Toward a new economic order in Ghana: a critical review of policy on access to deceased customers’ account

By Dr. Francis OSEI-KUFFOUR

Let me lean on ILAPI and be emphatic that ‘Abusua bi te sika so, ?nso ek?m de w?n’, literally translated as ‘some families are sitting on money, yet live in poverty’.

The recent publication by the Institute for Liberty and Policy Innovation (ILAPI) resonated with a text I read in the Holy Bible (II Kings 4:1) and I believe might be in the Quran as well, which talks about a creditor chasing a family (as it is done to guarantors in our day) for an amount borrowed by a deceased husband and father.

I’ve always wondered whether the above’s opposite cannot also hold – whereby banks, and for that matter the Bank of Ghana,‘chase’ families to remit deposits made by deceased family members.

The publication noted that the Bank of Ghana is holding onto approximately GH¢500,000,000 in Dormant Accounts – from various financial institutions that have accumulated between 2016 and 2023 as a result of unclaimed wealth belonging to deceased individuals (ILAPI, 2024).

The problem of deceased customers’ inaccessible account while their families struggle with poverty is profound (Addae, 2024; Bolton, 2024; ILAPI, 2024). As a result, the ‘micro’ economic outlook of these families becomes bleak while the ‘macro’ economy boosts its reserves with the deceased customers’ wealth. This explains the call by various stakeholder groups for new policies toward a new economic order in Ghana to address the phenomenon.

Sections (1) to (7) of Article 143 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) indeed make clear the procedures on unclaimed balances. Sections (4), (6) and (7) seemed to, partly, address the agitations of concerned citizens.

Section (4) has it that: ‘‘Where an account is transferred to a register of dormant accounts and the account has been on the register for three years, the bank or specialised deposit-taking institution shall advertise in at least two daily newspapers of national circulation  (emphasis mine) the fact that the account has been on the register of dormant accounts for three years’’.

Section (6) continues that: ‘‘Where an account has been in the register of dormant accounts for a period of three years and that fact has been advertised as required under subsection (4), the balance on the account shall be transferred to an account earmarked for that purpose at the Bank of Ghana’’. Section (7) concludes the article by indicating that:  ‘‘Where a balance has been transferred under subsection (6), the Bank of Ghana shall, on a request, refund any unclaimed balances to the depositor; or if the depositor is dead, to the legal representative of the depositor (emphasis mine) (GBSDTI Act 2016, Act 930).

As clear as these procedures may be, an issue of concern is that one is not sure about the kind of details banks or specialised deposit-taking institutions are required to display in advertising the dormant account which will catch the attention of deceased depositors’ families.

Another concern is the problem with tracing families of deceased account holders (ILAPI, 2024). Bank and specialised deposit-taking institutions trace and/or chase loan guarantors to redeem facilities granted untraceable customers to reduce their Non-Performing Loan (NPL) rates.

Can’t this trace be replicated using the contacts of Next-of-Kin as indicated in the account-opening form? Or can a new form be introduced to help trace and/or chase depositors’ beneficiary (Payable on Death Form)? A quick glance at Section (4) of the GBSDTI Act 2016, (Act 930) brings to mind the needfulness for advertisements when particulars of Next-of-Kin might be sitting in a deceased customer’s folder.

The initial thought of most concerned citizens on ‘Next-of-Kin’ was made hollow by the recent Bank of Ghana educational notice (NO.BG/GOV/SEC/2024/22), which noted that Next-of- Kin does not automatically inherit account of deceased (BOG, 2024). the Bank of Ghana explained that Next-of-Kin is usually the closest living relative of the account holder, listed as a contact person in case the account holder is unreachable – hence it does not grant the Next-of-Kin automatic access to or inheritance of funds in the account upon the account holder’s death.

The notice further advised that the Next-of-Kin would be required to submit various legal documents such as a death certificate, Letters of Administration or Letters of Probate to access the account of a deceased customer. This might account for the over 1.4 million accounts transferred from Banks and Specialised Deposit-Taking Institutions from 2021 to June 2024, according to ILAPI (2024).

This article considers ILAPI’s recommendations to the Bank of Ghana – Integration of National ID, Public Transparency, Annual Reporting of Dormant account data, Collaborative Identification Efforts to locate beneficiaries, and Setting Retention Periods for Dormant Funds to ensure families can access these resources through recognised legal processes – as good advocating measures for reforms that facilitate access to dormant accounts by next of kin. This article seeks to add a dimension to the proposed recommendations.

In moving toward a new economic order in Ghana to enhance the ‘micro’ economic conditions of families whose relatives die intestate but were customers of Banks and Specialised Deposit-Taking Institutions, Payable on Death (POD) forms could be introduced in Ghana by the Bank of Ghana as a banking and specialised deposit-taking policy.

Payable on death (POD) is not a new concept in the banking and specialised deposit-taking industry. Studies indicate that POD is an arrangement that an individual makes with financial institutions to designate beneficiary(ies) to their accounts, who will inherit funds in the account in the events of their death(Aoki & Aldrich, 2023; Kagan, 2024).

According to those authors, the financial institution provides an account owner a beneficiary designation form to fill out and the completed form gives the bank or specialised deposit-taking institution authorisation to convert the account to a POD; and that upon death of the account holder, the beneficiary automatically becomes the account’s owner.

The authors added that a POD-designated beneficiary prevails even if the beneficiary of a POD account is different from a named beneficiary in the will of an account holder as pertains in other jurisdictions.

The present policy’s main drawback is not permitting an alternate name as beneficiary to the initial POD account when the initially named beneficiary dies before the account owner, in which case the contents of the account automatically transfer to the Dormant account (Kagan, 2024).

This article believes POD would reduce the number of accounts transferred to Dormant account each year in Ghana, with a resultant effect of improving economic conditions for deceased account holders’ surviving family members.

References

Addae, J.K. (2024, August 28). Next of Kin does not automatically inherit account of deceased- Bank of-Ghana. https://www.graphic.com.gh/news/general-news/next-of-kin-does-not-automatically-inherit-account-of-deceased-bank-of-ghana.html

Aoki, K. & Aldrich, E. (2023, August 10). Payable-On-Death Bank Account: Pros And Cons. https://www.forbes.com/advisor/banking/payable-on-death-bank-accont/

BOG (2024).The-Concept of ‘‘Next of Kin’’ in Bank Account Operation. https://www.bog. gov.gh/ wp-content/uploads/2024/08/THE-CONCEPT-OF-NEXT-OF-KIN-IN-BANK-ACCOUNT-OPERATION-1.pdf

Bolton, K. (2024, November 6). Dormant accounts with BOG hold over Gh?167.8m, Ilapi reveals. https://www.gbcghanaonline.com/news/business/bog-dormant/2024/

ILAPI (2024). Bank of Ghana Holding Close to a Billion Cedis in Dormant Account. https://norvanreports.com/bank-of-ghana-holding-close-to-half-a-billion-cedis-in-dormant-accounts-ilapi-says/

Kagan, J. (2024, June 13). Payable on Death (POD) Account Benefits and Drawbacks. https://www. investopedia.com/terms/p/payableondeath.asp

Nartey, L. (2024, November 5). Over GH167. 8m, $14.6m, £ 2.4m in dormant accounts with Bank of Ghana – ILAPI report. https://3news.com/business/over-gh167-8m-14-6m-2-4m-in-dormant-accounts-with-bank-of-ghana-ilapi-report/

The writer is with the Valley View University

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