Banks will be compelled to keep updated information on next of kin of account holders if MPs approve proposed amendments to the Banking Act.
Kiambu MP Jude Njomo, the architect of the interest rate capping law, wants banks to maintain a register containing particulars of the next of kin of all customers operating savings, current and fixed deposit accounts.
The next of kin rule will ensure easy access to cash upon death of an account holder and conclusion of administration and succession processes in court.
About Sh5.7 billion had by June last year been transferred from bank accounts to the Unclaimed Financial Assets Authority (UFAA) because their owners could not be traced.
Mr Njomo has sponsored amendments to the Finance Bill, 2018 seeking to change Section 44B of the Banking Act to introduce a requirement that banks keep updated information on next of kin of account holders.
“Every bank or financial institution licensed under this Act shall, in respect of each savings current or fixed deposit account operated at the institution, maintain a register containing particulars of the next of kin of all customers operating such accounts and shall update this register on an annual basis,” the new section 44B (1) reads in part.
“A bank or financial institution that contravenes subsection (1) commits an offence and shall be liable for each account in which there is default to a fine not exceeding Sh1 million, in every year, or part of the year during which the default persists,” the proposed amendment states.
Unclaimed assets from bank accounts accounted for 67 per cent of the Sh8.5bn held by UFAA from items like pension, sacco savings and insurance policies.
“The amendment creates an offence for a bank which fails to keep particulars of next of kin so that families are able to access funds even upon the death of a bread winner,” he said.