What characterizes a dormant account?

A dormant account is typically characterized by a period of inactivity, during which the account has not seen any transactions or account holder engagement. An account being classified as dormant usually occurs after a specified duration of inactivity. In many financial institutions, this period is often 12 months or more without any withdrawal, deposit, or other activities initiated by the account holder.

This classification serves various purposes, including guiding regulatory compliance and monitoring for potential risks, such as forgotten accounts that may be at risk for fraud. Accounts that remain inactive for less than this designated timeframe, such as 6 months, usually do not meet the criteria for being classified as dormant. Statements delivered to the account holder or accounts with frequent transactions would typically indicate active engagement, thus not being classified as dormant. Therefore, the defining characteristic of a dormant account is that it has been inactive for an extended period, which, in this context, is accurately described by the stipulation of inactivity for more than 12 months.