The Central Bank of the UAE issued new rules for dormant bank accounts on Wednesday, requiring banks to transfer funds to the regulator after five years of no activity and allow customers to access balances at any time.
The “Dormant Accounts Regulation” sets out a framework for the control and protection of dormant funds in banks, according to the central bank circular.
“The regulation introduced will safeguard dormant accounts and will make certain that consumers are able to access them at any time,” said Mubarak Rashed Al Mansoori, governor of the central bank. “Consumer protection remains a focus of our overarching strategy and we are committed to continuously enhancing our regulative provisions to safeguard consumer rights.”
The central bank's new rules updated measures on dormant accounts set out in an April 2018 circular. The previous instruction stated that a personal savings account is considered dormant if there have been no transactions for six years. That has now been reduced to three years, said Divya Gambhir, a partner in banking and finance at law firm Al Tamimi.
The 2018 regulation said that if an account is dormant for seven years and the balance exceeds Dh3,000, banks are required to transfer funds to the “Unclaimed Balances Account” at the central bank. The updated regulation decreases that period to five years and removes the Dh3,000 condition, Ms Gambhir said.
It also clarified that unclaimed dividends are subject to oversight by the Securities and Commodities Authority "and are no more under the purview of the UAE Central Bank", she said.
"The regulations provide comprehensive procedural details and have provided better clarity to ensure protection of customers’ funds at either the relevant bank level or thereafter at the UAE Central Bank level," Ms Gambhir added.
An account is only considered dormant if the customer has no other active accounts with the bank and the customer’s current address is unknown. Customers have the right to make a claim to recover funds held in a dormant account by approaching the lender. Banks are required to settle recovery claims within one month unless there is a valid reason for delay.
Funds “will always remain available to be reclaimed by the dormant customer, or his or her legal heirs, at any time through the customer bank”, the central bank circular said. This is “regardless of the time period” the account was dormant.
However, customers should be aware that funds transferred to the central bank will no longer earn any interest and the central bank will not be liable for any extra payments on transferred funds.
