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Use it or lose it: the new Italian law on "dormant" financial assets

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After a gestation of almost two years, last August new legislation has been introduced in Italy, to dispose of "Dormant" bank accounts and other financial assets which are estimated to total almost 10 billion Euro in Italy.

A deposit or other financial asset is "dormant", if it has not been used by its owner / his legal representatives for over 10 years. "Bank accounts" include deposit held with Italian banks or Italian branches of foreign banks. The 10 years period starts from the time the liquidity was first freely available to its owner or since he/she last effected any operation with these funds. Financial assets also include insurance contracts.

In the past, these "dormant" assets were the privilege of the holding bank that effectively could freely dispose of these funds, in the absence of the owner. This new legislation now provides that upon the lapse of 10 years since the last operation or since the funds were first freely available, the bank or the financial intermediary must notify the owner by registered post with advice of receipt at his / her last known address, asking for instructions to effect at least one operation, within the following 180 days. If the legitimate owner then remains absent or does not effect any operation, the liquidities / assets are paid into a fund which is managed by the a panel of experts appointed by the Authorities.

This legislation provides additional warnings to the uninterested owners. On the 31st March of every year, banks and other financial institutions are required to lodge a yearly list of "Dormant assets" with the Finance Ministry. The list will then be published on a statutory website and on the national press. If nobody claims the assets / effects an operation by the following 31st May, the funds are paid into a special fund which will be used to refund the victims of financial frauds and criminal mismanagement.

Although the effort to refund victims of financial frauds is commendable, it can not be ignored that this procedure runs counter to several basic principles of Italian law. Firstly, under Italian law, property rights are perpetual, that is they are not subject to any time limits as such. Secondly, it is not clear why the owner of financial assets must be compelled to effect some operation with his funds every ten years, if he has no wish to do so. Thirdly and more importantly, under the Constitution of the Italian Republic private property can not be expropriated without compensation.

In any case, if you have a bank account or other financial assets in Italy it may be worth your while effecting some operations regularly, at least once every ten years and ensuring that you promptly receive all your Italian mail. Once your assets are paid over into the fund that will compensate victims of financial frauds, it may be difficult to recover them ... "use it or lose it."

Avv. Claudio Del Giudice - Copyrights reserved - September 2007

 

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