IBA Compliance Connection

Your go to source for compliance!

Our bank issues checks to sponsor community events. Some of these checks are never cashed for various reasons, such as the events being cancelled due to COVID or because the payee organizations no longer exist. Some of the coordinators of these events have told us that they have no intention of ever cashing these checks and have already destroyed them. Are we required to send these funds to the Illinois Treasurer as abandoned property, or can we take the funds back as income?

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We believe your bank must report the checks to the Illinois Treasurer as unclaimed property if they have remained uncashed for at least three years. Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), a check on which a bank is directly liable becomes reportable as unclaimed property if it has not been cashed “3 years after issuance.” Also, if the check has a value of over $50, your bank must attempt to notify the apparent owner no less than sixty days before filing the report.

We do not recommend unilaterally taking the funds back as income, as Illinois courts have stated that banks can be liable for conversion when they assume control, dominion, or ownership over funds wrongfully and without authorization. Also, the Illinois Treasurer will charge interest at the rate of 1% per month on property that should have been remitted as unclaimed property from the date on which it was due to be remitted to the Treasurer’s office, as well as civil penalties of up to $5,000.

For resources related to our guidance, please see:

  • Illinois RUUPA, 765 ILCS 1026/15-201(3) (“Subject to Section 15-210, the following property is presumed abandoned if it is unclaimed by the apparent owner during the period specified below: . . . (3) any instrument on which a financial organization or business association is directly liable, other than a money order, 3 years after issuance.”)
  • Illinois RUUPA, 765 ILCS 1026/15-401(a) (“A holder of property presumed abandoned and subject to the custody of the administrator shall report in a record to the administrator concerning the property. A holder shall report via the internet in a format approved by the administrator, unless the administrator gives a holder specific permission to file a paper report.”)
  • Illinois RUUPA, 765 ILCS 1026/15-501(a) (“Subject to subsections (b) and (c), the holder of property presumed abandoned shall send to the apparent owner notice by first-class United States mail that complies with Section 15-502 in a format acceptable to the administrator not more than one year nor less than 60 days before filing the report under Section 15-401 if: . . . (2) the value of the property is $50 or more.”)
  • Illinois RUUPA, 765 ILCS 1026/15-603(a) (“Except as otherwise provided in this Section, on filing a report under Section 15-401, the holder shall pay or deliver to the administrator the property described in the report.”)
  • Cruthis v. Firstar Bank, N.A., 354 Ill.App.3d 1122, 1131 (5th Dist. 2004) (“Conversion is an unauthorized act that deprives a person of his property permanently or for an indefinite time. . . . To prove the tort of conversion, ‘a plaintiff must establish that (1) he has a right to the property; (2) he has an absolute and unconditional right to the immediate possession of the property; (3) he made a demand for possession; and (4) the defendant wrongfully and without authorization assumed control, dominion, or ownership over the property.’ Illinois courts have sustained a plaintiff’s cause of action for conversion against his or her bank.”)
  • Illinois RUUPA, 765 ILCS 1026/15-1204(a) (“A holder that fails to report, pay, or deliver property within the time prescribed by this Act shall pay to the administrator interest at a rate of 1% per month on the property or value of the property from the date the property should have been reported, paid, or delivered to the administrator until the date reported, paid, or delivered.”)
  • Illinois RUUPA, 765 ILCS 1026/15-1204(b) (“Except as otherwise provided in Section 15-1 or 15-1206, the administrator may require a holder that fails to report, pay, or deliver property within the time prescribed by this Act to pay to the administrator, in addition to interest included under subsection (a), a civil penalty of $200 for each day the duty is not performed, up to a cumulative maximum amount of $5,000.”)