds of billions of Naira. Also with the advent of the BVN, billions of Naira were left unclaimed in banks because their owners failed to register BVN or link to existing ones where appropriate.


There have also been incidents of unclaimed dividends within the Country. Nigeria has an avalanche of unclaimed dividends, larger than the country’s combined capital expenditure to health and education sectors in its 2020 budget. The Security and Exchange Commission (SEC) sometime in December, 2019 outlined a number of initiatives to resolve the issue of unclaimed dividends in the capital market. However, the lack of institutional and legal framework keep on hampering the efforts of the Stakeholders to arrest the situation relating to unclaimed dividends.

It is also against the incidents of unclaimed funds that the Central Bank of Nigeria came up with a Guideline on the management of Dormant Accounts and other unclaimed funds by banks and other financial institutions in Nigeria in 2015. The essence of the Guidelines is to curb possible abuses in the operation of dormant and inactive accounts, set operational standards for banks and other Financial Institutions in line with best practices. In the said Guideline, a bank account is classified as dormant if there has been no Customer or deposit-initiated transactions in it for a period of one (1) year after the last customer or deposited-initiated transaction.

Paragraph 5a of the Guideline states that where any unclaimed funds remain outstanding in the books of the bank beyond six (6) months, the bank shall pool such funds into a suspense account. The bank shall warehouse the funds until the beneficiary shows up or the corresponding bank deposits its account.

The provision above is that in the event that the beneficiary never turns up, the money will keep being in the suspense account and may never be put to any useful purpose except interests which may accrue on the suspense account doubtfully. The factual situation on ground is that a lot of these dormant accounts has not been operated in more than 20 years. Lack of legal regulatory framework to deal with the unclaimed assets especially funds abandoned and trapped in commercial banks will continue to put Nigeria behind so many countries in the world that have developed the legal framework to deal with these assets. Perhaps, one effective way of dealing with unclaimed funds is through escheatment, originally a common law doctrine in England.


Escheatment is a government right to property including funds unclaimed for any reason after a period of time. Escheat rights can be granted by a court of law or given following a standard time period. Once the assets have been taken over by the Government, the Owner can still access it by filing a claim. The process of escheatment has been a part of the Feudal/legal system in England. Though the escheat laws which were common laws under the English system had to do with real property, the United States has over the years developed a more robust regulatory framework for the operation of the escheatment process.

In the United States, the Security and Exchange Commission issued a regulation on escheatment process which requires all states to report when personal property has been abandoned or unclaimed after a period of time specified by state law. Before an account can be considered abandoned and unclaimed, the bank must make diligent effort to try to locate the account owner. In the event that the account owner is not found, the bank must report the account to the state where the account is held. The state then claims the account through a process called “escheatment”. The state then treats the proceeds as state funds.


The treatment of the escheated proceeds as state funds usually aids the government’s developmental projects. In recent years in the U.S, unclaimed property has grown into a major revenue stream for many states. According to National Association of Unclaimed Property Administrations, states hold about $42 Billion and studies show the vast majority is in cash, mostly from accounts worth less than $100. The City of California alone has about $8 Billion in unclaimed assets. Hungry for revenue, California and other states are devising ways to be more aggressive in taking over these funds for government use.

The bill in the House of Representatives sponsored by Hon. Benjamin Kalu to establish unclaimed dividend trust fund provides that all dividends by any Shareholder after 24 months of declaration by a public company and venture capital meant for investment shall be categorized as unclaimed dividends. Clause 17 of the said bill provides that the funds shall guarantee loans to small and medium scale enterprises. The time to create a bill for the treatment of unclaimed bank accounts has come in view of the dwindling Government revenues. The good news is that the money doesn’t just go into the government’s coffers for them to do as they please.

It is noteworthy that the process of escheatment vests only equitable interest in the Government since the Owner of the account may still turn up. Government in control of the escheated funds could embark on projects with a high return on investments. Escheated funds can go a long way in our infrastructural deficit in Nigeria. As banks and other financial Institution Act regulates commercial banks, it is suggested that escheat laws will be an Act of the National Assembly.

Mr. Tochukwu Onyiuke is a Partner is the firm of Accendolaw Barristers & Solicitors Lagos


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