7.  Cash Transactions

To combat money laundering, lawyers are not permitted to receive cash in excess of $7,500 in respect of any one client matter. Unless it falls within one of the exceptions, if any party attempts to deliver cash in excess of that amount, lawyers are required to return the cash to the party. The party can be directed to attend at a financial institution, deposit the funds and obtain a bank draft.

It is important to note that the $7,500 limit is an aggregate amount. So, if a client were to provide $5,000 cash toward a purchase of an asset and later arrives with an additional $3,000, the lawyer could accept only $2,500 of the latter sum. Any additional sums received from the client or from any party on that matter would have to be by cheque or some other means other than cash.

There are exceptions. The $7,500 restriction does not apply when the cash is received in connection with the provision of legal services:

  • from a financial institution or public body;
  • from a peace officer, law enforcement agency or other agent of the Crown acting in an official capacity; or
  • to pay a fine, penalty or bail.

NOTE

Cash transactions have specific record keeping requirements.  These will be outlined in the Record Keeping section.

A further exception relates to professional fees, disbursements or expenses. A lawyer can accept cash in excess of $7,500 for one of those purposes, provided that any refund out of such receipts is also made in cash. For example, a lawyer would be entitled to accept a $50,000 cash retainer from a client. If, however, the client’s legal matter does not materialize and the file is concluded after the lawyer has billed $4,000 in fees, the balance of $46,000 must be returned in cash to the client.

DID YOU KNOW?

Some firms have a policy of not accepting cash from clients.  That is a business decision.  If you do decide to accept cash, you must ensure the specific requirements regarding cash are adhered to for each and every transaction.