For those seeking extremely safe and private banking facilities and who do not require frequent transactions, using a solicitor’s (lawyer’s) so-called Trust or Escrow account in New Zealand can be an excellent alternative to opening a bank account directly. Besides privacy advantages, the clients funds are also secured against bank insolvency. We have made arrangements with a law firm in New Zealand that can offer this service to clients.
The Fastest Way to Open a Bank Account?
This type of account can be opened in as little as one business day and is therefore ideal for situations were funds must be received urgently and there is no time to open a regular bank account.
It can also be used as a transit or pass-through account. For example: due to a last minute business deal you need to receive USD 1 million tomorrow, but structuring a company and opening a normal bank account typically takes at least 1-2 weeks. You can use the Lawyer’s Trust Account to receive the funds confidentially, and then transfer them to your Offshore Bank Account in another jurisdiction once the account is opened. The source of funds visible to the offshore bank will be a reputable New Zealand law firm that may also smooth “source of funds” questions at the offshore bank.
Banks do not normally like money passing through but in the case of accounts operated by law firms, this is acceptable as it is the standard method of transfer for large real estate transactions in New Zealand.
Of course, normal strict KYC procedures still apply and the lawyer will require full details and documents regarding the transaction in question.
What is a Solicitor’s Trust Account?
In English and therefore New Zealand law a solicitor’s firm is licensed to hold money in trust as stakeholder for property transactions. Indeed the whole English system of property transfer operates in this manner whereby the
solicitor for the buyer holds money in a Trust Account for the purchase of property and releases that money once the title is transferred to his client.
How Does the Trust Account Operate?
The solicitor’s firm holds an account in an “AAA” rated New Zealand Bank (in this case BNZ Group, Bank of New Zealand). Under this Trust Account the money is deemed in law not to be an investment in the bank but money belonging to the law firm’s clients and therefore in the event of bank insolvency this account is not merged with the funds of ‘normal’ depositors.
The law firm opens a sub account in the name of its client (which can be a trust, an individual or a company) i.e. you. The account has its own account name and number and is not merged with other accounts and is clearly designated as a Trust Account in the bank.
The authorized person operating the account (i.e. you) signs an agreement with the lawyer that instructions as to what to do with the money which can be sent via any method suitable such as code, fax, email, phone call or a
combination of the above.
The account can be held in any currency or combination of currencies, but only Australian and New Zealand dollar accounts bear interest.
Each time money is banked in or sent out the lawyer must be instructed as to where to send the funds or where they come from.
Safety Aspects of the New Zealand Lawyer’s Trust Account
Solicitor’s Trust Accounts hold billions of dollars of client’s money at any given time and are basically the only method by which property transactions are effected in New Zealand.
Solicitors are regulated by the New Zealand Law Society and under the Lawyers and Conveyances Act. The regulation is extremely strict in terms of the obligations to hold client money. Solicitors are absolutely prohibited by law from using, merging or in any way dealing with client’s money outside instructions.
Offshore Pro Group’s recommended law firm carries insurance and further can arrange insurance for sums from 5million to 100 million dollars which means that your money is insured in the unlikely event of breach of the solicitor’s obligations. Further the New Zealand Law Society also has a fidelity fund which guarantees return of clients fund in the unlikely event of misfeasance. However you can rest assured New Zealand is a jurisdiction with an extremely well regulated legal profession and removal of funds from Trust Accounts is unknown. Offshore Pro Group’s preferred law firm regularly holds client funds up to 10 million dollars in value.
Confidentiality Advantages of the Solicitor’s Trust Account
‘The account can be set up completely confidentially. Due Diligence is done by the lawyer and us, not the bank. The bank never knows who the ultimate beneficial owner is. Under the doctrine of lawyer confidentiality and privilege, the lawyer cannot release the name of the beneficial owner to anyone including the bank (with the exception of serious crimes and only then if a criminal warrant is produced) Funds are accepted by our preferred lawyer on our certification that it has been cleared under our AML policy.
The funds in the solicitor’s trust account cannot be frozen or arrested by the bank because it is a part of a lawyer’s trust ledger and therefore regulated by the Law Society not the banks policies. The Escrow account makes the solicitor/lawyer responsible for due diligence and is not regulated by the bank’s anti-money laundering policies.
Disadvantages
• Not particularly good for trading as needs personal instruction for each transaction
• More expensive than ordinary bank account
• Cannot be operated on the internet
• Does not come with credit cards
Fees and Setup Procedure
Normally this type of account is only available in the case of New Zealand entities (trusts and companies) set up or in the process of set-up via Offshore Pro Group.
There is an establishment fee of USD 3,000 for accounts holding one million dollars or less. This includes our full Due Diligence which is sent to the lawyer prior to establishing the account. Due Diligence documents check is conducted by our legal team including source of funds verification procedures which are then held by the solicitor as part of his AML obligations.
For larger accounts an establishment fee of USD 8,000.00 is charged plus any extra or additional time if verification is complex.
The above fee includes all documentation to set up an account in any desired currency. Each new account carries the same establishment fee although if multiple accounts ( eg in different currencies or for different trusts) are set up at the same time then this fee may be reduced.
All instructions to send money out or deposits in carry a staff processing fee as the processing of transactions is carried out strictly by the solicitor in question . Each transaction takes approximately 12 minutes, depending on complexity, and is charged in ten minute units of USD 30 per unit.
To proceed with set-up of a New Zealand Solicitor’s Trust Account, please contact Offshore Pro Group.