Legal Profession > Trust accounts > Controlled money accounts

Controlled money accounts

Controlled money accounts (CMAs) are subject to specific requirements under the Legal Profession Uniform Law (WA) and Legal Profession Uniform General Rules 2015.
 

Controlled money

Controlled money is defined as money received or held by a law practice where the practice has a written direction to deposit the money in an account (other than a general trust account) over which the practice has or will have exclusive control.¹
 

Controlled money records

Records are to be maintained for CMAs include:

• written direction
• controlled money receipts
• initiating record of withdrawals
• register of controlled monies consisting controlled money movement records
• monthly listing of controlled money accounts
• ADI (bank) statements
• trust account statements.²

Written directions

A written direction must be obtained from a person on whose behalf the money was received (for example, the client) before money can be deposited to, or withdrawn from, a CMA.³

If no written direction is held, the law practice must first deposit the money into the general trust account pending written instructions from the person entitled to the funds.

It may be prudent for the written direction to have the details of the matter, reason for the investment, name of the ADI and the type of account (e.g. type of product that an ADI offers) inserted in the direction given to the law practice or type of ADI account.
 

Maintenance of CMA accounts

A controlled money account must include:

1. the name of the law practice
2. the expression “controlled money account” or the abbreviation “CMA” or “CMA/c”
3. particulars that identify the purpose of the account and distinguish it from any other account maintained by the law practice.⁴

 

Receipt of controlled money

The law practice must operate a single controlled money receipt system for the receipt of controlled money for all its controlled money accounts.⁵

This needs to include:

1. the date the receipt is made out and, if different, the date of receipt of the money
2. the amount of money received
3. the form in which the money was received
4. the name of the person from whom the money was received
5. details clearly identifying the name of the person on whose behalf the money was received and the matter description and matter reference
6. particulars identifying the purpose for which the money was received
7. the name of and other details clearly identifying the controlled money account to be credited unless the account has not been established by the time the receipt is made out
8. the name of the law practice, or the business name under which the law practice engages in legal practice, and the expression “controlled money receipt”
9. the name of the person who made out the receipt
10. the number of the receipt.

 

Withdrawal must be authorised

The client’s written direction is required to withdraw money from a CMA.⁶ A withdrawal of money from a CMA must be effected, under the direction of or with the authority of specific persons.⁷ Controlled money can be drawn from the controlled money account only by cheque or electronic funds transfer.⁸
 

Register of controlled money

A law practice that receives controlled money must maintain a register of controlled money including:

1. a separate record for each CMA
2. the name of the person on whose behalf the controlled money is held
3. the person’s address
4. particulars sufficient to identify the matter
5. the date the controlled money was received
6. the number of the receipt
7. the date the money was deposited in the controlled money account
8. the name of and other details clearly identifying the controlled money account
9. the amount of controlled money deposited
10. details of the deposit sufficient to identify the deposit
11. interest received
12. details of any payments from the CMA.⁹

 

Monthly listing of controlled money accounts

The law practice is required to prepare a statement listing its controlled money accounts as at the end of each month detailing:

1. the name, number and balance of each controlled money account held in the register
2. The name of the person on whose behalf the controlled money in each account was held; and
3. A short description of the matter to which each account relates; and
4. The date the statement was prepared.

The law practice must prepare the statement within 15 working days after the end of each month.
 

Interest earned

Please note that a receipt is not required for interest or other income received from the investment of controlled mone,y where the interest or other income is credited directly to a controlled money account.
 

Trust account statements – CMA

A law practice must give a trust account statement to each person on whose behalf trust money is controlled by the law practice. The statement should be furnished as soon as practicable after the completion of the relevant matter, or after receiving a reasonable request.¹⁰
 

Power or authority

If a law practice is given a power or authority to deal with money for and on behalf of a person, for example, power of attorney, guardianship order or an authority to sign on a person’s bank account, whether alone or jointly; the practice is required to keeps records in accordance with the Rules.¹¹

If an associate of the law practice is the executor of a deceased estate and opens a bank account in the name of the associate as executor of the estate, the account will be a power money account.

Alternatively, the associate may choose to instruct the law practice to open a CMA for the estate, or may instruct the law practice to receive money on behalf of the estate to the law practice’s general trust account. The executor may then instruct the law practice to withdraw the money from the general trust account and invest it for the benefit of the estate in a CMA.⁹

If the money is invested in a CMA, the money can be disbursed direct from the CMA, in accordance with the executor’s instructions, without having to first return the money to the general trust account.

General and controlled money

General trust account

A law practice that receives trust money must establish and maintain a general trust account(s) at an Authorised Deposit Taking Institution (ADI) in Western Australia.¹¹ The general trust account opened by the law practice:

1. must be established with an authorised ADI
2. must include in the account’s name the name of the law practice or the business name under which the law practice engages in legal practice, and the expression “law practice trust account” or “law practice trust a/c”.¹²

 

Controlled money account

If the account is a controlled money account, the account name is to include:

4. the name of the law practice
5. the expression “controlled money account” or the abbreviation “CMA” or “CMA/c”
6. particulars that identify the purpose of the account and distinguish it from any other account maintained by the law practice.¹³

 

Establishment and closure

The law practice must give the Legal Practice Board notice within 14 days of the establishment or closure of any general trust account. The written notice should include:¹⁴

1. the date the trust account opened or closed
2. the name of the bank and the BSB and account number
2. the name of the account
3. bank statements confirming a nil balance for a trust account closed.

 

Stagnant balances and unclaimed money

Unclaimed and unidentified monies may need to be paid to the State Treasury.
 
 

External Examiner’s Report

Trust records must be externally examined at least once in each financial year by an External Examiner approved by the Board and paid for by the practice. The External Examiner must provide the Board a written report of the examination. The report must include an examination of all general trust accounts and accounts where trust money was held (e.g. controlled money accounts and account subject of a power) that have been opened or closed by the law practice during the reporting period.¹⁵

Where a trust account is closed during the financial year, a written report for the part year is required, unless the trust account funds are transferred to a new ADI and there is no change in the ownership or structure of the legal practice. In such instances the report is prepared for the financial year for both the old and the new trust account.
 

Final External Examination

If the law practice ceases to be authorised to receive trust money (including controlled money and trust money subject to a power) or ceases to engage in legal practice, the practice must arrange an External Examiner to prepare a final External Examiner’s Report. The report is required to be lodged with the Board within 60 days after the end of the period to which the examination relates.¹⁶
 

Form

Controlled Money Account (CMA) Checklist (PDF form)
 

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1 Legal Profession Uniform Law (WA) s 128 (‘Uniform Law’).
2 Please refer to Legal Profession Uniform General Rules 2015 rr 61 - 64 (‘Rules’) for full details.
3 Uniform Law s 139.
4 Rules r 61.
5 Ibid r 62.
6 Uniform Law s 139.
7 Rules r 63.
8 Ibid.
9 Ibid r 64.
10 Ibid r 52.
11 Ibid r 55.11 Legal Profession Uniform Law (WA) s 136 (‘Uniform Law’).
12 Legal Profession Uniform General Rules 2015 r 35 (‘Rules’).
13 Rules r 61.
14 Ibid r 50. Please see notification form on LPB website.
15 Uniform Law ss 155 - 159.
16 Rules r 68