Big companies risk auctioning over 240 billion shillings of unclaimed assets


Economy

Big companies risk auctioning over 240 billion shillings of unclaimed assets


Richard Kiplagat, President of the Unclaimed Financial Assets Authority (UFAA). PICTURES | LUCY WANJIRU | NMG

The state has given the unclaimed assets agency more powers, including seizing assets from non-compliant companies, as part of new efforts to collect about 241 billion shillings held by public and private entities.

The state amended the law to empower the Unclaimed Financial Assets Authority (Ufaa) to take legal action and obtain orders for full recovery of accrued interest and penalties on unreturned assets.

According to the law, unused assets are supposed to be declared and handed over to Ufaa no later than November 1 of each year. Holders do not file any declarations, if any.

The state amended Section 33 of the Unclaimed Financial Assets Act 2011, which imposes a fine of 7,000 to 50,000 shillings for each day an unused asset report is withheld or the duty is not not executed.

Holders also pay a fine of 25% of the value of the asset when they fail to hand it over to the authority.

“Penalties payable under subsections (1), (4) and (5) of this section shall – (a) be summarily recoverable as civil debts and (b) in the aggregate, not exceed the value of the assets judged to be declared and delivered”, specifies the 2022 finance law which entered into force last Friday.

Unclaimed assets include money in bank accounts that have been inactive for more than five years, uncashed bank checks and the contents of safe deposit boxes that have not been claimed for more than two years.

Unclaimed assets have reached 54.8 billion shillings, turning the agency into another financial black hole that aggressively collects billions of shillings each year but fails to find its owners.

Kenyans remain disinterested in seeking funds legally belonging to them or their families despite the difficult economic conditions compounded by the soaring cost of living.

Ufaa revealed in January that it received only 2,315 claims between October and December last year, worth 270 million shillings.

The value of idle assets fell from 50.9 billion shillings in June 2021 to 54.8 billion shillings in December.

The money is largely held by insurance companies, banks, pension plans, law firms, utility companies, cell phone money wallets, and Saccos, among others.

The majority of funds are held in one billion shares worth 30 billion shillings and 9.8 million unit trust portfolios worth 55 million shillings.

The Authority revealed in January that it also holds 23.1 billion shillings in cash and 120 million shillings in foreign currency which it can invest in government securities, meaning the government is the biggest inactive money beneficiary.

Returned safes believed to contain jewellery, deeds, stock certificates and treasury bills rose to 2,949 units from 2,873 in June.

A benchmark survey commissioned in 2018 estimated that around 477,112 public and private entities hold these assets on their books.

The state has now changed the law to empower the Cabinet Secretary to waive penalties and interest for those who wish to return unused money.

Section 33 of the Act establishes a voluntary disclosure program for unclaimed financial assets.

This will grant relief from penalties and interest on unclaimed assets where the holder discloses, declares or surrenders the assets to the authority.

“A holder of unclaimed assets may disclose, declare and surrender the assets to the Authority for the purpose of obtaining relief from penalties and interest on such assets,” the finance law states.

“This section applies to assets held until June 30, 2022.”

The Treasury says the punitive fines have discouraged holders of idle assets from declaring and turning over idle assets.

The value of idle assets fell from 50.9 billion shillings in June 2021 to 54.8 billion shillings in December.

The money is largely held by insurance companies, banks, pension plans, law firms, utility companies, cell phone money wallets, and Saccos, among others.

The majority of funds are held in one billion shares worth 30 billion shillings and 9.8 million unit trust portfolios worth 55 million shillings.

The Authority revealed in January that it also holds 23.1 billion shillings in cash and 120 million shillings in foreign currency which it can invest in government securities, meaning the government is the biggest inactive money beneficiary.

Returned safes believed to contain jewellery, deeds, stock certificates and treasury bills rose to 2,949 units from 2,873 in June.

A benchmark survey commissioned in 2018 estimated that around 477,112 public and private entities hold these assets on their books.

The state has now changed the law to empower the Cabinet Secretary to waive penalties and interest for those who wish to return unused money.

Section 33 of the Act establishes a voluntary disclosure program for unclaimed financial assets.

This will grant relief from penalties and interest on unclaimed assets where the holder discloses, declares or surrenders the assets to the authority.

“A holder of unclaimed assets may disclose, declare and surrender the assets to the Authority for the purpose of obtaining relief from penalties and interest on such assets,” the finance law states.

“This section applies to assets held until June 30, 2022.”

The Treasury says the punitive fines have discouraged holders of idle assets from declaring and turning over idle assets.

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