Who Should Use Attorney Paymaster Services?

For some transactions, it’s important to protect yourself and others by engaging an attorney paymaster. These services are available for both domestic and foreign transactions, and while there are no set rules about what you can and cannot use attorney paymaster services for, there are a few transaction types or industries in which these services are more common.

Understanding Paymaster Services

Engaging an attorney for paymaster services is a pretty straightforward transaction:

• You hire the attorney to act as a paymaster.
• The attorney verifies both parties in the transaction for compliance with KYC, CDD/EDD, and AML requirements.
• The attorney holds funds in escrow and helps complete all necessary paperwork to satisfy legal requirements.
• The attorney paymaster releases the funds to the seller upon completion and verification of the information.

In order to offer paymaster services, an attorney must ensure that all aspects of the transaction are in full compliance with the U.S. Treasury, Department of Homeland Security and other agencies as required.

When Attorney Paymaster Services Make Sense

The use of attorney paymaster services can provide an added layer of security and protection in large transactions, particularly ones involving foreign buyers or sellers. The most common situations in which people utilize an attorney paymaster include:

• Real estate, particularly large transactions or international deals
• Oil or jet fuel transactions
• The purchase or sale of gold, diamonds or other precious metals
• Steel transactions
• Note transactions

Since the attorney paymaster is not part of the transaction, they have limited information about when it will occur and will only receive and disburse funds as directed. These services also help you avoid the hassle of Letters of Credit or the requirement to have an established history with a bank or financial institution to participate in a transaction. This can speed up large transactions significantly because the paymaster doesn’t check your credit or references.

Other Important Notes About Paymaster Services

Before you can participate in any attorney paymaster transaction, all parties in the transaction will need to verify their identity and provide additional information to the attorney. You will need:

• A valid driver’s license or passport
• IRS form W-9 (U.S. citizens only)
• IRS form W-8BEN (for non-U.S. citizens)
• Copy of payment agreement and other transaction documentation
• Other documentation or identity verification as requested by the attorney

While you can technically use someone besides an attorney to fill the same role of paymaster, there is an added layer of security when you work with an attorney. They use short-term escrow accounts called IOLTAs that are monitored by the state bar to prevent fraud or illegal activity. If they fail to handle your funds properly, they face disbarment and significant financial penalties.

The attorney you select for paymaster services also cannot provide other legal services to you or the third party in your transaction. This would be considered a conflict of interest.

Learn More About Paymaster Services at Cantley Dietrich

To find out more about the attorney paymaster services available at Cantley Dietrich and get your questions answered, contact us today.