The Bank of Canada released their Annual Report for 2013 today. Perhaps you missed it. Perhaps you have not had the time yet to read it. I certainly don’t want to ruin your fun hence, I have noted this post with the far too popular Identifier: Spoiler Alert
After reading the report, (where do I find the time?) I have to say that I’m glad I took the time because I have 2 BIG concerns & I thought they were both worthy of sharing and worthy of a response from the Bank of Canada.
If you guessed that they have something to do with Unclaimed Balances by now ; You would be correct; because yes; I’m a little more than obsessed about this issue for the sake of Canadians and their families.
Reference Page 14 of 97
The 2 items that concern me come right after the explanation of what Unclaimed Balances are and where they come from. For your convenience I have flipped it around, so that part is copied below
Concern 1: Other Unclaimed amounts like Matured Canada Savings Bonds ($420M) and unclaimed bank balances held in a foreign currency
The report notes: “At the end of 2013, the Bank was the custodian of 1.4 million of these accounts” (in reference to unclaimed accounts transferred from federally chartered banks after 10 years of inactivity) “which had a total value of approximately $533 million.”
That’s a very big and sad number and unfortunately, correct per the database noted on their website. But what about Unclaimed but Matured Canada Savings Bonds ?
According to recent email Correspondence I have from the Bank of Canada, the balance of Unclaimed Canada Savings Bonds was $420M at the end of Dec 2013.
I see the $532.7 in unclaimed balances specifically referred to on the Balance Sheet (Page 69) but there is no explanation about Canada Savings Bonds; the ones that individuals and families for the most part, could really use. Are they included in the $774.2M in “Other” liabilities immediately under “Unclaimed Balances” ?
I am also curious about what the value of Unclaimed bank balances that are held in foreign currency might be given that the value of those accounts are not included in the $532.7M nor on the Bank of Canada website. I’m not sure why that would be given that it seems reasonable that the Bank of Canada could convert these balances into a Canadian equivalent but nevertheless…I would very much appreciate your insight on the value of such accounts and where that amount is included in the Annual Statements.
As an accountant, I have to say that $774.2M seems like a really BIG number to define as “Other” I think it’s reasonable to have more insight into what this value of $774.2M is comprised of. Perhaps it includes the Unclaimed balances referred to above; but I would also appreciate more insight into this balance of $774.2M.
Concern 2: The Bank of Canada inappropriately paid out $1.6M in error (?) during 2013 ?
“During 2013, the Bank discovered that $1.6 million had been inappropriately paid
to an organization as a result of multiple claims submitted by that organization.
The Bank has taken action to recover the funds, and the accounts have been
reinstated on the UCBS registry.”
“As a result, the Bank undertook a review of its processes for administering claims
for unclaimed balances. Procedures have been strengthened, particularly those
related to the processing of complex multi-account claims made by corporate
entities, which have a greater risk of error.”
So the Bank of Canada, the Head of all of our Banks; the lead in promoting stability and efficiency in our financial systems & the necessary control policies for our banking system (and us essentially) and the Bank that works on behalf of all Canadians to reduce their risk. ….made an error of $1.6M ?
Doesn’t ANYONE know how to do their job anymore? This is not a confidence builder…
My inquiry into these concerns has been sent to the Bank of Canada…I will of course share any/all insight when they follow-up and I hope they certainly do.
Oh Yes. Here’s the explanation that is standard fare in explaining what Unclaimed Balances are according to the Bank of Canada (And the Bank of Canada does not look at Matured but Unclaimed Canada Savings Bonds as just that)
An “unclaimed balance” is a Canadian-dollar deposit or negotiable instrument,
issued or held by a federally regulated bank or trust company, which has been
inactive for a period of 10 years and whose owner cannot be contacted by the
institution holding or administering it. It can be in the form of a deposit account,
bank draft, certified cheque, deposit receipt, money order, GIC, term deposit,
positive credit card balance or traveller’s cheque.
These balances are turned over to the Bank of Canada, which acts as custodian
on behalf of the owners. Balances are transferred to the Bank of Canada once a
year, on 31 December.
Under its unclaimed balances service (UCBS), the Bank of Canada holds unclaimed
balances of less than $1,000 for 30 years after they have been transferred to the
Bank. Balances of $1,000 or more will be held for 100 years. If the balance remains
unclaimed at the end of the prescribed custody period, the Bank of Canada transfers
the funds to the Receiver General for Canada.
Owners of these accounts can claim their money if they are able to provide
proof of ownership. Over the past 10 years, the Bank has paid out approximately
$135 million to claimants representing about 75,000 unclaimed balances, the
largest account being $600,000. In addition, during this time frame, the Bank
transferred $15 million to the federal government.