By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The $71 million in dormant accounts currently held by the Central Bank should instead be “vested” in the Public Treasury, a leading accountant said yesterday, thus aiding a government desperately needing every cent of revenue it can get.
Philip Galanis, managing partner at HLB Galanis & Company, also recommended that the timeline for deeming Bahamas-based bank accounts inactive, or dormant, should be extended from the current seven years to 10.
Tribune Business revealed last week how the Central Bank of the Bahamas was holding almost $71 million in ‘dormant account’ funds at year-end 2012, having received a further $3.58 million last year.
And, rather than having these monies sitting idly at the Central Bank, Mr Galanis said they could be put to better use by helping to close the Government’s fiscal deficit or paying down the $5 billion national debt.
That $71 million figure is more than 10 per cent of the projected 2012-2013 Budget year’s $550 million fiscal deficit, for instance.
Currently, under the Banks and Trust Companies Regulation Act 2000, all financial institutions are required to transfer to the Central Bank all funds from accounts where there has been no activity for seven years.
“I think that maybe the period of time might be extended for a longer period, from seven to 10 years,” Mr Galanis told Tribune Business.
“I would have thought that 10 years would be sufficient to allow owners to recover their funds. I’m not sure why the timeframe is seven years; it might have something to do with the recordkeeping requirements placed on companies in the Bahamas - they have to keep them for seven years.”
He noted that in Ireland, for example, the law stipulated that 15 years must pass before an account is declared ‘dormant’ and passed on to that country’s Central Bank. In Scotland, the timeframe is believed to be the same 10 years.
The former PLP MP and Senator, and current head of the Bahamas Trade Commission, added: “People should be given every chance to claim that which belongs to them, but after that period of time that money should vest in the Consolidated Fund.
“The Government is clearly in need of funds to operate, and if those funds are not claimed after the required period of time, they should revert back to the Public Treasury.”
When the Banks and Trust Companies Regulation Act, and its dormant accounts requirements, was passed in 2000, Tribune Business reported at the time that the Central Bank had not wanted to be saddled with the burden of dealing with dormant accounts.
And Mr Galanis reiterated: “There ought to be a 10-year cut-off period, after which they revert to the Treasury; that would be my recommendation. I think that’s reasonable.”
As to why these accounts were slipping into ‘dormant’ status, Mr Galanis suggested a variety of factors were involved.
Some account holders had died or were in jail, while foreign owners of Bahamas-based accounts “may not want to come forward for tax reasons”, as they may expose themselves to their home jurisdiction tax authorities.
Given that many G-20/OECD nations were tightening the screws when it came to cracking down on tax evasion by their citizens, Mr Galanis said: “Not many people want to come forward for fear of making themselves known to their home country tax authorities.”
Noting the continued build-up of dormant account funds in its 2012 annual report, the Central Bank said: “During 2012, 85 licensees submitted a total of 1,123 dormant accounts, with value equivalent to $3.58 million and claims processed at $437,360.
“At end-2012, dormant account balances outstanding, net of claims, aggregated $70.6 million and were denominated in eight currencies - led by the United States (51.1 per cent) and Bahamian (38 per cent) dollars.”
Comments
ThisIsOurs 11 years, 7 months ago
Where they will quickly go from dormant to dispensed...on everything but the deficit...
dragonride 11 years, 7 months ago
hahahaha!!!! so they can quickly 'vest' it in themselves!
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