Case study examples help solicitors understand client banking facility rules

The Solicitors Regulation Authority (SRA) has produced a number of additional case studies to help law firms understand their responsibilities in ensuring client accounts are not used as a banking facility.

The SRA Accounts Rule 3.3, which states that solicitors ‘must not use a client account to provide banking facilities to clients or third parties. Payments into, and transfers or withdrawals…must be in respect of the delivery of regulated services’.

The rule was brought in to address a problem where some law firms were providing clients with banking facilities in instances where they did not have access to their own. The practice was outlawed as it increased the risks of money laundering and could also have been misused to hide assets in cases of insolvency or matrimonial disputes

Now, the SRA has issued additional guidance in the form of published case studies to help law firms understand scenarios when paying money into the client account is deemed unacceptable.

Although the case studies are intended to provide firms with a general idea of issues that would breach regulations, the SRA has warned that any case will ‘turn on its own individual facts’.

Paul Philip, SRA Chief Executive, said: “It is really important that firms don’t use the client account as a banking facility – it can open the door to money laundering or help people inappropriately hide away assets.

“This rule generates a lot of queries and I’ve been asked about it a number of times when meeting with local law societies in the last year. We want to support firms to help them remain compliant. We hope these case studies prove useful.

“The most important aspect for all firms is the rule itself, read that first, and then have a look at the case studies for further help.

“Solicitors naturally will want to help their clients, but they of course must also do the right thing. If a client wants you to act in this way, you should seek to understand why they are asking you to do this and reassure yourself that you take an approach that is compliant.”