The last five years has seen a handful of rogue lawyers skipping town with almost $20 million - the most memorable being David Rasif, who disappeared with about $11 million in 2006.
MinLaw is seeking a second round of public feedback on the revised enhancements, which will see banks playing a central role in safeguarding money meant for property transactions that lawyers are entrusted with. Under the latest recommendations, lawyers cannot hold any conveyancing monies - option deposits, stamp duties, balance sales proceeds, for example - in their regular client account.
Other than holding up to $5,000 for last-minute disbursements - not unusual in property deals - in their client accounts, law firms have to open a separate type of bank account to hold remaining funds.
Anyone breaching this may be jailed up to three years or fined up to $50,000. The money may also be held in an escrow account between lawyers for both parties.
Either way, to deposit or release any funds from the account, lawyers for both buyers and sellers of properties need to sign off on prescribed forms.
Banks will validate the signatures against a Central Signature Repository - which will be set up in due course - before pay-out is made to approved parties, such as sellers, mortgage banks or others as indicated. Payment will only be through cashier's orders.
Banks will also show on their website a list of law firms that have conveyancing accounts with them, as well as the account numbers, to enable property buyers to make verifications.
So far, only DBS, UOB and OCBC have signed up for the scheme, but MinLaw expects foreign banks to be involved eventually. Although the stringent checks will cause some delays initially, lawyers say this is a worthy trade-off for buyers and sellers.
Rodyk & Davidson partner Norman Ho said: "If there's cooperation between the bank and the lawyers and among the lawyers working on the transactions, and with the understanding of the public, there should be no issue. Ultimately, the result to be achieved is to ensure that monies are safeguarded."
Law Minister and Second Minister for Home Affairs K Shanmugam said it is all a matter of balance: "In the end, you cannot completely eliminate fraud. You can only try and put in rules to make sure it makes it more difficult to commit fraud. And at the same time, 99 per cent of the transactions go through without problems or have gone through without problems. And in order to try and catch the small number of situations where that hasn't worked, you must make the rules unworkable." TEO XUANWEI
A pilot trial involving selected law firms and the three banks will be held from April to May. The trial is expected to process around 400 cases. For details on the proposed measures, visit www.minlaw.gov.sg. The public can fax feedback to 6332 8842 or email MLAW_Consultation@mlaw.gov.sg by Feb 12.
- Source: TODAY, 18 January 2010
