The Singapore Law Gazette

Digital Payments from Client Accounts

In view of the Monetary Authority of Singapore’s (MAS) mandate to phase out all corporate cheques by 2025, the Legal Profession (Solicitors Accounts) Rules (SAR) was amended on 12 April 2022 to allow members to transit to effecting withdrawals from client accounts via digital means.

In particular, rule 8(5) of the SAR provides that no sum exceeding $5,000 is to be drawn from a client account except by means of an online digital payment authorised by two solicitors in accordance to any Practice Directions issued by the Council of the Law Society of Singapore. Online digital payment is an additional modality of payment to the pre-April 2022 practice of issuing hardcopy cheques with the wet ink signatures of two solicitors.

Rule 8(5) of the SAR is reproduced below in full:

8(5) No sum exceeding $5,000 is to be drawn from a client account except –

(a) upon a cheque (or other instruction effecting the withdrawal) signed by 2 solicitors; or

(b) by means of an online digital payment authorised by 2 solicitors in accordance with any practice directions issued by the Council.

To this end, Practice Direction 3.3.11 was issued on 12 April 2022. The policy intent behind rule 8(5) of the SAR read with Practice Direction 3.3.11 was to introduce a new modality of payment from client accounts in addition to the current regime of issuing hardcopy cheques by replicating the existing safeguard of having two solicitors’ authorisation before monies can be paid out of client accounts.

On 23 May 2023, Practice Direction 3.3.11 was revised following members’ feedback that they had encountered technical difficulties in complying with it. In summary, the revised Practice Direction 3.3.11 stipulates the use of biometric authentication as a safeguard to ensure it is indeed the two solicitors who are authorising the transaction with the following technical requirements:

• Biometric authentication¹The use of fingerprint or facial recognition to authenticate the user’s identity. must be used at the point of logging into an application (App)²As defined in Practice Direction 3.3.11 – Online Digital Payments from Client Accounts. on a smartphone used by a bank for effecting such payments.
• To use the App’s prescribed method(s) to authorise the transaction upon logging in.
• Such transactions are not to be conducted through banks’ websites via browsers on laptops, personal computers and other devices.

The full text of Practice Direction 3.3.11 is reproduced as follows.

Book-Keepers

The framework surrounding the engagement and use of an approved book-keeper under rules 8(6) and 11A of the SAR, in relation to the quantum of monies sought to be paid out of client accounts, remains unchanged. Please see below for a flowchart for members to determine when a second solicitor’s authorisation is required when using online digital payment.

*As defined in Practice Direction 3.3.11 – Online Digital Payments from Client Accounts.

FAQs

Q: Must both the authorising solicitors be from the same law firm?

A: For the purposes of rule 8(5)(b) of the SAR, there is no requirement for both solicitors to be from the same law firm and the current practice of obtaining the help of a solicitor from a different firm can continue so long as Practice Direction 3.3.11 and Practice Direction 3.3.10 are complied with.

Q: How can I prove compliance to Practice Direction 3.3.11 to my auditors?

A: The obligation to comply with Practice Direction 3.3.11 lies with the authorising solicitor. The law firm should have processes in place (with the appropriate documentation) such that it is reasonably assured that the authorising solicitor uses Approved Biometric Authentication³As defined in Practice Direction 3.3.11 – Online Digital Payments from Client Accounts. to log into the App using his/her smart phone. Such processes can include:

1. Records (either manual or electronic) kept by the authorising solicitor as to the activities he/she carried out to authorise any Regulated Online Digital Payment.⁴As defined in Practice Direction 3.3.11 – Online Digital Payments from Client Accounts.
2. Verification that biometric authentication has been enabled on the smartphone that the authorising solicitor uses for the purposes of carrying out any Regulated Online Digital Payment.
3. Periodic checks with the authorising solicitor to reinforce his obligation to comply with the Practice Direction 3.3.11.

Your auditors may have additional suggestions as to the processes that a law practice should have in place due to the nature of your practice. It would be prudent that you check with your auditors.

Q: Can I log into the bank’s website to authorise the transaction?

A: No. As stipulated in Practice Direction 3.3.11, Regulated Online Digital Payment must not be conducted through banks’ websites accessed via browsers on laptops, personal computers and other devices. The onus is on the solicitors to comply with the Practice Direction.

Q: When can law firms start using digital payment of monies out of client accounts?

A: The revisions to the SAR allowing for digital payment of monies out of client accounts came into effect on 12 April 2022.

Q: Must both the authorising solicitors use an App installed on the same smartphone?

A: No. Individual solicitors should use the App installed on their respective individual smartphones.

Q: Can cheques still be used for payments out of client accounts?

A: Yes. Under rule 8(5)(a) of the SAR, cheques can still be used for payments out of client accounts until such time in 2025 when they are phased out by MAS.