Financial institutions, publicly-traded companies and utility providers will face increased scrutiny for compliance with the law in surrendering idle resources under their custody.
The authority mandated to receive cash and securities whose owners cannot be traced says it is widening the scope to ascertain whether firms are making full disclosures.
The Unclaimed Financial Assets Authority (Ufaa), which has been auditing financial institutions since 2016, says it will sign more partnership agreements to widen its capacity to scrutinise the books of financial institutions.
Ufaa chief executive Kellen Kariuki said the agency has hired external auditors and will also work with the office of the Auditor-General to audit firms in the public sector.
“We are building capacity on audits. We have been auditing financial institutions all along, but the scope is very wide.
"We are working with the Auditor-General to support us in auditing firms, especially in the public sector,” Ms Kariuki said in an interview with the Nation.
“We are also working with private auditors. Recently, we procured private auditors to support us in this process.”
The audits are aimed at catching financial firms that are under-declaring dormant resources whose legal owners have not been found within the stipulated period, or companies which are not reporting and surrendering such assets to the State.
Unclaimed assets include bank accounts that have been dormant for more than five years, banker’s cheques not cashed for two years and the contents of safe deposit boxes that have been unclaimed for more than two years.
Others are life insurance policies unclaimed for more than two years and shares whose dividends have not been collected for more than three years.
Banks, insurers, listed firms, saccos, pension schemes and utilities such as mobile money firms are, under the Unclaimed Financial Assets Act 2011, required to surrender such resources to the authority by November 1 of every year from the time they publish their periodic financial performance reports.
Companies which knowingly fail to declare such assets under their custody are liable to a penalty of between Sh7,000 and Sh50,000 for each day the report is withheld.
Ufaa said that last year it signed a memorandum of understanding with the Capital Markets Authority and the Insurance Regulatory Authority to ensure financial services firms include the value of idle assets in their periodic financial reports.
The authority also has a capacity building partnership with the Institute of Certified Public Accountants of Kenya on auditing of unclaimed assets, while a deal with the Integrated Population Registration System of the Interior ministry was meant to re-unite the assets with the legal owners or beneficiaries.
Sh31.35 billion value
The value of unclaimed assets in the Trust Fund account at the Central Bank of Kenya since the authority started full operations early in 2014 stood at Sh31.35 billion in early November.
The agency has, however, been struggling to re-unite the cash or securities with their rightful owners or beneficiaries, a possible pointer to weaknesses in claims processing and settlement channels.
Only about Sh60 million, or a paltry 0.19 per cent, of the value surrendered to the State has been paid out to claimants.
Payments must be supported by documents, as stipulated under the Unclaimed Financial Assets Act 2011 and attendant regulations gazetted early last year.
“We are not happy with the claim rate. We want people to come over and we are working on a more comprehensive devolution strategy. We want to see how we can work with Huduma Centres, e-citizen and Posta to reach out to more people,” Ms Kariuki said.
“We do not want to see somebody travelling all the way from Turkana to Nairobi to claim their money.”
She said the authority — whose offices are in Nairobi only — is searching for a mobile application to facilitate remote processing of claims. The platform is expected to go live mid-next year.