Context
The Luxembourg Parliament (Chambre des Députés) has passed a law on inactive (also sometimes referred to as dormant) bank accounts and safe deposit boxes and on unclaimed life insurance policies (the “Law”), thereby creating a specific legal framework on matters that until now were governed by contracts and general civil law rules.
The Law was published in the Luxembourg Official Gazette (the Mémorial A) on 1 April 2022 and will become effective on 1 June 2022.
Definitions of Inactivity
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Bank Accounts
An inactive account is one on which the account holder has not carried out any transaction, provided that in addition he has not transacted on any other account or safe-deposit box held with the same credit institution. Furthermore, the holder must not have made himself known through any other means to the credit institution.
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Safe-deposit Boxes
A safe-deposit box is considered inactive when its holder has not made himself known to the credit institution that maintains the safe-deposit box. A transaction on an account held with the same credit institution is considered as sufficient to signal activity.
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Insurance Policies
An inactive life insurance policy is one towards which no beneficiary has asserted a claim for amounts due. Inactivity ceases after any representation made by a beneficiary to the insurance undertaking.
Legislative Aims
The Law aims to accomplish three main goals:
- Assure that credit institutions and insurance undertakings impose preventative measures to avoid inactivity by keeping in contact with holders/beneficiaries, monitoring accounts, safe-deposit boxes and life insurance policies and establishing procedures for reactivation. Credit institutions and insurance undertakings must attempt to inform holders/beneficiaries of inactivity and its legal consequences and conduct further research on holders/beneficiaries if they were unable to
re-establish contact. Credit institutions and insurance undertakings are also under an obligation to report annually on a consolidated basis on dormant accounts, safe deposit boxes and life insurance contracts to their respective regulators and to the tax authorities. - Assure that after a prolonged period of inactivity (10 years for accounts and safe-deposit boxes (50 years for certain assets) and 6 years for life insurance contracts), the credit institutions and insurance undertakings must deposit the assets (or assets of equivalent value) to the Consignment Fund (Caisse de Consignation). Once the assets are deposited, the inactive accounts and safe-deposit boxes are deemed closed and the life insurance policies are deemed terminated by operation of law.
- Assure that wherever possible, approved applicants to the Consignment Fund receive restitution for claims that are ascertained to be owned by them. In order to validate claims, the Consignment Fund may request information from the relevant credit institution or insurance undertaking.
Sanctions
The regulators may impose administrative sanctions if credit institutions or insurance undertakings fail to comply with their legal obligations or refuse to cooperate. Criminal sanctions may also apply in certain circumstances.
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