In the plenary session of the Senate of the Republic of Colombia, in October 2021, the budget law for the year 2022 was approved, which includes in Article 79 a provision for the transfer of inactive funds in savings accounts to the national treasury in order to finance the general budget. However, this mere legal determination raises a series of doubts and uncertainties within the Colombian legal framework, the financial consumer statute, and the very proposals for the transparent and responsible management of the nation's resources.
As a first point, I cite the regulations approved by Congress:
“ARTICLE 79. The balances of checking or savings accounts that have remained inactive for a period greater than one year and do not exceed the equivalent value of 322 UVR, shall be transferred by the financial institutions holding them, by way of a loan to the Nation – Ministry of Finance and Public Credit – General Directorate of Public Credit and National Treasury, in order to finance appropriations of the General Budget of the Nation. The respective loan contracts entered into between the Nation – Ministry of Finance and Public Credit and the financial institutions for the purpose of transferring the balances of inactive checking or savings accounts shall only require the signature of the parties and their publication for their perfection and validity. When the account holder requests the activation or cancellation of the inactive balance before the financial institution, the General Directorate of Public Credit and National Treasury shall reimburse the lender the corresponding sum with the respective returns, in accordance with the interest that the deposit was earning in the financial institution as an inactive account, in accordance with the provisions in force.” (General Budget Law 2022)
Now, from the above, the following doubts arise: what happens to funds derived from money laundering? Is authorization required from the financial consumer to carry out these transfers? Could this be considered an automatic expropriation different from that mentioned in Article 399 of the General Code of Procedure? Does this provision generate any concern for the bank account holder?
With the above, and to avoid making the considerations more extensive, we will try to analyze these questions.
What happens to funds derived from money laundering?
In this regard, it is important to consider that proceedings against individuals or assets that engage in or carry out money laundering activities, and the illegal obtaining of funds from illicit activities, are conducted under the guidelines of Law 1708 of 2014, Law 1849 of 2017, and other relevant regulations, and are intended to sanction those who acquired assets through illegal acts. Having said that, we put forward the idea that we have a savings account containing illicit or money laundering funds, and that for reasons X we stopped using it for more than a year, leaving a balance of 322 UVR (approximately $92,000 as of 2021), and that by provision of Article 79 in question, the financial institution would transfer those funds to the nation. At this point, we could consider that the State would be consolidating illicit funds without an asset forfeiture process and therefore would be, in some way, laundering the assets, being indirectly complicit.
Under this problem, the operation carried out on the balances of bank accounts that are not active or that have not shown movements for more than one year should be guaranteed in such a way as to allow knowing whether such balances are part of money laundering or illicit funds. This could be done through various SARLAFT-SAGRILAFT mechanisms and various investigations into the account holder and the last transactions carried out.
Is authorization required from the financial consumer to carry out these transfers?
According to Article 79, it appears that no type of authorization is required from the savings account holder, and therefore, unilaterally, the State would dispose of the funds without requiring further circumstances. Although this is a tax-related situation, it should not be forgotten that this type of act is not typical of a Social State of Law, which guarantees the coexistence of a society by respecting and guaranteeing individual, collective, economic, environmental, social, etc. situations, and distances itself from totalitarian and authoritarian states. Therefore, it would not be acceptable for a Social State of Law to override its citizens with a law that eliminates their ability to authorize or not the loan contracts over their funds deposited in savings accounts in the different bank accounts. In order to respect the individual rights and obligations of citizens, it is important to obtain such authorization expressly through their financial institutions.
Not far from the above, it is important to note that each financial institution enters into an adhesion contract for savings and checking accounts, in which the account holder cannot modify any essential clause thereof, but in such contract, there is no authorization (in several financial institutions) to carry out different activities with the funds deposited in such bank accounts. Therefore, it would be prudent to identify this issue in the Financial Consumer Statute law.
Does this provision generate any harm to the bank account holder?
Finally, when analyzing whether this could effectively cause any harm to the bank account holder, we see that harm could be caused to individuals as long as the State and banking institutions cannot respond and return the funds, along with the returns, to the holders. But in general terms, if there are necessary resources, there would be no damages or losses that could be claimed over the funds lent to the State and that these are effectively returned once requested from the banking institution.
However, from the above, an interesting concern can arise, which stems from those experiences where the State does not pay its obligations on time or in due form, and due to certain procedures, delays in compliance are generated. Therefore, some kind of financial bubble could be generated where the resources obtained through loans are not returned on time to the financial institutions, and it is these institutions that back such resources to the account holders, and the sums given as loans are of such magnitude that the financial institution cannot meet such payments, and in turn, enforcement actions are initiated against the State to recover such funds, generating significant patrimonial detriment.
This Article 79 of the 2022 Budget Law, as we have seen, presents several questions and will continue to do so, since its operation may present certain legal and financial risks that, if left adrift, can generate damage to the legal system and cause harm, instead of financing the nation's budget.
Prepared by: Luis Carlos Ramirez Satizabal.. Consulting Attorney.