BIG BANK RISK
Attorney wants solutions as concerns sparked over safety of lawyers’ clients’ funds
Published:Monday | October 2, 2023 | 12:11 AMTanesha Mundle/Staff Reporter
Veteran attorney-at-law Bert Samuels is calling for the Jamaican Bar Association to convene an urgent meeting with Finance Minister Dr Nigel Clarke, to find solutions to safeguard lawyers against the potential financial risk of losing clients’ funds in banks through fraud.
“We need to be protected from liability arising from any massive financial losses associated with the banks’ inability to secure funds of which lawyers are custodians,” Samuels shared in a letter.
“Becoming personally liable for having taken their money to the bank is a nightmare we can now wake up to,” he added.
The lawyer is also urging the association to immediately issue a statement regarding the high risk that depositors are facing.
Samuels’ concerns were triggered by the frequent and reportedly increasing number of hacking incidents in which bank customers’ accounts are said to have been emptied.
A recent client of Samuel’s law firm was a victim of ‘social engineering’ through which her savings of $1.6 million was stolen and a $ 1. 4-million loan was taken out on her account.
The primary-school teacher fell prey to fraudsters after reportedly clicking on a link in a message that she indicated was sent to her through the bank’s messaging portal.
Citing that incident, Samuel emphasised that lawyers are particularly affected by this risk, as they are compelled to place their clients’ funds in the bank, to comply with our canons/rules.
PROHIBITED BY LAW
“Further, by law, we are all prohibited from being in possession of cash exceeding the equivalent of US$10,000,” he added, noting that they were essentially compelled to place clients’ funds in high-risk institutions called banks.
But, he said, “Banks can no longer be regarded as safe houses for depositors to leave their funds.”
Pointing to the Privy Council’s February ruling in the case of the Attorney General of Jamaica vs The Jamaican Bar Association, he noted that the State succeeded in having attorney’s police their clients’ deposits to ensure compliance with state policy.
However, he said, “We cannot be the subjects of reporting suspicious transactions with our clients being the depositors of those funds, yet, when the said funds are duly placed in banks, those same banks are not required to secure the clients’ funds.
“As trustees of clients’ funds, and given the prevalence of accounts being fleeced, we have now been placed on notice that our clients’ accounts are at real risk of being fleeced,” Samuels added.
He, however, noted that what is greatly concerning to him is that the banks have been resisting replacing the stolen funds and, in a few instances, when they do, it takes several months to do so.
Noting that the Jamaica Deposit Insurance Corporation’s (JDIC’s) insurance only protects deposits in qualifying accounts, up to a maximum of J$1.2 million, regardless of economic fluctuations, Samuels argued that, in a medium-size law firm, the amount does not represent one per cent of the total funds being held on behalf of clients at any given time.
“As trustees of our clients’ funds, we are now vulnerable and exposed to the risk of those funds being hacked on these banks’ vulnerable banking platforms. It is therefore a matter of great importance that we address this risk.”
Further, he said, “We cannot tell our clients that the bank lost their funds because, as trustees, we are responsible for keeping the funds in a safe place.”