Office of the State Treasurer

NEWS RELEASE

FOR IMMEDIATE RELEASE	CONTACT:	Tom Vincz (Treasury)
October 31, 2002		(609) 633-6565
		Mary Caffrey (Banking and Insurance)
		(609) 292-5064

State of New Jersey		State of New Jersey
DEPARTMENT OF BANKING AND INSURANCE		DEPARTMENT OF THE TREASURY
Holly C. Bakke, Commissioner		John E. McCormac, Treasurer
Tel. (609) 292-5360		Tel. (609) 292-6748
October 31, 2002 Treasurer, Banking and Insurance Commissioner Move To Ensure Compliance And Clarity With Unclaimed Property Law Changes (TRENTON) - State Treasurer John E. McCormac and Banking and Insurance Commissioner Holly Bakke today moved to ensure that financial institutions doing business in New Jersey properly implement changes to State Unclaimed Property law and avoid any premature and improper designation of consumer accounts as abandoned, and thus subject to transfer to State custody. "We are concerned by reports that some banks may be misinterpreting changes to the Uniform Unclaimed Property Act," Treasurer McCormac said. "The unclaimed property law is intended to safeguard property when its owner cannot be located. Only accounts that are truly dormant should be transferred to the custody of the State under this law." The changes modify the amount of time that must pass before abandoned property or assets are transferred from financial institutions to the State. Under the old law, abandoned accounts and other unclaimed assets were turned over after a ten-year dormancy period. An account such as a CD CANNOT be classified as dormant if a customer has contact with their bank through another account, such as a savings or checking account. Like many other states around the country that are shortening their dormancy windows, New Jersey this year reduced the dormancy period to three years. "The Department of Banking and Insurance will be working closely with the Treasurer and New Jersey banks to ensure the procedures established to protect consumers are followed," Bakke said. "In short, any routine or incidental contact with a customer on any account is sufficient to stop the clock and keep the accounts active." Bakke said. To address the concern over improper interpretation of the changes, McCormac and Bakke sent the attached clarifying letter to all financial institutions. The letter details specific guidelines for banks to follow to properly designate the active or dormant status of accounts. The letter specifies that institutions should follow certain guidelines pending the issuance of formal regulations by the Division of Taxation later this year. The letter also provides an explanation, in clear terms, that banks should provide to customers on how to reactivate an account and prevent transfer to the State. The guidelines would allow customers to contact their bank by phone, e-mail or in person.. "The (Uniform Unclaimed Property) act is premised on the principle that the State has no interest in becoming the custodian of property that is prematurely or inaccurately classified as dormant," the letter states. The letter from the two State officials comes about two months after they sent a separate joint letter to banks, advising them to not misrepresent the State's intentions with the amended unclaimed property law. The officials noted that some banks are raising legitimate concerns over how some time deposits, such as certificates of deposits, are treated under the shortened dormancy period, but expressed full confidence that regulations currently being drafted and the interim guidelines in the letter to the banks, will address all issues related to time deposits. "The State does not seek to interfere with banking/customer relationships in which both parties understand that CDs roll over automatically upon maturity. In view of the shortened dormancy period, we ask only that banks implement a simple and non-intrusive way of demonstrating consumer contact when CDs mature so that these timed deposits are not prematurely classified as abandoned in subsequent years," said McCormac. "The State is working diligently and responsibly to administer modifications to the unclaimed property law approved by the Legislature this year. We expect the banking community to continue to uphold the tenets of the long-established law and to work with us on implementing changes. Our continued goal is to act in the best interests of New Jersey consumer," McCormac said.

October 28, 2002

To All New Jersey Financial Institutions:

Concerns raised by New Jersey depositors suggest that further clarification of our August 16, 2002, letter on the Uniform Unclaimed Property Act is needed. The act is premised on the principle that the State has no interest in becoming the custodian of property that is prematurely or inaccurately classified as dormant. Certificates of Deposits (CDs), merit special consideration due to the revised dormancy period and contact requirements, and we have been working diligently to assure that banks and depositors are heard in the regulatory process.

Until regulations can be promulgated, the following procedures apply:

Recognizing that during this first year of implementation institutions may have difficulty meeting the November 1 reporting deadline, the Office of Unclaimed Property will grant extensions under certain circumstances. You may request an extension by explaining the reason for your request in writing to:

The Office of Unclaimed Property
P.O Box 214
Trenton, N.J. 08695-0214
Attn: Steven Harris

If your records reflect a prior mailing to an accountholder that is returned by the post office, then no due diligence mailing via certified mail is required. The due diligence letter should reflect what the law requires and is intended to give one final chance to the accountholder to renew contact before the State becomes the custodian of the property. The due diligence mailing, if not already done, must contain, but may not be limited to, the following language:

"Please contact us immediately about the account referenced below. You can contact us in person, by phone or electronically.

Our review of this account indicates that it is dormant because there has been no activity in it for at least three years and you have not had any contact with this institution concerning this or any other account during this period.

Under the State's Uniform Unclaimed Property Act, we are required to make a due diligence attempt to renew contact with you. If contact is not renewed we are required to transfer this account to the State of New Jersey, which will maintain custody until contacted by the rightful owner. The State is required to maintain custody of these funds until you come forward to claim them. This law is intended to ensure that unclaimed property is properly safeguarded when the owner cannot be located. The State must pay you interest when the funds are returned.

To reestablish contact, and avoid having your account transferred to the State, please sign below and return this letter in the enclosed envelope no later than (insert date). Once we receive the signed letter we will restore your account to an active status. Or, if you prefer, you can make a deposit or withdrawal on your account to show immediate activity, or simply call us at (insert bank tel. # ). You can also e-mail us at (e-mail address). This type of routine contact also assures that financial institutions will not incorrectly classify accounts as dormant. If you have any updated address information, please provide it in the space below."

3.	Time Deposits (CD's) are only to be reported before November 1 of the appropriate year for the abandonment period when:
	Three years (the required abandonment period) have passed since the date of the maturity term and the accountholder did not respond to a renewal notice in writing or by phone call recorded by the bank, and there are no other active accounts or forms of communication from the accountholder during the three-year abandonment period;
OR
	Three years have passed since there was a mailing returned by the Post Office or from the date of an un-cashed distribution, and there are no other active accounts or forms of communication from the accountholder during that three-year abandonment period.

If the three-year abandonment period ends before the maturity term the property is NOT reportable until maturity.

	Example: 5 year CD. -Statement mailed at year 1 and returned by the Post Office. -Abandonment period ends 3 years later (year 4 of the term) -Property due at year 5 (end of maturity term).
If the three-year abandonment period ends after the maturity term it is reportable at the end of the three-year abandonment period.
	Example: 5 year CD. -Statement mailed at year 4 and returned by the Post Office. -Abandonment period ends 3 years later (year 7, 2 years after maturity) -Property due at year 7
4.	If there is a written communication or phone call noted by the bank acknowledging renewal then the reporting criteria remains as reflected in #3 above.
5.	Consistent with current practice, if there is any type of communication from the accountholder while the three-year abandonment period is in effect, the three-year clock begins again. Contact can be established in several ways:

		Deposit to or withdrawal from the account about to be abandoned, or on any other account of the accountholder.
		Cashing of a distribution
		Notice of a change of address
		Written correspondence
		Electronic communication (e-mail contact or online banking activity) from the accountholder.
		Phone communication noted by the bank at the time of the call.
		Responding to the due diligence letter.
		Responding to financial privacy "opt out" notices.
The above guidelines clarify the language of NJSA 46:30B-18 and 21 and are consistent with current Unclaimed Property policy and procedures In view of the shortened abandonment period, we ask only that banks implement a simple and non-intrusive way of demonstrating customer contact so that these time deposit accounts are not prematurely classified as abandoned. Regulations mirroring these guidelines will be promulgated by the end of the year. If you have any questions you may call The Office of Unclaimed Property at 609-777-4655, or e-mail the Office at sharris@tax.state.nj.us. Thank you for your assistance in this matter.

Holly C. Bakke
Commissioner
N.J. Department of Banking and Insurance

John E. McCormac
N.J. State Treasurer

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