What are Dormant Accounts?
Dormant accounts (usually checking or savings accounts) are those that have had no activity for a lengthy period of time. These accounts are considered to be sensitive in nature because they are more likely to be the target of embezzlement due to limited—or lack of—monitoring by the customer. Banks must implement proactive measures to deal with dormant accounts to reduce such risks.
From Dormant Account to Escheatment
A financial institution’s core system will flag an account when it becomes dormant. Then, the bank will usually place the dormant account into a restricted status. This allows only certain staff members to access the account, thereby reducing the risk of embezzlement.
After a set period of time, the bank will close the account, and funds are escheated to the state’s treasury. At that point, the customer (or his or her heir) must contact the state to reclaim the money. Escheatment times vary by state.
Protecting Dormant Accounts
As previously mentioned, banks usually try to limit staff access to dormant accounts in their core system. That being said, employees may still be able to retrieve dormant account information especially if the bank relies on paper documents that are still accessible to bank staff. Examples may include signature cards or other hard copy files.
To reduce the risk of employee theft, modern financial institutions are turning to electronic document management systems, such as AccuAccount. A system like AccuAccount can receive information from the core, identify dormant accounts, and automatically place dormant accounts into a restricted “branch.” This gives bank administrators the ability to confidently and instantly limit user access to dormant account information and related documentation.
For more information about customer and account document management, be sure to check out our extensive resource library with free spreadsheets, whitepapers, and ebooks.
Browse our banking definitions page for more terminology.
TicklerTrax™ Exception Spreadsheet Downloaded 1,000+ Times Looking for a free spreadsheet to track your financial institution’s exceptions? TicklerTrax might be the perfect tool for you! We’ve taken some of the basic logic from our top-rated document tracking system and boiled it