Illinois State Treasurers Office Unclaimed Property Division

1
Illinois State Treasurers OfficeUnclaimed
Property Division

• Unclaimed Property Reporting in Illinois
• December, 2004

Alissa Camp Director Unclaimed Property
2
Property returned to owners

Unclaimed Property came under the jurisdiction of
the State Treasurer in July 1999. Our Claims
Statistics

• In FY2000, we returned 29,791,852
• FY2001, we returned a total of 36,427,837
• FY2002, we returned a total of 50,442,666 to
  claimants.

3
Property returned to owners

• In FY2003, we returned a total of 53,829,481 to
  claimantsAND
• FY2004 we returned 55,703,339.59!

Since July 1999, the Treasurers Unclaimed
Property has returned 226,199,991!
4
EXAMPLES OF UNCLAIMED PROPERTY

• Inactive Savings or Checking Accounts
• Safe Deposit Box Contents
• Unclaimed Wages
• Commissions
• Uncashed Checks

• Money Orders
• Gift Certificates
• Stock Shares, Dividends, and
• Mutual Funds

See Annual Reporting Instructions, page 6
5
EXAMPLES OF UNCLAIMED PROPERTY CONTINUED

• Utility deposits
• Security deposits
• Paid up Life Insurance Policies
• Uncashed death benefit checks

• Estates
• Court-Ordered Distributions
• Child support
• Victims restitution
• Retirement and Pension Benefits

See Annual Reporting Instructions, page 6
6
Reporting requirements in Illinois

• Under Illinois statute, almost every company is
  required to turn over assets to the state
  whenever the property owner cannot be found.
• (see Section 11 Report of Custodians (765 ILCS
  1025/11))
• It is the States responsibility to try to get it
  back to its true owners

7
Reporting Requirements in Illinois

• Presumption of Abandonment (Rules Section 180.15)
• Unclaimed assets are abandoned when the property
  has been unclaimed for five years
• attempts by the holder to contact the owner have
  been unsuccessful.

8
Reporting Requirements in Illinois

• Presumption of Abandonment (Rules Section 180.15)
• Actions that do not prevent
• automated clearing house transfers,
• automatic posting to accounts,
• computer system conversion dates,
• non-return of mail.

9
Reporting requirements in Illinois

• WHEN are Annual Reports due?
• Holders report May 1, every year as of preceding
  December 31
• Business Associations
• Utilities
• Life Insurance Corporations
• 5 year abandonment period
• Date of last activity 12-31-99 and prior for 2005
  reports.

10
Reporting requirements in Illinois

• WHEN are Annual Reports due? (Section 11(d) )
• Holders report November 1, every year as of
  preceding June 30
• Banking and financial organizations
• Non-life insurance companies
• 5 year abandonment period
• Date of last activity 6/30/00 and prior for 2005
  reports.

11
Reporting requirements in Illinois Holders under
the Act (765 ILCS 1025/1 et seq)Section 1
Definitions

• Banking organization (a)
• Business associations (b)
• Financial organization (c)
• Life Insurance corporation (e)
• Utility (h)
• Insurance company (k)

• Also defines
• Holder (d)
• owner (f)
• person (g) and
• reportable property

Several of these holders are defined in separate
sections of the Act.
12
Reporting requirements in Illinois

• Why is this Important?
• Proposed legislation
• Changes to the Act
• exemptions or exclusions from reporting.
• Scope limitation on examinations.

13
Presumption of Abandonment(Rules Section 180.15)

• Trigger There has been no owner initiated
  contact,
• property has been dormant.
• Examiner will look for a date of last activity.
• Usually five years, depending on the property
  type, and
• The holder.

14
Presumption of Abandonment(Rules Section 180.15)

• Various sections of the Uniform Disposition of
  Unclaimed Property Act (765 ILCS 1025/1 et seq)
  specify the periods generally it is five years
• /2 Financial organizations
• /2a Business Associations
• /3 Life insurance companies
• /4 Utility.

15
Presumption of Abandonment(Rules Section 180.15)

• Governmental entities have a longer dormancy
  period
• Section (765 ILCS 1025/8) Court or Public Officer
  
• Section (765 ILCS 1025/8.1) Governments
• Seven year requirement
• Voluntary Dissolution (765 ILCS 1025/6) two years
• Business Associations
• Banking organizations
• Financial organizations

16
Presumption of Abandonment(Rules Section 180.15)

• Non-owner initiated
• Those that do not require a direct owner
  response.
• Non returned mail does not constitute such an
  act unless the notice was sent return receipt
  requested and the owner signed the receipt.

Source Annual Reporting Instructions
17
Defining Activity(Rules Section 180.10)

• Activity" - occurs when the owner takes any
  action described in Section 2 of the Act which
  prevents a presumption of abandonment.
• Activity in any account on a consolidated
  statement shall constitute activity for any other
  account on that statement.
• Non return of mail shall constitute activity only
  if the holder sends a notice to the owner, return
  receipt requested, and has on file the signed
  return receipt.

18
Defining Activity(Rules Section 180.10)

• Last Activity Date" means, for other than
  property reported in the aggregate under Section
  11(b)(1) of the Act, the last verifiable date of
  owner contact with the property being remitted to
  the Department.
• In the alternative, where the holder's records
  are insufficient, it is the earliest date in the
  holder's records for which property can be
  identified minus 12 months.

19
Records retention in Illinois

• I. Records retention reality check
• Section 11 (h) (2) Report of Custodians (765
  ILCS/1025/11)
• Amendatory Act of 1993
• property records for the period required for
  presumptive abandonment,
• plus the 9 years immediately preceding the
  beginning of that period,
• shall be retained for five years after the
  property was reportable.

ÖÖ
5 9 14 YEARS
5
20
Records retention in Illinois

• II. Business Associations
• Statutory Guidelines Property is Reportable after
  5 Years
• III. Governmental Entities
• Statutory Guidelines Property is Reportable after
  7 Years
• IV. Period available for examination
• 14 years
• Scope of the exam.
• Current records will be reviewed.
• Section 10.5 NONAPPLICABILITY OF ACT (765
  ILCS/1025/10.5)

21
What Information Is Needed From Each Record?
A) Record should be complete B) It
should cover the entire year.

• What constitutes a complete owner record?
• i) Complete owner name
• ii) Complete last known address
• iii) Last Activity Date.

State of Illinois Department of Financial
Institutions Unclaimed Property
Division-Unclaimed Property Rules Section 180.10
22
Examination Selection

• Focus on Consumer Protection
• Returning property to owners, i.e.
• CLAIMS
• Section (765 ILCS 1025/23 et seq) of the Act
• grants Treasurer permission to examine records
  where there is a reason to believe
• Administrative Rules specify what constitutes a
  reason to believe.

23
Compliance Audits/Examinations

• Scope limitation
• Identify and report unclaimed property
• Ensure compliance with the Uniform Disposition of
  Unclaimed Property Act.
• Compliance Audit º
• review financial or
• operating activities
• determine conformity with rules and regulations.

24
Compliance Audits/Examinations

• Compliance Audit
• Follow GAAP and GAAS
• Review internal controls
• Results/criteria based on governmental
  regulations.
• Compliance with the law
• Office of the State Treasurer is responsible for
  administering the statute.

25
Types of Records Required for Audit
A. Unclaimed Property Records

• The unclaimed property annual reports filed with
  our State and other States, and the working
  papers that support these reports for the period
  1998 through present,
• Analysis of the unclaimed property accounts,
• Adjusting journal entries for the period 1990
  through current period,
• A list of bank accounts closed after 1990

26
Types of Records Required for Audit

• B. Organizational Records
• An organizational chart
• A list of all divisions and subsidiaries
• A list of mergers and acquisitions
• A records retention policy
• As the examination progresses, we will need to
  review selected ledgers with associated charts
  of accounts, bank reconciliations, bank
  statements, journal entries and other records or
  documentation for the period 1990 through 1998.

27
Types of Records Required for Audit

• C. Organizations Issuing Publicly Traded
• Securities
• Annual reports to stockholders or audited
  financial statements for the period 1990 to
  present
• Lists of
• Illinois shareholders
• Uncashed dividend checks, including the number
  of shares
• D. If the holder has Long-Term Debt
• A list of bonds, debenture or note owners

28
WHAT IF I FAILED TO REPORT IN THE PAST?

• Amnesty Awareness
• Program

29
WHAT IS THE AMNESTY AWARENESS PROGRAM?

• July 2001, the State Treasurer instituted the
  Unclaimed Property Amnesty Awareness Program
• Designed to help business owners who may be
  holding unclaimed property to come into
  compliance with the Unclaimed Property Act (765
  ILCS 1025/1 et seq).

AAP
30
WHO IS ELIGIBLE FOR THE AMNESTY AWARENESS
PROGRAM?

• A holder is eligible if they
• are not currently under examination, or
• have not been notified by the Treasurers office,
  or a representative, of its intent to conduct an
  unclaimed property examination.

AAP
31
BENEFITS OF THE AMNESTY AWARENESS PROGRAM

• The Amnesty Awareness Program allows the holder
  to come into compliance with the Unclaimed
  Property Act.
• Our staff is available between 900 a.m. and 400
  p.m. CST, Monday through Friday to assist you
  with any questions you may have.

AAP
32
BENEFITS (CONTINUED)

• The State Treasurer agrees to waive all penalties
  and fees ascribed to late reporting.
• This waiver of fees and penalties is applicable
  only during the amnesty period.
• The Amnesty Awareness Program expired on June
  30, 2005.

AAP
33
How To Apply

• Review the eligibility requirements
• Complete and sign the Amnesty Agreement
• Upon acceptance of the agreement, all reports and
  unclaimed property must be delivered to the
  Treasurers office before the expiration date of
  the amnesty period, June 30, 2004.

AAP
34
AMNESTY AWARENESS PROGRAM UPDATE
For those interested in participating

• Enrollment was extended through December 31,
  2004.
• We must have a signed agreement by December 31,
  2004.
• Holder must report and remit by June 30, 2005.

AAP
35
AMNESTY AWARENESS PROGRAM UPDATE

• If the holder files a report after the Amnesty
  Awareness program has expired, the holder shall
  be liable for any fees or penalties as provided
  by the Act.
• Holder may be subject to examination.

AAP
36
HOW TO OBTAIN MORE INFORMATION

• Please contact the
• Illinois State Treasurers Office at
• www.cashdash.net
• Fax [phone]
• Call [phone] or [phone]
• between the hours of 900 a.m. and 400 p.m. CST

37
Legislative Update

• House Bill 4921
• Abandoned Property-Mortgage Escrow
• Amends the Residential Mortgage License Act of
  1987
• For more information see
• us.asp?DocNum4921GAID3DocTypeIDHBLegID9594
  SessionID3

38
THIS PROGRAM WAS BROUGHT TO YOU BY YOUR ILLINOIS
STATE TREASURER

• Judy Baar Topinka