Companies today face mounting challenges in building and maintaining effective unclaimed property compliance programs. With laws constantly evolving across jurisdictions, managing unclaimed property is not only complex but also time-consuming and costly. As a result, many organizations delay compliance or fail to dedicate sufficient resources—often leading to serious financial and reputational consequences.

In today’s regulatory environment, the stakes have never been higher. States are ramping up efforts to identify non-compliant entities through outreach initiatives and aggressive audits. Companies can no longer afford to ignore or postpone compliance.

What Happens If You Don’t Comply?

Penalties for non-compliance vary by state but are consistently severe. All states require annual reporting and remittance of unclaimed property, and failure to do so can trigger interest charges and steep penalties. These charges accrue from the date the property was originally due, meaning even minor oversights—like missing one property type—can result in significant liability over time.

In addition to financial penalties, companies may face audits. These audits are lengthy (often 5–8 years), complex, and usually managed by third-party firms representing multiple states. While some states have statutes of limitation, auditors often challenge or ignore them, pushing for extended lookback periods. If companies lack historical records, auditors frequently estimate liability, often to the company’s disadvantage.

Compounding the challenge is the fact that many audit firms operate on a contingency fee basis—meaning they’re financially incentivized to uncover as much liability as possible. As more of these firms enter the field, the number of audits continues to grow. For states facing budget deficits, unclaimed property audits offer a convenient revenue stream—making them a trend that shows no signs of slowing.

The Hidden Costs of Non-Compliance

Beyond fines and audits, non-compliance can lead to reputational damage. News of enforcement actions can result in negative publicity, loss of customer trust, and decreased business opportunities. Internally, the resource drain from managing audits and remediating compliance issues can also be substantial.

How to Stay Ahead

To avoid these risks, companies must implement robust policies and procedures to stay compliant with each state’s unclaimed property laws. This includes regular reporting, diligent recordkeeping, and a proactive compliance strategy across all business units.

Continental Stock Transfer & Trust Company supports your compliance efforts on the registered shareholder side, ensuring all required filings and reports are handled efficiently. But who’s managing the rest of your business’s unclaimed property compliance needs?

Written by John Ulla