- Dormant Accounts
- The Law on Dormant Accounts
- What are the Requirements for Intermediaries?
- How To “Wake Up” a Dormant Account
- Transactions That Will Not Allow an Account to Be Reactivated
- Bearer Accounts
- Bank Cheques
- How the Money can be Recovered
- How Much are Old Passbooks Worth?
- Banking and Financial Arbitrator
Dormant accounts are defined as money deposits in which no transactions have been carried out for at least ten years.
In Italy, contractual accounts that have not been handled for at least ten years, and therefore classified as dormant, that contain sums of money exceeding one hundred euros are automatically annulled.
The remaining funds are entrusted to CONSAP (Concessionaria Servizi Assicurativi Pubblici), a company that reports directly to the Ministry of Economy and Finance. Once entrusted to CONSAP, the funds remain “frozen” for a further ten years, allowing the legitimate owners to claim them. At the end of this ten-year period, the sums will be allocated to a fund dedicated to the compensation of victims of financial fraud.
Dormant accounts include money deposits, deposits of financial instruments under custody and administration, and insurance contracts. The account may have been stipulated with a bank or other financial intermediary and may consist of both monetary deposits (such as current accounts or savings books) and deposits of financial instruments (for example stocks, shares, etc).
Specifically, they could fall into one of the following categories:
- Money deposits
- Savings accounts, both bank and postal
- Current, bank, and postal accounts
- Certificates of deposit
- Investment funds
- Uncashed bank drafts
In all cases the balance must exceed 100 euros, as stated by the law.
The Law on Dormant Accounts
Presidential Decree no. 116 of June 22, 2007, “Regulations for the implementation of art. 1, paragraph 345, of Law no. 266 of December 23, 2005, regarding dormant accounts” came into force on August 17, 2007, defining the guidelines for dormant accounts.
According to the law, intermediaries affected by the implementation of the rules are:
- Italian banks and the branches of EU and non-EU banks in Italy;
- Financial intermediaries;
- Insurance companies operating in Italy;
- Stockbroker companies and the branches of EU and non-EU investment companies in Italy;
- Asset management companies and the branches of harmonized management companies in Italy;
- Poste Italia – Divisione Bancoposta.
What are the Requirements for Intermediaries?
The regulation states that once an account has become “dormant”, the intermediary must attempt to inform the owner, or any third parties delegated by them, by registered letter with proof of receipt, addressed to the last known address.
The letter should inform the intermediary that the account can be recovered if action is taken within 180 days of receipt and that, if this does not happen, it will be annulled and the sums and values relating to each account will be transferred to a public fund.
How To “Wake Up” a Dormant Account
There are many ways to wake up a dormant account; all of which are aimed at showing interest in wanting to make the account active again.
- Send a letter to the bank/post office expressing your willingness to keep the account open;
- Visit the bank and talk with a cashier at the counter;
- Carry out operations on the account, movements, or communications, such as request a cheque book, a copy of bank documentation, a statement, make a withdrawal or deposit money, communicate a change of residence, etc.
If you are the owner of more than one dormant account with the same intermediary, it is not necessary to reactive them all but just one.
Transactions That Will Not Allow an Account to Be Reactivated
- The crediting of a transfer by a third party (e.g. salary transfer);
- The automatic debiting of utility bills (e.g. electricity or gas);
- Any type of automatic transaction (e.g. redemption);
- The lack of movement of deposits subject, by contract, to tacit renewal (for example, certificates of deposit or BTPs).
The owners of bearer accounts cannot be identified with certainty, which means that even sending a registered letter informing them that their account will be soon classified as “dormant” would not have much hope of reaching the person concerned.
For this reason, each intermediary is required to prepare a monthly notice containing details of bearer accounts that have become dormant. The deadline of 180 days to avoid the termination of such account, which starts from the date reported on the notice, remains valid.
Every year, on 31 March, the banks are required to inform the Ministry of Economy and Finance of the number of uncollected cheques whose three-year statute of limitation expired on 31 December of the previous year. By the 31 May of the following year, the cheques that have not yet been redeemed, will end up at CONSAP.
The person who issued the cheque may apply to CONSAP for a refund of the amount paid within ten years of the date of issue of the cheque.
How the Money can be Recovered
As long as the sums have not been paid by the intermediary to the Fund, the holder may request their restitution. Once returned, CONSAP shall be informed accordingly.
Even if the funds have already been transferred, the holder, or their heirs or delegates, has the possibility of claiming back the amount transferred.
Before transferring the sums, intermediaries are required to display in their branch and to publish on their website, at least one month before the scheduled transfer, a list of accounts destined to become “dormant”.
Even after this date, the holders or their delegates will have ten years to claim the sums transferred directly from CONSAP.
In fact, the owner of a dormant account, or their heirs or delegates, can ask to regain possession of the money before twenty years has passed since the last recorded activity in the account. Or even after, but only in exceptional cases.
How Much are Old Passbooks Worth?
The press is abuzz with news of legendary finds of old passbook, and of the vast riches awaiting the lucky heirs of such fortunes. It’s a pity that, while it’s easy to find articles on these discoveries, you never find articles on their actual collection.
If the balance in the passbook should be a few liras, one should not create false expectations that it has magically transformed, thanks to the interest accrued over the years, into hundreds of thousands of euros.
If, with the current exchange rate, the balance does not to reach the current 100 euros minimum requirement, the passbook would not even fall into the category of “dormant”, but rather “extinct”. A sleeper can be woken up, but unfortunately an extinct one cannot.
According to a number of jurisprudence rulings, including the Supreme Court, the sums deposited in passbooks and current accounts are prescribed unless requested within ten years from the date of last entry (and in any case after a further ten years from the moment they are transferred to CONSAP).
It should be noted that the Arbitro Bancario Finanziario takes a different view and considers the sum to be prescribed after ten years from the customer’s request for withdrawal. However, given the sum at stake, it might not seem appropriate to apply to the Arbitro Bancario Finanziario.
Banking and Financial Arbitrator
The Arbitro Bancario Finanziario (ABF) is an alternative arbitrator to the ordinary judge for the settlement of disputes between financial intermediaries and their clients. It corresponds to the English Alternative Dispute Resolution (ADR).
Unlike the decisions of an ordinary judge, the decisions of the ABF are not binding. However, situations when an intermediary does not respect such decisions are widely publicised and kept public for a period of 5 years. The client can still decide, after the Banking Arbitrator has given its opinion, to appeal in front of an ordinary judge.
If you have any doubts on the subject and would like to receive legal advice before taking any action, do not hesitate to contact our lawyers from our Administrative Law Department and Corporate and Commercial Law Department.
Complete the form to request a legal consultation. Our experts will evaluate your case and suggest the best solution.