Proceeds of Crime continued

Be wary of clients who want to bring you cash, even if they claim they have no bank account. Such clients can always bring you a money order or bank draft. Refuse to act for any client in a matter that is more in the nature of a banking service than a legal service. Approach with caution any situation where you can't define the legal services you are being asked to carry out. Call the LSBC for advice on how to deal with ambiguous requests; you can do this while still keeping the client's name in confidence.

You can be caught between a rock and a hard place if you have, or suspect you have, received funds that do constitute proceeds of crime. You may be prosecuted if you return the money to the client, transfer it to another lawyer's trust account or distribute it to third parties. At the same time, you risk prosecution if you keep the money without taking the proper steps.

What should you do upon learning or suspecting you have funds in your account that constitute proceeds of crime?

  • Retain knowledgeable counsel for yourself and disclose in writing to that counsel your knowledge respecting the funds.(This action serves as evidence that you are only holding the funds in the public interest and negates criminal intent.)
  • Advise your client that you are holding the funds in trust and will only release them on court order.
  • If your client refuses to authorize you to disclose the reason why the funds cannot be released to any third party for whom the funds are being held, then in order to maintain confidentiality, you can only tell the other party to seek an explanation directly from the client and, if necessary, seek independent advice.
  • If matters are still unresolved, contact the Practice Advisors at the LSBC for advice on the proper course to follow.

In short, to be safe, if your client wishes to give you large amounts of cash, the client should first convert the cash into a negotiable instrument through a financial institution.

Community Discussion

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I pracised for many years in Ontario, and one of the fairly recent fraud scams lawyers there have been warned about involves previously unknown clients retaining counsel for a collection matter, payment being made unexpectedly quickly by the 'debtor' to the lawyer in trust, and the unwary lawyer agreeing to disburse funds to the 'client' before waiting for the (phony) cheque to actually clear.  A variant scam involves the new client 'mistakenly' over-paying a fee account with what purports to be a bank draft, the lawyer agreeing to immediately pay the surplus back to the client, and the lawyer only learning later that the bank draft was a bogus instrument.