Firms cede Sh3.9bn unclaimed assets under penalties waiver


Holders of unclaimed financial assets including companies and State corporations have surrendered a record Sh3.9 billion in idle assets. FILE PHOTO | ILLUSTRATION

Holders of unclaimed financial assets including companies and State corporations have surrendered a record Sh3.9 billion in idle assets so far in the current fiscal year to the Unclaimed Financial Assets Authority (Ufaa) following a moratorium on penalties.

The one-year waiver of penalties, which runs to the end of June, was introduced via the 2022 Finance Act, with the authority hoping that this voluntary disclosure plan would encourage surrenders by companies that were otherwise put off by the prospect of stiff penalties and interest charges.

Additional changes also saw applicable penalties and interest capped to the value of the asset while Ufaa gained powers to recover penalties as civil debts.

The rise of surrenders from the moratorium lifted the value of unclaimed assets, also known as Ufaa trust fund, to Sh57.5 billion as of December 2022 from Sh48.4 billion at the end of June last year.

The assets include Sh27.3 billion in cash, of which Sh855.7 million is dollar-denominated, 1.2 billion units of shares valued at Sh30.17 billion, 9.1 million units of trust funds and 3,661 safe deposit boxes.

Ufaa has further reported the reunification of Sh2 billion in cash and 39.7 million units of shares to rightful owners.

The money is largely held by insurance companies, banks, pension schemes, law firms, mobile phone money wallets and saccos, among others.

Ufaa serves the primary role of receiving unclaimed financial assets from holders and safeguards and reunites them with their rightful owners.

Billionaire business owners, former powerful government officials and prominent politicians are on the long log of individuals whose shares have been surrendered to the Treasury.

Most of the unclaimed assets are attributed to the failure of the deceased to inform beneficiaries of the property dying intestate.

A baseline survey commissioned in 2018 estimated that Sh241 billion in unclaimed financial assets was still unreported to Ufaa by public agencies and private firms.

The report also showed that approximately 477,112 public and private entities hold these assets in their books.

Holders are obligated to make all reasonable efforts to locate owners and to notify them of the same.

Having exhausted options to track down the owner, the holder is required to make a report concerning the assets to Ufaa with a deadline of November 1 of each year for idle assets disclosures.

By taking advantage of the moratorium, holders of unclaimed financial assets have been avoiding hefty fines that go as high as 25 percent of the value of the unclaimed financial asset, and specific daily penalties to company managers.

The authority has partnered with regulatory bodies including the Central Bank of Kenya and the Retirement Benefits Authority on reporting and surrender framework for private and public sector entities.

The assets recovery agency implemented the Unclaimed Financial Assets Management System to facilitate online filing and tracking of claims and automated backend processing.

Claims processing and payment policies have been reviewed to accommodate a 30-day payment turnaround time.

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