Apparently the law was passed under the guise of "consumer protection."
http://www.sco.ca.gov/col/ucp/faq/faq.shtml#geninfo03
How does the State acquire Unclaimed Property?
California's Unclaimed Property Law requires corporations, business associations, financial institutions, and insurance companies (commonly referred to as "holders") to annually report and deliver property to the Controller's Office after there has been no customer activity on the account for over three years. Often the owner forgets that the account exists, or moves and does not leave a forwarding address or the forwarding order expires. In some cases, the owner dies and the heirs have no knowledge of the property. All holders of Unclaimed Property are required by law to make attempts to contact the owners before reporting the property to the State.
Why does California have an Unclaimed Property law?
The law was enacted to prevent holders of Unclaimed Property from using your money and taking it into their business income. This law gives the State an opportunity to return your money and provides California citizens with a single source, the State Controller's Office, to check for unclaimed property that may be reported by holders from around the nation.
How very kind of them.