There is a savings account at the Ulster Bank branch in College Green in Dublin which has been inactive for 12 years. The account - in the name of this reporter - will in all likelihood be included in the first batch of accounts to be classified as dormant under new legislation being prepared by the Government.

While the State will not be gaining greatly from the tiny balance in the Ulster Bank account, the Minister for Finance, Mr McCreevy, will be hoping for much richer pickings from his move to take control of the funds in these accounts. The financial institutions estimated that there is some £15 million (€19 million) in deposit accounts, above a certain balance threshold, dormant for 20 years or more. However, Mr McCreevy has indicated he "could not be confident" about that figure.

The initiative could bring the State a multi-million pound bonanza with some banking sources estimating the figure to be in excess of £100 million.

The value of the money in these inactive accounts will depend on what definition Mr McCreevy accepts as constituting a dormant account. He favours a period of between five and 15 years of inactivity for arriving at the dormant status. From the financial institution perspective, the later the date the better.

Consultations on the subject between the Minister and the financial institutions are due to conclude within the next two weeks. Mr McCreevy has been moving swiftly on the issue since the report of the DIRT inquiry recommended last December that legislation be introduced to allow the State to seize money in dormant accounts.

Prior to the DIRT report the dormant account issue had been under consideration within the Department of Finance for more than two years with little sign of movement. The conventional wisdom was that money unclaimed in dormant accounts was out of the State's reach.

Officials in the Department advised that it "would not be easy to formulate a proposal and draft legislation in a way that would eliminate the risk of a successful legal challenge".

According to documents released to The Irish Times under the Freedom of Information Act, the official advice was that "the State does not have any natural or statutory entitlement to the funds in non-active bank accounts".

However, the Government is now confident its new system will overcome such difficulties. The first objective will be to "return dormant funds to their legitimate owners".

Only when the holders of such accounts are not contactable will the balance be transferred from the financial institutions to a State-controlled Board of Trustees which will be under the remit of the National Treasury Management Agency. The funds will be used for charitable causes as well as "purposes of societal and community benefit".

To date, the standard practice - after attempts to contact the customer have proven fruitless - has been for the financial institutions to retain the unclaimed money for their own purposes.

A similar system operates in many of the member-states of the European Union where there is no legislation governing such accounts. Indeed, in Germany accounts which have been inactive for 30 years become the property of the financial institutions.

However, a number of countries do have arrangements such as the one being proposed by the Government. In Portugal, when an account is not used for 15 years the balance becomes the property of the State. The period of inactivity used to define an account as dormant is 20 years in Spain.

In France, after 10 years of inactivity the funds in dormant accounts are transferred to a holding agency which manages the money for a further 20 years after which it becomes the property of the state.

However, it would appear the Government is looking to the United States for a model of how the dormant account issue can be addressed. As far back as 1996 the Department of Finance received information on the system in operation in the District of Columbia which has been replicated in areas of the US.

All financial institutions in the district are required to submit an annual report on accounts that have had no owner transaction activity for more than five years prior to June 30th of the year in which the report is submitted. For example, the report for June 2000 will list all dormant accounts since June 1995. Accounts which continue to show no activity by April of the following year are seized by the district.

This arrangement will provide the framework for the forthcoming Irish legislation on dormant accounts which will cover accounts with the banks, building societies, An Post and insurance companies.

It is estimated that more than £25 million remains unclaimed by people who have failed to collect on matured life assurance policies. Standard Life has indicated it has about £2 million in such unclaimed policies in values ranging from £20 to £30,000.

The non-inclusion of the credit union movement in the initiative has been criticised by the Irish Bankers' Federation which argues that "a dormant account has the same significance irrespective of where in the financial sector it may be".

The explanation for the non-inclusion of credit unions is their non-profit status - money in dormant accounts is automatically returned to members. However, this argument may be reexamined given that the EU is already undertaking an investigation to determine whether credit unions are more favourably treated by the State than their competitor financial institutions.

There are many reasons why accounts become dormant - forgetfulness, emigration, death and change of address. In the District of Columbia many accounts opened on behalf of children which are forgotten over the years are included every year in the list of dormant accounts.

The advice offered elsewhere to prevent state authorities "cashing out" the funds in such accounts is for customers to make at least one transaction every year on each of their accounts. Interest and charges levied by financial institutions do not count as owner activity.

However, the best guarantee for staying off the dormant account list is to ensure the financial institution which holds the accounts has up-to-date customer details including a current address.