The Caisse de consignmenent can refuse assets it deems questionable, leaving little recourse for financial institutions Shutterstock

The Caisse de consignmenent can refuse assets it deems questionable, leaving little recourse for financial institutions Shutterstock

Bill n°7348 was first introduced in August 2018 but changes to the first draft proposed in June 2019 are still pending. The law, once passed, should help solve disagreements between banks wishing to close dormant accounts on the one hand and the so-called Caisse de consignation on the other.

This department within the state treasury is normally the recipient of funds and assets that go unclaimed, but it is wary of being passed dirty money or any other kind of “hot potato”.

The dormant accounts’ problematic reputation precedes them when, in reality, their origin is banal in most cases, such as a person dying without their family having knowledge of an account or an insurance policy.

Bankers’ association ABBL recommends lenders regularly carry out an inventory of accounts that have been inactive for longer periods of time, also because sudden activity could be a sign of money laundering or fraud.

Banks concluding that they cannot trace a claimant should be able to divest themselves safely of the unclaimed assets with the Caisse de consignation, which keeps them for a period of 30 years before taking ownership.

But the department is refusing to accept assets dating back further than 1993, when the first anti-money laundering rules were implemented. And even for newer accounts, banks must prove they have carried out all anti-money laundering due diligence operations and can ensure the legitimacy of the unclaimed assets.

For some of the accounts, however, documentation is incomplete and banks struggle to match information that met much older standards to the new rules. An enquiry with the state prosecutor’s office can be enough to halt a transfer process, even if the prosecutor gives no sign of a potential infraction.

So, while bill n°7348 enshrines the Caisse de consignation’s right to refuse unclaimed assets that it deems questionable, banks have no other option to divest themselves of such assets.

The Chamber of Commerce in its opinion on the draft law said the Caisse de consignation should have to explain each refusal with an option for appeal by the bank. The State Council, too, criticised the Caisse de consignation’s right of refusal, forcing the finance ministry to review the draft.

The ministry in a statement said it was working on implementing the State Council’s recommendations but that the pandemic had forced it to redefine its priorities.

In the absence of a legal framework the only reference for banks and other financial sector players is circular n°15/631 issued by Luxembourg regulator the CSSF, which sets out procedures on dormant accounts and unclaimed assets.

A review of Luxembourg’s anti-money laundering and counter-terrorist financing framework by the Financial Action Task Force (FATF) could provide new impetus to get the issue sorted.

Although the FATF on-site visit has been delayed twice already because of the pandemic, rules on dormant accounts and unclaimed assets feature on its check list.

This article was first published in French on Paperjam.lu and has been translated and edited for Delano.