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A07742 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7742
 
SPONSOR: Lavine
  TITLE OF BILL: An act to amend the abandoned property law, in relation to including unclaimed virtual currency within the scope of property covered by such law; authorizing the promulgation of regulations recognizing electronic communication as written contact; and requiring reporting of unclaimed property belonging to deceased persons   PURPOSE: The purpose of this proposed legislation is to provide coverage for virtual currency, authorize the promulgation of regulations related to electronic communications, and recognizing the death of an owner as a trigger for dormancy.   SUMMARY OF PROVISIONS: Section 1 of this bill amends Section 103 of the abandoned property law by adding two new subdivisions (h) and (i) defining the terms "virtual currency" and "virtual currency business activity". Section 2 amends the abandoned property law to add a new section 1423 authorizing regulations related to electronic communications. Section 3 amends the abandoned property law to add a new section 1318 providing coverage for unclaimed virtual currency. Section 4 amends the abandoned property law to add a new section 1424 to begin applicable dormancy periods at the time of an owner's death. Section 5 provides for an immediate effective date.   PRIOR LEGISLATIVE HISTORY: Revised A08314   JUSTIFICATION: It is the policy of the State of New York that while protecting the interest of the owners thereof, to utilize escheated lands and unclaimed property for the benefit of all the people of the state. In furtherance of this policy, the State Comptroller, as custodian of the Abandoned Property Fund, -is diligent with respect to updating and amending the provisions of the Abandoned Property Law (APL) as, from time to time, may be necessary. This legislation: provides coverage under the APL for "virtual currency", a new type of property the use of which is growing; authorizes the promulgation of regulations to recognize electronic communications as sufficient owner contact to prevent property from becoming abandoned; and recognizes the date of death of an owner as a trigger for dormancy. Unclaimed Virtual Currency: Consistent with the regulations issued by the Department of Financial Services regulating virtual currency busi- ness activity (Title 23, Part 200), this change provides statutory coverage for unclaimed virtual currency and provides reporting instructions to holders of such property. By providing coverage for virtual currency under the Abandoned Property Law, the owner's rights will be protected. Holders of such property will be subject to the same due diligence requirements required of other holders under the APL Elec- tronic Communication as Written Contact: The legislation specifically authorizes the State Comptroller to promulgate rules and regulations establishing when an electronic communication from the apparent owner of amounts or securities shall constitute "written contact" for purposes of tolling the dormancy period. This provision recognizes that individuals frequently access their financial accounts through electronic means and authorizes regulations that will establish the form of electronic contact that will be considered sufficient customer contact to prevent property from becoming abandoned. Deceased Persons: the legislation establishes the date of death of the apparent owner of amounts or securities for the purposes of commencing the dormancy period. This provision recognizes that unclaimed funds owed to deceased persons are susceptible to fraud and accounts may appear active when in fact the owner is deceased. Clarifying that the account activity must be generated by the owner will provide protection to the entitled heirs and increase the likelihood that lost funds will be claimed. The State Comptroller urges the passage of this proposed legislation.   FISCAL IMPLICATIONS FOR STATE: The new coverage is estimated to increase receipts by $2-5 million annu- ally in virtual currency and $200 million in FY21-22 as a one-shot increase from dormant accounts owed to deceased owners and $15-20 million annually thereafter.   EFFECTIVE DATE: This act shall take effect immediately.
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