Bureaucracy is stopping thousands of Kenyans from accessing Sh50 billion held by the Unclaimed Financial Assets Authority (Ufaa).
Analysts say multiple regulations have resulted in low uptake of the funds. By the time Ufaa was established in 2014, it had Sh300 million in unclaimed financial assets, but the amount has risen to Sh50 billion.
Of this, Sh20 billion is in cash and Sh30 billion being the value of 900 million units of shares.
The authority has settled claims of about Sh1 billion, leaving a huge sum in its custody. It beats the purpose for its establishment, which was to trace legal owners and beneficiaries of the wealth.
Last week, the authority unveiled a digital claim and assets filing platform to enable institutions holding unclaimed assets to report, as well as people claiming them to file claims.
The move seeks to double its reach from the 5,000 claimants last year. The authority also launched its services at Huduma centres across the country.
“The long procedures have affected the rate of reunification of the financial assets we hold with claimants. We are engaging relevant bodies to have our regulations reviewed because currently a person claiming Sh1 or Sh1 billion from us go through the same processes,” said Ufaa chairman, Mr Richard Kiplagat.
The authority said red tape had affected tracking claimants, resulting in a mere 1 per cent reunification rate.
Auditor-General Nancy Gathungu raised concerns over the low rate of reunification of the assets with owners in her 2018/2019 report, saying the management had faulted the regulations.
“The rate is significantly slow, standing at 1.5 per cent of receipts as of 30 June, 2019. Management attributed the slow pace to the Unclaimed Financial Assets (UFA) Regulations, 2016 which do not support the reunifications,” Ms Gathungu said.
“Management have submitted a proposal to the National Treasury for its amendment. In the circumstances, the Authority is not meeting its mandate of tracing unclaimed assets from holders and reunifying the assets with the beneficiaries.”
According to the Ufaa Act, 2011, the authority has a duty to locate the owner of assets in its custody and notify him or her of their existence.
“During the year under review, instances were noted where claims were paid without certified death certificates by the registrar of persons and deaths as required in the claims policy. There is risk of financial loss being incurred if invalid claims were to be processed,” the auditor noted, in relation to a case where three claims amounting to about Sh3 million were paid out.
The authority also complained that many institutions still hold unclaimed financial assets despite the legal requirement that they surrender it if unable to find beneficiaries.
“There are a number of institutions where audits have been carried out and they have been found to have unclaimed financial assets but they have not remitted those assets to the authority. They are in quite a precarious position because the law provides for quite significant penalties for them,” said Mr Kiplagat.
The authority said banks and listed companies were among the most compliant institutions in reporting of unclaimed financial assets.
It has also engaged the judiciary to partner with family courts for purposes of easy access of letters administration, where they are required to ease reunification processes.