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 Benefits of Compliance

*Enhances Shareholder/Customer Relations    

*Minimizes Corporate “Deadwood”

*Reunites Missing Owners With Their Property

*Reduces Operating Expense/Overhead

*Eliminates Regulatory/Non-Compliance Risk

*Reduces Risk Of Fraud

*Obviates Embarrassing And Awkward Questions

*It’s Required

*Can Be Achieved With Minimal Expense

*Can Be Achieved Without Embarrassment

Enhances Shareholder/Customer Relations

After you have exhausted efforts in looking for lost shareholders, customers or vendors, their interests are best-served through unclaimed property compliance. Where contact has been lost and cannot be re-established, the missing owner is not served by his funds being held in a dormant state at their place of origin.

Reporting dormant assets reflects a recognition that the owner may very well be found by the state, and the asset returned.  Owners, or their heirs located through state efforts will truly appreciate your role in this joint private/public sector initiative to reunite them with their property.

State efforts to find missing owners are significant and frequently successful, even where previous private-sector searches were unsuccessful.  The states are uniquely positioned to undertake broad-based outreach efforts such as statewide publications and Internet-accessible lost owner databases.

Some states will pay a reappearing owner interest on unclaimed funds for the period the asset was held by the state. 

Minimizes Corporate Deadwood

Unclaimed property provides you with an opportunity to clean-up any old, off-line manual records as well as remove dormant accounts from active files on an automated database.  In effect, the state becomes successor custodian for your records.  Since the state will retain the reported information indefinitely, you are spared the burden of maintaining the records and not forced to continually be faced with decisions regarding the need for retention.

Reunites Missing Owners With Their Property

The states will undertake extensive and sincere efforts to locate owners.  By virtue of publications with state-wide distribution, Internet sites, and a variety of other outreach efforts, the states are highly successful in returning property, particularly where they receive owner names and previous addresses.  Skepticism aside, any state will tell you that returning property to the rightful owner is what it’s all about.

Reduces Operating Expense/Overhead

Handling inquiries concerning old, outstanding checks can be very disruptive.  Often, the research involves manual records which are so rarely consulted, that they cannot be readily located.  The time and effort required for research can easily exceed the amount of the open check.

The costs associated with maintaining, researching, and reconciling old records can be greatly reduced through comprehensive unclaimed property compliance.  Why perform these tasks when the states will assume them at no cost to your company?  Unclaimed property programs will retain a permanent record of all reported items, allowing you to direct reappearing owners to the state.

Perhaps your company uses a third party to administer shareholder or other accounts. Administration costs can be reduced by identifying, and eliminating via reporting, all dormant accounts.  For unclaimed securities, consolidating numerous lost accounts into a single state-registered position can result in very considerable savings.

Eliminates Regulatory/Non-Compliance Risk

Times have changed.  Unclaimed property reporting requirements are no longer a secret.  Consequently, industry regulators know about them and measure compliance.  Even where your company is not regulated, you should be concerned with internal and external auditors.

An audit exception might be the least of your worries.  A state unclaimed property audit, however, is a serious matter.  You may need to produce a considerable volume of records, explain policies and procedures, and, where found not to be in compliance, pay over significant penalties and interest.  Some states can additionally charge the company for the cost of the audit, if past-due property is found. 

All states have the ability to assess penalties and interest for non-compliance.  Many states in fact levy these assessments against holders who are found, through state-initiated audits, to have failed to report and deliver property.

State unclaimed property programs are only one type of regulator who may question the failure to report unclaimed property.  To many other regulators, unreported abandoned property is synonymous with a poor internal control environment. 

Reduces Risk Of Fraud

Experts agree that one of the key elements of fraud is opportunity.  And there are few better opportunities for fraud than inactive assets.

Many of the embezzlement stories reported in the media would have never occurred, had the employer complied with state unclaimed property reporting requirements.  Removing abandoned accounts can mean removing a temptation. 

Unclaimed asset conversion can take many forms, and result in exposure well beyond the cost of restitution.  One revered New York bank paid fines of more than $20 million for using abandoned checks to enhance corporate revenues.  The resulting bad publicity was immeasurable.

Obviates Embarrassing And Awkward Questions

The courts have upheld the legitimacy of state unclaimed property laws.  This fact, coupled with increased media attention and the reality that many leading companies now comply, make the failure to report increasingly indefensible.

Your internal auditors may ask why reports were not filed.  In time, a state or states may ask the same question.  Missing owners may reappear and ask you to pay interest on their dormant assets.  Such inquiries can be avoided through compliance. 

It’s Required

Ultimately, unclaimed property laws are just that:  the law.  Their constitutionality has been upheld by the courts, including the United States Supreme Court.  Past rationales for non-compliance have become largely invalid.

Each year, reporting requirements become more widely known, and large numbers of companies report.  Non-filers are now in the minority.

Can Be Achieved With Minimal Expense

Unclaimed property compliance need not be an expensive proposition.  For those companies that have not previously filed, or have not previously filed all property with all states, the Compliance Program, administered by the Unclaimed Property Clearinghouse, is available at no charge. 

Once a company has achieved compliance, compliance can be maintained at a nominal cost through utilization of an unclaimed property service bureau, or through the purchase of reporting software.

Can Be Achieved Without Embarrassment

All states encourage the reporting of past-due unclaimed property.  Virtually all states have offered the incentive of relief from interest and penalties to those companies who acknowledge and address their prior failure to report.  While individual circumstances and states need to be taken into account, there has been no better time than the present for companies to step forward and achieve compliance, with little likelihood for substantial penalties and interest being assessed.

The Unclaimed Property Clearinghouse can assist your company in addressing any and all complex reporting issues, as well as undertaking the actual state filings.  We can also facilitate you obtaining, from the states that provide them, release agreements settling any interest or penalties that might otherwise be owing.