Is it correct that national banks, at least OCC and OTS chartered, are exempt from state dormant account reporting laws so th ey should not report dormant accounts and should not deliver dormant account funds to the state?

As far as I know, OTS regulated banks must comply with current state escheat/dormancy laws. This I determined from the I/A's questionnaire (PERK) and also OTS' definition of "dormant account" -- a savings account on which no transaction (except the crediting of interest) has occurred for a specified number of years. At the end of that time period set by state law, funds in the account escheat to the state. Hereis the I/A questionnaire.

WOW - that would be interesting if true, but it's not true - you must report and turn over funds.

But look at item 2 on the OTS's Compliance Self Assessment Guide.

The OCC has recently issued a Notice of Proposed Rulemaking in which it is proposing to add to its 12 CFR Part 7 rules more definition of what types of state laws and regulations are superceded by the National Bank Act.

One of the items in the proposed rule is state abandoned property law and regulation.

Since abandoned property (escheat) is a jealously-guarded source of state funds, you can expect that state treasurers will comment copiously on the proposal.

As of now, we consider ourselves (a national bank) subject to state abandoned property rules. We would welcome, I suspect, a change in that point of view.

Woe is me!

"Is the association aware that, for Federal savings associations, the OTS preempts state laws regarding abandoned and dormant accounts, checking accounts, disclosure requirements, funds availability, savings account orders of withdrawal, service charges and fees, state licensing or registration requirements and special purpose savings services? [§557.11-.13]"

I guess I didn't... So then, can someone explain to me, why are there contradictory indicators elsewhere?

This is the OTS Regulation on preemption.

So what is the proposal for the funds - do they go to the US Government?

See below for more fun and games...

Well, maybe I am not crazy after all:

Powers of Federal Savings Associations
March 1, 2002
FSAs generally are not subject to state laws attempting to regulate FSAs’ deposit-related activities, including state laws governing abandoned and dormant accounts, checking accounts, disclosure requirements, funds availability, savings accounts orders of withdrawal, service charges and fees, state licensing or registration, and special purpose savings services. 12 C.F.R. §§ 557.11 to 557.13; OTS Op.
Ch. Couns., Oct. 11, 1991.
State escheat laws, such as those that require a FSA to remit the balance of an abandoned account to the state at a designated time or that allow states to review FSA records solely to determine compliance with the escheat laws, are not preempted. OTS Op. Ch. Couns., Jan. 18, 1996; FHLBB Op. Dep. Ch.

Anyone want to help solve my dilemma?

The answer is nicely hidden in the Federal Register where the proposed 12 CFR 557.12 is discussed (62 FR 55759 at 55761 or so):

"One additional type of state law merits discussion--state escheat laws. Some commenters argued that escheat laws should be added to the list of preempted state laws. Other commenters suggested that these laws should be added to the list of laws that are not preempted. This agency has concluded in prior opinions that federal law does not
preempt state laws requiring a federal savings association to remit the balance of an abandoned account to a state at a designated time.
Additionally, the agency has opined that states may review the records of, or obtain reports from, a federal savings association only in very limited circumstances, including determining whether the federal savings association has complied with the escheat law. On the other hand, certain other laws (e.g., state laws prohibiting a savings association from charging any fees for lack of activity during the designated escheat period) are subject to preemption.
Because some aspects of state escheat laws are preempted and other aspects are not, OTS declines to address these laws in the final regulation."

Bottom line - OTS (and OCC even with new reg) institutions are subject to the states' escheat laws but the state cannot prohibit the bank from charging fees on dormant accounts.

Thanks all, (and I wasn't even the original poster)I do wonder why the regs have to be so darn convoluted!

In the OCC's NPR, we find footnote 3, which reads: "This does not apply to state laws of the type upheld by the United States Supreme Court in Anderson Nat’l Bank v. Luckett, 321 U.S. 233 (1944), which obligate a national bank to "pay [deposits] to the persons entitled to demand payment according to the law of the state where it does business." Id. at 248–249. State escheat laws are not included in this category. See also 12 CFR 557.12; 62 FR 55759, 55761 (Oct. 22, 1997)."

I suspect the laws referred to in the Anderson Nat'l Bank case are escheat laws. The footnote is ambiguous, however, since it goes on to say "State escheat laws are not included in this category."

In which category are escheat laws not included? Laws on abandoned property and dormant accounts? Or "laws of the type" described in the Anderson Nat'l Bank case?

Does anyone know anything about the NJ State Escheat Laws? My question is: We must file based on all accounts considered abandoned AS OF JUNE 30th - we file to the State prior to Nov 1st - so, in the case of a Savings account, do we send the state the balance in the savings account as of June 30 - or do we send the State the balance in the account as of Nov 1st (which will include interest paid over past four months)?????

Nope, but the people at the New Jersey Department of Taxation are good enough to post their requirements on their web site.

I already read the NJ State requirements and they do not specifically indicate the answer to my question - but, under Reg DD, don't we have to continue to pay interest on the account and therefore, we would have to give them the entire balance in the account as of November 1st?