Client account fraud attack on law firms
23 Jun 06
Society alerts profession after criminals target banks
The Law Society of Scotland has put solicitors on high alert after two attempted frauds in 24 hours on bank accounts for client funds.
In both cases a standing order was submitted to a solicitor's bank requesting £27,000 immediate payment to a limited company followed by monthly payments of £500 per month. Fortunately the bank concerned in both instances thought it odd that a standing order should be created on a client bank account, telephoned the solicitors and it quickly became clear that the matter was fraudulent.
James Ness, deputy director of professional practice at the Society, said the Society had been advised that the quality of the signatures was excellent and it was clear that the perpetrators held copies of original signatures.
"It should be noted that there is existing Guarantee Fund guidance that the principal client bank account should never be subject to variable direct debit or standing orders", he added. "There is an obvious concern that larger branches of banks might not be as careful in checking and processing these payments and there is clearly a risk to the profession.
"We strongly recommend that solicitors communicate with their bankers immediately both to check that they have not been a successful victim to this fraud and to alert their bankers to any possible future attempt.
"It would also be prudent for solicitors to write pointing out that the Society does not permit standing orders or direct debits to be operated on principal bank accounts and that their bank should be suspicious of any such instruction."
Mr Ness suggested that in regard to the creation of standing orders and direct debits on a firm's bank account an additional protocol should be negotiated to verify these. If a fraud has been attempted on a solicitor's account, the Guarantee Fund Department at the Society should be advised on 0131 476 8172.