The Minister for Finance, Mr McCreevy, has proposed that the State should be empowered to seize money which has been lying unclaimed or "dormant" in bank and building society accounts for five years.
This is one of the steps now proposed to make up for revenue lost to the Exchequer due to evasion of DIRT tax on deposits through the operation of bogus non-resident accounts.
The Minister hopes to raise about £40 million from this measure, to be spent on community development purposes.
The seizure of funds held in "dormant" accounts was one of the penalties against the banks proposed in last week's hard-hitting report by the Public Accounts Committee.
However, Mr McCreevy's proposal is expected to prove controversial. Financial institutions usually leave funds in such unclaimed accounts for periods of up to 20 years before they are forfeited.
Because of the possible legal and constitutional implications arising from his proposals, the Minister has sought the advice of the Attorney General, Mr Michael McDowell. It is understood that full restitution would be made where the owner of a dormant account was later identified.
The measure would require the passage of special legislation in the new year.
It has been indicated that Mr McCreevy has been considering action on this issue for the past two years and has been encouraged by the Public Accounts Committee's report on DIRT evasion.
A reliable source said specific legislation would be introduced to deal with dormant accounts, rather than include the issue in the Finance Bill or in the Central Bank Bill, which will give effect to the appointment of an independent financial regulator.
Two years ago, Mr McCreevy invited the financial institutions to carry out a voluntary assessment of the value of funds held in dormant deposit accounts. The figure of £15 million produced at that time was regarded as unsatisfactory by the Department of Finance because different criteria were applied by different institutions in compiling their figures. In addition, the banks suggested that £2 million accrued every 25 years to such dormant accounts as "an indicative estimate".
In the aftermath of the DIRT inquiry, such estimates from financial institutions are unlikely to be taken at face value. Some dormant accounts would have been opened in pre-DIRT days as multiple-accounts, so as to avoid drawing the attention of the tax man to interest paid; later accounts could be in bogus names with off-shore addresses. And, while banks provide assistance in tracing the assets of deceased persons, many accounts slip through the net.
Mr Jim O'Keeffe of Fine Gael, who has been active on this issue, said: "Over £25 million lies unclaimed in life assurance companies due to the fact that people have failed to collect on their matured policies."
Commenting on dormant accounts, some of which were opened for tax-evasion purposes before the owners died, the DIRT report said they contained "an unquantified and probably very large amount of money" which was, for financial institutions, free capital and effectively part of the capital base of the institutions.