Dormant Accounts

A dormant account is an account with no activity or contact with the member for a specified period. Many credit unions classify an account dormant if it has had no activity for 12 months. Typically, this is an automated process, where the credit union's data processing system marks the inactive account as dormant. Accounts with large balances in dormant status are at greater risk of insider fraud and require enhanced monitoring.

An abandoned account review is different than a dormant account review. The period of time that must lapse without activity or contact for an account to be considered ‘abandoned’ or ‘unclaimed property’ depends on the laws of the state where the member last lived. Each state and territory establishes laws governing the transfer of abandoned or unclaimed property.

Examiners can review dormant account operations to determine if controls are in place monitor and handle these accounts properly.

To review dormant account controls, examiners:

• Review written policies/procedures over dormant accounts

• Obtain a system-generated dormant account report (may be referred to as a Dormancy Status Change Report or Dormant to Active Report depending on the core system vendor) to identity accounts that rolled off the dormant account report and determine if the activity looks unusual

  • Select a sample of dormant accounts for testing and:

    • Review the transaction date and type of transaction

    • Verify the transaction was valid by tracing, as necessary, the following items to signatures on the member account cards:

      • check endorsements

      • signatures on withdrawal/deposit slips

      • loan documentation

    • Determine the validity of the address of the member on file

    • Verify the completion of a transaction override

If a Dormant Account Report is not available, the examiner contacts the data processor to find out if the system can generate one. Use the supervisory override controls report to determine if a supervisor must authorize activity on a dormant account. Use file maintenance reports to determine if activity in a dormant account creates a file maintenance entry

• Determine if the supervisory committee, internal auditor, or other designated third party performed a documented internal review of dormant accounts

• Determine if procedures are in place to periodically review dormant account reports and/or file maintenance reports

  • Verify that the report reviewer does not have transaction permissions or override authority for dormant accounts

  • Determine if staff performs subsequent evaluation on re-activated accounts for new or unusual account activity—for example, home banking addition to the account, new debit card request, change of address

• Identify and follow-up on red flags

Last Updated on October 14, 2021