A note about para. 1 of subsection 12(2) in By-Law 9

You might have noticed something unusual about paragraph 1 of subsection 12(2) in By-Law 9, where it says: "The electronic transfer system used by the licensee must be one that does not permit an electronic transfer of funds unless, (i) one person, using a password or access code, enters into the system the data describing the details of the transfer, and (ii) another person, using another password or access code, enters into the system the data authorizing the financial institution to carry out the transfer."

The above requirements corresponds to the "Additional particulars" section found at the bottom of the LSO's sample Form 9A, as shown below:

This is the bottom of the sample Form 9A from the LSO's website

The "additional particulars" section is simply trying to record who was involved in the electronic transfer of funds in the firm's banking portal, along with those persons' signatures. These signatures are separate and apart from the "signature of person requisitioning electronic trust transfer".

Very often, such as for sole practitioners with no employees, the same person might have to provide their signature three times on the same Form 9A, in the following capacities:

(1) as the person requisitioning the electronic trust transfer;

(2) as the person entering the details of the details of the transfer; and

(3) as the person authorizing the transfer at the computer terminal.

Even if you are not a sole practitioner, lawyers might also wonder what they should do if their financial institution's online banking portal doesn't offer a multi-party process for transferring funds.

After all, it makes little sense for the By-Law to distinguish between "the person entering the details of the transfer" in their banking portal and "the person authorizing the transfer at the computer terminal" when most lawyers' small business banking accounts don't work that way.

In other words, if you sign into TD EasyWeb, or RBC Online Banking, or any of the typical chartered banks in Canada, you likely won't find an option to carry out a funds transfer in the multi-user way that paragraph 1 of subsection 12(2) in By-Law 9 requires, even if you ask your bank to do that for you.

That being said, some banks offer specialized self-serve "Commercial Banking" portals for firms that routinely transact very large amounts of money, like real estate law firms. In those situations, it's not uncommon for banks to provide you with sophisticated tools (like a physical RSA key) to carry around in your pocket, with a code that constantly changes. Those types of systems can accommodate a multi-user authentication system to execute a funds transfer.

So if your bank isn't offering you sophisticated commercial banking services, either due to a lack of enormous financial transactions or for some other reason, what are lawyers supposed to do?

We don't have the answer to this question, but what we can tell you is that we have brought this issue to the attention of the Law Society of Ontario, and they are aware of the matter.

Part of our mission here at TrustReq is to make compliance for lawyers easy and convenient. To us, that means going above and beyond just building great software, but also asking the right questions to help make sense of the rules.

We're going to be monitoring these developments closely, and we will post an update when we know more.

Thanks for reading!