State to go after crypto and law firms in unclaimed assets' hunt

Bitcoin tokens. [iStckphoto]

Law firms and crypto-currency platforms are the next target of Unclaimed Financial Assets Authority (UFAA) as the State agency embarks on implementing its third five-year strategic plan.

The authority has also set its eyes on government departments and agencies, courts and telcos that hold mobile money balances. It notes in particular how government departments have not been surrendering unclaimed financial assets they are withholding.

A major reason noted for this non-compliance, the authority notes, is the Unclaimed Financial Assets Act (2011), which needs to be reviewed.

The just unveiled third strategic plan 2023-2028 notes gaps in the existing legal framework which it says only addresses common types of unclaimed financial assets.

"This leaves out, and does not extend, to all financial asset classes and new financial instruments including balances in mobile money and banking innovations where Kenya is a world leader as well in the emerging area of crypto-currencies," reads the strategic plan in part.

According to the plan, banks are the leading institutions that the agency received unclaimed financial assets from.

They are followed by listed companies, telcos, insurance firms, pension funds and Saccos.

The reason behind the agency's decision to go after these bodies is informed by a 2018 baseline survey the authority undertook to determine potential holders of unclaimed financial assets.

The survey revealed that financial assets worth Sh241 billion were being held and it targeted to receive Sh100 billion. As of December 2022, the authority had received assets worth Sh55 billion - Sh27 billion being in cash and Sh28 billion in shares.

"This translates to a deficit of Sh44 billion worth of assets," the State agency says. Most of these assets had been submitted by banks (67.7 per cent), listed companies (16.9 per cent), telecoms (9.3 per cent), insurance companies (5.3 per cent), other sources (0.3 per cent) pension funds (0.1 per cent) and Sacco societies (0.3 per cent).

"This is an indication that there are unclaimed financial assets withholders which the authority should strive to receive," it notes.

UFAA says some of the holders so far not included in the current legal and policy framework are lawyers with respect to unclaimed balances in client accounts held by their firms and trust accounts.

The authority says the current unclaimed financial assets framework is unclear about compliance by institutions and entities in the public sector that hold significant financial assets.

These include Public Trustee, Kenya Deposit Insurance Corporation and other government departments. "The regime does not explicitly differentiate public and private institutions as holders of different categories of unclaimed financial assets," says UFAA.

"The authority has performed dismally in receiving assets held by court or government departments." As a result, UFAA says it will be initiating engagements with ministries, departments, and agencies (MDAs).

"The authority will partner with key public institutions such as the National Treasury; Public Sector Accounting Standards Board, Ministry of ICT and Digital Economy and the Institute of Certified Public Accountants of Kenya, among others, to strengthen reporting of unclaimed financial assets in financial statements.