Abu Dhabi: The Central Bank of the United Arab Emirates has announced the development and expansion of a system regulating dormant accounts and unclaimed funds, extending its scope to include all licensed financial institutions, including banks, finance companies, exchange houses and insurance firms.
In a circular, the Central Bank said the updated system obliges institutions to make reasonable efforts to contact eligible beneficiaries, while documenting all communication attempts. If beneficiaries cannot be identified or reached, the funds must be transferred to the Central Bank for safekeeping until claimed.
Framework for financial institutions
The circular outlines a comprehensive framework aimed at regulating and protecting dormant accounts and unclaimed balances, while enabling customers or their legal heirs to recover funds.
A “dormant customer” is defined as any individual or entity that holds accounts or balances with a licensed financial institution or an insurance policy, where no activity has occurred, no valid address is available, and no legal disputes or regulatory claims are linked to the account.
The Central Bank also clarified that unclaimed funds include instruments such as bank cheques, transfers and cash payment orders that remain unclaimed for one year despite attempts to contact the beneficiary. It also covers unclaimed dividends and trust fund contents where charges remain unpaid for more than three years without communication from the customer.
Sector-specific definitions
For exchange houses, funds awaiting collection that remain unclaimed for one year and where the customer cannot be located are considered dormant.
In the insurance sector, dormancy is assessed at the customer level. If a policy matures and remains unclaimed for more than three years, with no other active policies held by the same client, the amount is classified as unclaimed.
Mandatory procedures
The updated system sets clear procedures that institutions must follow when accounts become dormant. These include attempting to contact customers through written, electronic or recorded communication channels to reactivate accounts or settle balances.
Institutions must also notify issuers of unclaimed cheques, remittances or payment orders that have not been collected, and send final notices to customers with unclaimed safe deposit boxes at their last known address.
Under the new rules, financial institutions must wait three months for a response from customers or beneficiaries. If no response is received, funds must then be transferred to a central “Record of Dormant Accounts and Unclaimed Funds”.
Institutions are also required to submit periodic reports to the Central Bank detailing all accounts and balances transferred during each quarter.
Claims process
The circular stipulates that customers or their legal heirs seeking to recover dormant funds must contact the financial institution directly or through a legal representative and submit a claim supported by official documents proving identity and entitlement.
The Central Bank said the primary objective of the system is to create a structured mechanism for managing dormant accounts and unclaimed funds while ensuring that customers and heirs can reclaim their assets in a clear and regulated manner.