Questions about trust accounts
The bank must be contacted immediately and asked to reverse the charges out of the general trust account. When the general trust account was opened an arrangement should have been made for all charges associated with the trust account to be debited to the firm's office account.
Law firms need to report large amounts of cash received to AUSTRAC (Australian Transaction Reports and Analysis Centre). You will find details on the AUSTRAC website.
There is a Solicitor Significant Cash Transaction Form 15A, which can be obtained from AUSTRAC (Australian Transaction Reports and Analysis Centre). To contact AUSTRAC you can email email@example.com, or phone 1300 021 037.
Further information about money laundering through legal practitioners can be found here.
If my client has money in my trust account and owes me for work done, how can I withdraw what I am owed?
You can withdraw the legal costs as per section 229 (1) (b) of the Legal Profession Act 2006, and refer to section 62 of the Legal Profession Regulation 2007.
What are the trust records I need to maintain to satisfy the requirements of the Legal Profession Act 2006 and the Legal Profession Regulation 2007?
Trust records include the following documents:
- Cheque butts or cheque requisitions;
- Records of authorities to withdraw by electronic funds transfer;
- Deposit records;
- Trust account ADI statements;
- Trust account receipts and payments cash books;
- Trust ledger accounts;
- Records of monthly trial balances;
- Records of monthly reconciliations;
- Trust transfer journals;
- Statements of account as required to be provided under regulation;
- Registers required to be kept under regulation;
- Monthly statements required to be kept under a regulation;
- Files relating to trust transactions or bills of costs, or both;
- Written directions, authorities or other documents required to be kept under this Act;
- Supporting information required to be kept under a regulation in relation to powers to deal with trust money.
These records should be held for seven years, as required by section 63 and section 64 of the Legal Profession Regulation 2007.
No, section 41 (2) of the Legal Profession Regulation 2007 states that a cheque must be made payable to, or to the order of a stated person or people, not to bearer or cash.
Yes, section 42 of the Legal Profession Regulation 2007 provides for practitioners using electronic fund transfers from the trust account, given the appropriate records are maintained. The same internal controls must be implemented for electronic fund transfers, as those adopted when signing trust cheques.
Details regarding statutory deposit requirements are found in section 253(1) of the Legal Profession Act 2006, as well as sections 69, 71, 72, 73 and 74 of the Legal Profession Regulation 2007.
Yes, you can. You will need to arrange settlement cheques be made payable to your client, and have clients provide settlement and disbursement cheques. This means that you will only ever receive transit cheques and no transit money is required to be banked if in the form of a cheque. Refer to section 226A of the Legal Profession Act 2006 if you receive cash.
If your firm only receives transit money you will not be required to open a general trust bank account, and no annual external examination is required.
Section 41 (3) of the Legal Profession Regulation 2007 requires that cheques be signed by an authorised principal of the law practice, or if a principal is not available, an authorised legal practitioner associate, or an authorised Australian legal practitioner who holds an unrestricted practising certificate authorising the receipt of trust money, or by two or more authorised associates jointly.
In relation to general trust accounts, regulation 46(1) requires law practices that keep a general trust account, to keep separate trust account ledger accounts for each client of the practice, in each matter for which trust money has been received. Certain particulars must be recorded in the title of a trust ledger account, including “the person’s address” (regulation 46(2)(b)). This is consistent with equivalent trust account legislation in all other jurisdictions.
The Society often receives enquiries in relation to the meaning of “address” to satisfy the requirement in regulation 46(2)(b) for the trust ledger title to include a “person’s address”.
Having consulted the Society’s Legal Profession Act & Ethics Committee, the Society considers that, in order to comply with the “address” requirement in regulation 46(2)(b), the trust ledger account must record either:
- the person’s physical address (e.g. 1 Northbourne Avenue, Canberra, ACT); and/or
- a postal address (e.g. GPO Box 1, Canberra City ACT 2601).
The Society does not consider that a ‘virtual address’ (e.g. an email account) would be sufficient for the purpose of complying with regulation 46(2)(b).
Unless the Council grants a firm an exemption under regulation 81 for exceptional circumstances, the options under regulation 46(2)(b) are otherwise as stated (physical or postal address).
Section 50(2) of the Regulation requires a firm to provide the Society with written notice of the associates and Australian legal practitioners (including their names and addresses) who are authorised as at 1 July each year to sign cheques and/or effect the withdrawal of money from a general trust account.
For the annual notification provided to the Society from a law firm, the address provided can be either a residential address or a business address for the law firm. The same applies to any notifications at other times of the year, as is required by section 50(20)(a).