Wednesday, December 1, 2010

Industry Spoke, Goverment Listened - Changes to the Cayman Dormant Accounts Law

A few months ago, we reported some unclaimed property developments in the Cayman Islands.   The Cayman government enacted the "Dormant Accounts Law," which established a 6 year dormancy period for most items, and provided that all dormant funds would be held for the "general revenue of the Islands."  As noted in the original Cayman News Service article, a number of holders were particularly concerned about the length of the dormancy period as well as DAL's notice provision, which provided that in situations where "the financial institution has been instructed by the dormant account holder not to correspond with or contact the dormant account holder" the financial institution is required to publish notice of the "nature and type of such dormant accounts" in "one or more daily newspapers circulating in the Islands . . . [and] any other media as the financial institution deems necessary."  (Dormant Accounts Law, Section 6(1)).

Recently, the Cayman government responded to these concerns and amended various provisions of the DAL.  In particular, the dormancy period under the Law was lengthened from 6 years to 7 years, and makes clear that once property is turned over to the government, it will be held in trust for an additional six years.  The amendments also change the notice requirements.  Notice of unclaimed property held for a Cayman resident is still subject to newspaper publication, but property held by a financial institution for a non-resident need only be published on the "account provider's website or in a register held at the principal office of the account provider in the Cayman Islands."  (Dormant Account (Amendments) Bill 2010, Section 5(a)).

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