January 8, 2019
Tokyo--A system to divert funds sleeping in bank accounts for 10 years or longer for use in public-interest activities such as assistance to families in poverty started on a full scale in Japan this month.
About 70 billion yen in such bank accounts is expected to be newly deemed dormant every year.
Banks are alerting depositors to inactive accounts becoming dormant. Koji Fujiwara, chairman of the Japanese Bankers Association, or Zenginkyo, has urged the public to check any deposits that have been left untouched for a long time.
Under the law for the use of dormant deposits, which came into force in January 2018, a bank account is regarded as dormant if no deposit, withdrawal or other activity has been made for 10 years or longer and the account holder cannot be contacted.
The law applies to accounts for which at least 10 years have passed since the last transaction was made on Jan. 1, 2009, or later. This month, deposits started to become dormant under the law.
Money in dormant bank accounts will be transferred to the management of Deposit Insurance Corp., an institution that deals with bank failures, and, via incorporated foundations, used for subsidies and loans mainly to nonprofit organizations engaged in public-interest activities.
Depositors can withdraw money from accounts that have become dormant but need to complete procedures for identity checks and documentation.
If bank accounts have 10,000 yen or more, banks are required to notify the holders by mail or other means of coming transfers to Deposit Insurance Corp.
If the notice reaches the depositors, the accounts will not be regarded as dormant. If not, money in the accounts will be transferred to Deposit Insurance Corp.
In late October last year, MFUG Bank started notifying inactive depositors by mail about their accounts becoming dormant beginning this month. Resona Bank started doing so in June last year and advises customers who open new accounts not to leave them sitting idle for a long time.
One focus of the new system is the specific use of dormant deposits. Such money will be used for assistance to children, other young people and people with difficulties in their daily lives, as well as for regional revitalization projects, but it has yet to be decided which groups will be the recipients of such funds.
Though deemed dormant, such funds were originally the savings of depositors, so high transparency is needed for the selection of recipient organizations, analysts said. Jiji Press
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