CSSF Circular 15/631 dated 28 December 2015 (“Circular”) establishes the criteria for defining dormant accounts and determining the conditions for treating such accounts under Luxembourg law.
The Circular applies not only to credit institutions but also to other professionals which hold or manage third-party assets, in particular when such assets are placed with a bank or other financial institutions (the other professionals are hereafter referred to as “PFS”).
In this regard, credit institutions and PFS are obliged (i) to maintain regular contact (preferably once a year at least) with their clients and (ii) to thoroughly and constantly keep track of the relationship with clients to determine whether the transactions initiated from the relevant account are consistent with the client’s information made available to them.
A client relationship and an account shall be considered inactive and dormant if the following two conditions are fulfilled:
there has been no communication from the client or its authorised representative during the last six years of a given period; and
within the last three years of that same given period the client or its authorised representative have not initiated any transaction.
Transactions not initiated by the client (such as the collection of fees or direct debit payments) shall not be considered as account transactions under the terms of the Circular. By contrast, if the credit institution or PFS has been in contact with the client through any means whatsoever, the relationship shall not be considered as inactive.
Once an account is classified as dormant, the credit institution or PFS shall try to re-establish contact with the client by all appropriate means.
Searches for the client or any potential heirs may be made with due consideration of the costs, in particular as regards recourse to experts. The credit institutions and PFS are entitled to debit the relevant dormant account for all expenses derived from such a search. If the attempts to contact the client are unsuccessful, they shall carry on administrating the client’s assets in accordance with the principles of loyalty, good faith, diligence and care while being entitled to all justified and transparent administrative fees.
Finally, the Circular stresses that credit institutions and PFS are not entitled under any circumstances to appropriate the assets deposited within the dormant accounts for reasons of time lapse.