2. Types of Deposits
When money from a client or on behalf of a client is received by you in any form, you must deposit the trust money to the pooled trust account “as soon as practicable”, as required by Rule 5-44(1)(a).
In practice, “as soon as practicable” means within one or two days of the date of receipt.
Trust money can be received in a variety of forms.
If a client wants to provide trust money via Interac e-transfer, the firm may accept the money, although only if:
i) your online banking software – properly restricted to be ‘read only’ access – allows you to direct the receipt to your trust bank account. Trust money cannot pass, however briefly, through any account other than a trust account; and
ii) any related fees are charged only to your general bank account.
b) Credit/Debit Cards
There are many variations in firm practices in this area.
Some firms have policies that prohibit receipt of trust money by electronic payments and instead will only accept these payment methods for the general account.
It is permissible to accept both trust and general money by credit/debit card. Those firms that do, however, must follow these requirements:
i. If there is only one terminal or merchant number set up with your electronic payment service provider, 100% of all receipts must be deposited to your pooled trust account. For payments that belong to the general account, you must receipt and record it fully in the pooled trust account, followed by a trust cheque to pay it to your general account once you have confirmed that the deposit has been received in the trust account. Service fees are sometimes deducted from the amounts being deposited, so if you are charged 2 1/2 percent for every $100 deposited, most providers want to only deposit the net $97.50 for every $100. This is no different than any other bank charge that must not be made on the pooled trust account and must instead be directed to the general account.
ii. There may be a difference between processing individual transactions and then later submitting the batch to your service provider which will ultimately result in the money being deposited to your account. So, if you have a client come in on Monday and you process a debit card transaction for $200 for him, followed by another client for $300 the following day, but you do not submit the batch to your provider until Friday, you are in violation of the requirement to deposit trust money as soon as practicable [Rule 5-44(1)(a)], as you have been holding the $200 for 4 business days and the $300 for 3 business days without depositing them to your trust account.
iii. Depending on the provider and type of card (Visa vs. AMEX, for example), there may be a delay between submission of the batch and deposit of the money in your bank account. If you need to access the money quickly for a disbursement, or if the money is destined for the general account to pay an account you already rendered, you need to ensure the money has actually been deposited to the trust account before writing that cheque.
As a general precaution, due to privacy legislation it may be difficult to follow up with your service provider to obtain details regarding the transactions afterwards (such as the name of the related cardholder). Further, most terminals create those little pieces of paper as receipts which can be easy to misplace. You must be very careful in your office procedures if you are planning to receive electronic payments to address these risks.
c) Remote Deposit Capture
Remote deposit capture is a technology used by some firms to deposit money to a trust or general bank account without leaving their office.
For those who wish to adopt this technology, there are a number of requirements:
i. The system must use a specialized scanner approved or available through your savings institution. Scanning or taking a photo with a portable device such as a tablet or cell phone is not allowed;
ii. The system must use a secure platform for connecting between the law firm and the savings institution;
iii. For the pooled or restricted trust account, any fees must be charged directly to the general account and not deducted from the deposit;
iv. All supporting documentation must be printed and maintained in hard copy format or saved in a universally readable format; and
v. All remote deposits must be directed to the appropriate account – pooled, restricted, or general account.