The Society has become aware of Queensland law practices being the target of potential scams or attempts to use the law practice trust account to launder money.
In two recent examples, law practices have been approached by overseas clients requesting the law practices prepare escrow agreements, and act as escrow agent, for the purposes of holding and disbursing funds from investors. In doing so, the law practice’s trust account would receive and distribute funds, which were not connected to the provision of legal services. Such transactions without any more being said should be considered very high risk for money laundering.
In the current cases, the agreement provided that the law practice would contact the investor and confirm the bank details for the deposit before doing so.
It further appears that in one instance, the executed escrow agreement supplied to the law practice was not actually executed by an investor, but rather by the overseas client, posing as the investor. It appears the investor details supplied to the law practice are not the details of an actual investor, rather they are the details of an associate of the overseas client. It is with this associate that the bank details were confirmed.
All law practices are advised to exercise caution in relation to these types of matters. Law practices should ensure they conduct due diligence on their client (and any parties they deal with) to ensure they are who they say they are and only accept funds into their client account which relate to the provision of legal services. The Anti-Money Laundering and Counter-Terrorist Financing Act 2006 (Cth), which applies to law practices providing designated services as Tranche 2 entities from 1 July 2026, imposes obligations on law practices to conduct risk assessments and client due diligence, which are designed to avoid law practices, and the wider financial system, from being exploited by criminals in the ways described above. Law practices should also be aware of the risks of confirming and/or providing bank details via email, which can be intercepted by criminals with the intention of re-directing payments to themselves. Such practices should always be avoided
Please contact the QLS Trust Accounts Team at managertai@com.au or 07 3842 5908 should you have any queries.
