Accounts payable

Dead Kenyans leave 2 billion shillings in their mobile money accounts

A motorist pays for his fuel with his mobile. [Elvis Ogina, Standard]

Kenyans who died have left behind 2 billion shillings in mobile money wallets as the government scrambles to find and reunite the beneficiaries of billions in unclaimed financial assets.

This is according to the latest financial report from the Unclaimed Assets Trust Fund (UAFT), further stating that commercial banks, listed companies and telecom operators have contributed billions of shillings to the fund last year.

“In terms of unclaimed asset receipts, 3.6 billion shillings represented additional liquidity to cash-denominated unclaimed assets, compared to a target of 4.8 billion shillings,” the Trust Fund management said. unclaimed assets (UAFT) in a log. notice.

According to the report, revenue from telecom companies in 2021 reached 2 billion shillings, 36% more than the previous year, while the value of unclaimed shares on the Nairobi Stock Exchange stood at 20 .1 billion shillings.

“Overall, however, the total value of the fund stands at 39.5 billion shillings, consisting of 19.5 billion shillings in cash, 20 billion shillings in stocks and 4.4 billion shillings in unrestricted reserves. distributed over income,” the UATF said.

Safaricom, KCB Group, East African Breweries and Co-operative Bank account for 75% of the value of unclaimed shares reported by 45 listed companies.

According to the UATF, the asset holders had sold 5.5 billion shillings, 3.9 billion shillings, 2.7 billion shillings and 1.7 billion shillings worth of shares of the four blue chip stocks respectively. in June of last year.

The report follows growing concern that compliance by asset holders, which include commercial banks, Saccos, pension schemes, utility companies and telecom companies, remains weak.

The Unclaimed Financial Assets Act 2011 lists a wide range of assets that should be forfeited in the event of the death of the owners. These include deposits for utilities, court judgments, unpaid checks, insurance policies or annuity contracts, and unpaid wages.

In June 2021, commercial banks led in overall asset value, with 13.6 billion shillings handed over to the authority, an increase from 10.9 billion shillings the previous year.

Listed companies, insurance companies, Saccos and pension funds had sold 3.2 billion shillings, 1.2 billion shillings, 44 million shillings and 29.3 million shillings of assets not claimed from the UATF last year.

The Unclaimed Financial Assets Authority (UFAA) has been criticized in recent months that the speed of processing applications and payments was long and tedious, leading to low levels of reunification.

Earlier this year, UFAA launched service kiosks at Huduma centers across the country where Kenyans can initiate claims for the unclaimed property of loved ones.

In 2021, some 3,314 claims worth 307.7 million shillings were settled, an increase of 34% from the 228.7 million shillings paid the previous year.

“While current reunification levels have fallen from a low of 34 million shillings, the rate is still low,” the UFTF said in the notice.

“Management has therefore put mechanisms in place to ensure that the level of reunification increases.”

The slow rate of reunification has also been attributed to the fact that many Kenyans died without disclosing to their relatives all the possessions they owned.

Similar to last year, UFAA had received reports of 2,648 safe deposit boxes held by 17 commercial banks that have still not been opened, a 56% increase from 2020.

The majority of them – 77% – are at Absa Bank (995), Bank of Baroda (576) and Standard Chartered Bank Kenya (477).

The UFTF has a mandate to invest all the fund’s money in treasury bills and last year the regulator earned 1.5 billion shillings in investment income.

A recent case filed by AIG Insurance Company challenging certain clauses of the Unclaimed Financial Assets Act of 2021, however, may prevent the UFAA from filing a claim on certain asset classes.

AIG went to court last year to challenge a decision by the UFAA to demand from it 138 million shillings in unclaimed assets and 3.9 million shillings in audit fees.

The company also wants the court to quash an audit report commissioned by the UFAA which found the insurer held 138 million shillings in unclaimed assets and owed the authority 312 million shillings in penalties and interest.

The insurer also wants the court to declare that credit balances on accounts receivable and credit balances in the paid claims register are not enforceable under the Unclaimed Financial Assets Act.

The case will have far-reaching implications for UFAA’s mandate to collect unclaimed assets from insurance companies and could lead to a cascade of similar legal challenges from other asset holders.

Last year, the court decided that the Treasury, the attorney general and the clerk of the National Assembly should be added to the case as interested parties.

“The orders requested are therefore likely to affect people who are not parties to this case, and who will not have the opportunity to be heard,” Judge Pauline Nyamweya said in her judgment.

“It is also to be noted in this regard that three necessary parties who will be directly affected by the orders sought by the ex parte petitioner, namely the Secretary to the Cabinet in charge of the Treasury, the Attorney General and the National Assembly, being the public offices responsible for the public administration of finance and legislation, have not been joined as parties hereto.

In the Finance Bill 2022, the Treasury has proposed waivers on penalties, fines and audit fees and that penalties and interest should be capped to avoid exceeding the value of the asset.

“The authority may, with the approval of the Secretary to the Cabinet, waive payment of any of the penalties and fines provided for in section 33, in whole or in part,” the proposed amendments to the law read. of 2011 on unclaimed financial assets.

The Treasury says the penalty waivers are intended to induce asset holders to disclose and deliver undisclosed assets to the UFAA.

This will be done through a voluntary Unclaimed Financial Assets Disclosure Program which will run for one year from June 2022.

“A holder of unclaimed assets may disclose, declare and deliver the assets to the authority for the purpose of obtaining relief from penalties and interest on those assets,” the amendment reads.

“A holder who discloses, declares and delivers unclaimed financial assets within 12 months from the effective date of this section shall not be liable for any penalties or interest due.”