The National Assembly’s Finance Committee has rejected a controversial government proposal seeking to amend the Unclaimed Financial Asset (Amendment) Bill, 2024. The proposal would have allowed individuals with unclaimed assets to designate others to receive the benefits. The committee, chaired by Molo MP Kuria Kimani, deemed the provision vulnerable to abuse, perpetuating fraud, and enabling the transfer of proceeds of crime.
The Unclaimed Financial Asset Authority (UFAA) currently holds and manages assets presumed abandoned, which include income, dividends, interest, and other forms of wealth. The law ensures that rightful claimants can retrieve these assets upon verification. However, the government’s proposed changes sought to simplify the process by allowing claimants to nominate third parties to access the funds in their absence.
Proposed Changes and Concerns
The proposed amendment aimed to grant UFAA the authority to release unclaimed funds to a designated third party if the claimant is unavailable. “Where the authority is satisfied that a person is the owner of all or part of the assets that became unclaimed assets and paid into the fund, the authority may pay out of the fund to the owner or such other person as the owner may designate,” the bill read.
However, this provision sparked apprehension among stakeholders and lawmakers. The Finance Committee, after consultations with various entities including the Law Society of Kenya (LSK), UFAA, the Attorney General, and the Institute of Certified Public Accountants, flagged significant risks associated with the amendment.
“Whereas the amendments in the Bill seek to simplify and enhance the process of claiming unclaimed financial assets, the absence of explicit provisions on third-party designations creates legal risks for both the authority and claimants,” the committee’s report noted.
The committee also highlighted the potential for disputes due to fraud, undue influence, or lack of capacity, which could compromise the integrity of the claims process.
Legal and Ethical Risks
One of the primary concerns is the risk of fraudulent claims. Allowing claimants to designate third parties without robust checks could open loopholes for unscrupulous individuals to exploit the system. The committee also pointed out that the provision could facilitate the transfer of illicit wealth under the guise of unclaimed assets.
“The provision could pave the way for easy transfer of proceeds of crimes to individuals,” the committee warned, emphasizing the need for stricter safeguards.
Unclaimed assets, as defined by the law, include those presumed abandoned, transferred to UFAA, or deemed unclaimed under any other law. Lawful charges are deducted before claimants can access their funds, ensuring transparency and accountability.
Stakeholder Opposition
The proposed changes faced widespread opposition from stakeholders. The Law Society of Kenya raised concerns over the lack of clear guidelines for third-party designations, which could lead to legal disputes. Similarly, UFAA and the Institute of Certified Public Accountants stressed the need for more explicit provisions to prevent misuse.
The Finance Committee’s report reflects these concerns, recommending the deletion of the contentious provision. The proposal’s deletion signifies a broader commitment to protecting the integrity of the unclaimed assets framework.
Awaiting Plenary Vote
The amendment bill, sponsored by Majority Leader Kimani Ichung’wah, will be subjected to a vote in the main plenary session. The decision will ultimately determine whether the proposed changes are permanently shelved or revised for further deliberation.
As the government pushes for reforms to streamline the management of unclaimed assets, lawmakers and stakeholders remain vigilant to ensure that such changes do not compromise the system’s integrity. Protecting unclaimed assets from fraud and abuse remains a critical priority, reflecting the importance of a robust and transparent regulatory framework.
The debate underscores the delicate balance between simplifying processes and safeguarding public resources from potential exploitation.
