Congress shields financial firms from returning forgotten customer assets to states

What it does

This bill prevents financial institutions from turning over customers' securities, digital assets, and investment accounts to state governments under unclaimed property (escheatment) laws unless very specific conditions are met: for deceased individuals, the institution must have confirmation of death at least 3 years prior and no estate representative has claimed the asset in that time; for non-individual owners, there must be 5 years of no contact. The bill also requires financial institutions to periodically check death databases for retirement-age account holders. The effect is to keep dormant investment accounts in private custody longer, delaying or preventing states from claiming them as unclaimed property.

Why we flagged it

The bill's operative mechanism is a preemption of state escheatment law that extends the time financial institutions may hold dormant customer assets before surrendering them to state unclaimed property programs. The framing as 'preventing premature seizure' masks a substantive shift in custody rights from states to private financial institutions.

What the text implies

• Financial institutions gain extended use of dormant account assets and their proceeds (dividends, interest, investment returns) during the extended holding period, creating an implicit subsidy to custodians.
• State unclaimed property programs, which reunite citizens with forgotten assets, face reduced revenue and reduced ability to fulfill their public mission of asset recovery.

The full analysis lists 5 implications of this text.

Who stands to gain

financial institutions (custodians of securities and digital assets); transfer agents; centralized digital asset exchanges