CHAPTER 5:

ENFORCEMENT

As we mentioned in Chapter 4 (Reporting and Submission of Unclaimed Moneys), only a small percentage of Malaysia's companies and societies file reports with the Registrar each year. Common sense dictates that the numbers should be far higher.

In very broad terms, in the U.S., Canada, Australia, and in Malaysia as well, less than half of all unclaimed moneys that are reported and remitted to the authorities will be returned to its lawful owners. The remaining money will remain with the authorities, available in due course to be used as part of government financial resources. It is very much in governments' best financial interests to enforce compliance with unclaimed moneys laws.

The Unclaimed Moneys Act states that entities that do not report and submit unclaimed moneys are subject to a fine of RM 20,000. Since 1965, according to the Attorney General's office, not a single company has been prosecuted for non-compliance with the Act, although the Registrar has levied fines in a few instances.

Australian and American states, for example, have considered the potential revenue to be gained by compliance. They have hired teams of auditors to perform random checks on companies' books, searching for unclaimed moneys that the entities have failed to report, collecting fines as well as the unclaimed assets when they find them.

This is where we in Malaysia find ourselves in a Catch-22 situation: The Act gives the Registrar powers of inspection and enforcement, but inadequate resources to carry them out. Any investment in enforcement would pay off by generating more money for the government.

In light of the Registrar's limited resources at present, it is no surprise that businesses holding unclaimed moneys in their accounts may feel that they can retain that money, for their own use and benefit, without any real risk of detection or sanction. Such behaviour represents a financial loss not only to the legitimate owners of the moneys, but also the Consolidated Fund of Malaysia.

How might this situation improve? As we mentioned in the last chapter, growing public awareness of the Act can only help. Other countries have led the way, and we are pleased that Malaysia is following suit by publishing unclaimed moneys on the internet. As more people realise that the Registrar is holding money in their names and come forward to file claims, both activity and public awareness will rise. That increased awareness should also extend to accountants and auditors, and the heightened activity may also result in boosting the Registrar's resources for enforcement of the law.

Which leads us to make another suggestion: All registered companies and societies must conduct an annual audit. Suppose the Parliament amended the Act to hold auditors responsible to confirm that a company has no unclaimed moneys. Further, the Act might impose severe sanctions against auditors who failed to do so. At the moment, auditors appear to feel primarily responsible to their clients and may well feel inclined to overlook unclaimed moneys.