Community banks are built on strong local relationships and trust - but even the most customer-focused institutions face compliance requirements that can’t be overlooked. One of those obligations is escheatment, the process of reporting and remitting unclaimed property to the state.
While escheatment may seem straightforward, the reality for community banks is more complex. From dormant accounts to uncashed cashier’s checks, the range of escheatable property is broad, and compliance rules vary from state to state. Without a clear process, banks risk fines, audits, and reputational harm in their communities.
What is Escheatment in the Banking Industry?
Escheatment is the legal requirement to turn over unclaimed or abandoned funds to the state after a specified dormancy period. For community banks, this may include:
- Dormant checking and savings accounts
- Uncashed cashier’s checks or money orders
- Safe deposit box contents
- Overpayments or credit balances
- Unclaimed loan overpayments or escrow refunds
Because community banks serve both individuals and small businesses - often across multiple counties or states - keeping track of every potential escheatable asset is a significant operational responsibility.
Why Escheatment Is Especially Challenging for Community Banks
While larger institutions may have entire departments dedicated to unclaimed property, community banks often manage compliance with smaller teams and limited resources. Common challenges include:
- Manual tracking processes: Without automated systems, identifying dormant accounts can be time-consuming and error-prone.
- Multiple product types: From deposit accounts to safe deposit boxes, each has different dormancy periods and reporting rules.
- Multi-jurisdictional requirements: Customers may have moved, opened accounts in neighboring states, or relocated entirely - and each state has its own rules and regulations.
- Audit preparedness: Incomplete documentation of outreach attempts or reporting can trigger findings during a state audit.
Common Escheatment Scenarios for Community Banks
A Step-by-Step Approach to Escheatment for Community Banks
- Identify Dormant Accounts and Assets: Use activity monitoring to flag accounts with no customer-initiated transactions, undelivered checks, or unclaimed safe deposit box contents. Align each with the correct state dormancy period.
- Conduct Due Diligence Outreach: Most states require notifying the rightful owner before reporting. This may involve first-class mail, phone calls, or electronic notices where permitted by law.
- Report and Remit to the State: Submit a NAUPA-compliant report and remit funds or property to the appropriate state. Negative reports may still be required if no unclaimed property exists.
- Maintain Documentation for Audits: Retain account activity records, outreach logs, reporting confirmations, and safe deposit box inventory details for 10 - 15 years.
How Eisen Helps Community Banks Manage Escheatment with Confidence
Eisen’s compliance platform is designed for financial institutions that value efficiency and accuracy. We help community banks manage escheatment from start to finish with tools built for busy teams.
- Escheatment Manager: Identify dormant accounts, track multi-state dormancy periods, and produce accurate, state-compliant reports in minutes instead of weeks.
- Outreach Manager: Send and track required customer notices with pre-built templates, verified addresses, and delivery confirmations to stay audit-ready.
- Disbursement Manager: Manage state remittances - whether via ACH, check, or other approved methods - while ensuring clear reconciliation and accurate reporting.
The Bottom Line
Escheatment for community banks isn’t just about compliance - it’s about preserving the trust you’ve built with your customers and your community. With the right processes and tools, you can stay compliant, protect your institution from risk, and focus on serving the people who rely on you.
