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Remote Deposit Capture

  • What is remote deposit capture?

    Remote deposit capture (“RDC”) is a technology that gives users the ability to deposit cheques remotely into an account at their financial institution, without having to physically deposit or deliver the cheques directly to the financial institution. RDC provides users with the option of using their desktop computers, laptops, smartphones, tablets, or other electronic devices to deposit cheques.

  • How does RDC work on mobile devices?

    When using a mobile device, such as smartphone or tablet, to deposit cheques, the user will need to download their financial institution’s mobile application software onto their device (“mobile RDC application”). The user will then take a digital image (e.g., photograph or scan) with their mobile device of the front and back of the cheque and then submit it electronically to their financial institution account via the mobile RDC application.

  • What are the benefits to lawyers and paralegals of using mobile RDC applications?
    The benefits to lawyers and paralegals in using their mobile devices to deposit cheques are time savings and convenience.
     
  • What are the risks associated with mobile RDC applications?
    Lawyers and paralegals should consider the risks associated with using mobile devices to remotely deposit cheques, including risks related to the security, access, and confidentiality of the RDC. Some of the more common risks associated with the use of mobile RDC applications are identified below:
     
    1. Holding Periods. Lawyers and paralegals should be mindful that the ability to deposit cheques using the mobile RDC application does not mean that the funds are irrevocable. There will be a hold period before the funds are available for disbursement. It could take several days for the cheque to pass through the financial institution’s payment system clearing process. Accordingly, lawyers and paralegals should confirm their financial institution’s holding periods on cheques deposited by mobile RDC application and ensure that the cheques have cleared before withdrawing the funds.
     
    1. Duplicate Cheque Presentment. There is always a chance that errors will occur when using a mobile RDC application. For example, one cheque could be accidentally deposited twice resulting in an overstatement of deposited funds in an account. This could happen in different ways: the paper cheque could be mistakenly resubmitted twice using the mobile RDC application, or the paper cheque could be deposited by mobile RDC application and then subsequently physically deposited at the same or different financial institution. In these situations, there is a risk that the lawyer or paralegal will not catch the error and will use or transfer the deposited funds, putting the lawyer or paralegal’s account in an overdrawn position once the error is identified and corrected by the financial institution.
     
    1. Fraud Risks. Lawyers and paralegals should be aware of the risk of fraud for mobile deposits of cheques into accounts. For example, lawyers and paralegals could be at risk of identity fraud if their mobile device is not protected by a password or biometric lock and is stolen by an individual who knows or can access the lawyer or paralegal’s personal information. If the individual gains access to the information on the lawyer or paralegal’s mobile device, the individual could log into the financial institution’s mobile RDC application and retrieve the lawyer or paralegal’s account information. This risk may be heightened if the lawyer or paralegal 

              ○ stores payment information and passwords in a digital wallet on the mobile device that is not                           properly protected, and/or
              ○ uses public Wi-Fi connections when making a remote deposit.

    For practice tips on how to properly secure mobile devices from such cybercrime dangers, lawyers or paralegals may wish to consult the Law Society’s Technology Podcasts.
     
  • How do I manage the risks associated with mobile RDC applications?
    Lawyers and paralegals should establish protocols and procedures in their law or legal services firm to prevent improper activity relating to RDC. This may include, for example:
     
    • Using the financial institution’s official mobile RDC application to ensure that proper controls and security features are in place.
    • Ensuring that cheques deposited through the financial institution’s mobile RDC application are processed through a secure internet connection or wireless network.
    • Developing and implementing a process to ensure that any cheques deposited through a mobile RDC application are only deposited once (e.g., marking the cheque with the deposit date to indicate that it has been deposited).
    • Password protecting mobile devices and securing digital wallets.
    • Logging out of the financial institution’s mobile RDC application once financial transactions have been completed.
    • Frequently reviewing the transactions recorded in the firm’s financial institution account to identify any errors or unusual items, and contacting the financial institution as soon as reasonably possibly if errors or concerns are identified.
  • What should I consider before using a mobile RDC application?

    Before employing the RDC method, lawyers and paralegals should

    • Review the terms of their financial institution’s agreement concerning the use of the financial institution’s mobile RDC application. In particular, lawyers and paralegals should review the obligations, representations, warranties, and indemnities that the lawyer or paralegal and the financial institution are required to provide under the terms of the agreement. These terms should inform lawyers and paralegals of their responsibilities in using the mobile RDC application, including, for example, the handling of cheques, deposit limits, service fees, availability of funds, and the destruction of cheques.
    • Review their professional liability insurance policy and/or consult with their insurer to ensure that there are no coverage issues associated with the use of RDC.
  • What are the bookkeeping requirements for mobile RDC applications?
    From a books and records perspective, lawyers and paralegals who use a mobile RDC application to deposit cheques must add the client details to each deposit slip and maintain the slips as original source documents with their financial records. Specifically, lawyers and paralegals must record the following information on the deposit slip:
     
    • The date the funds were deposited
    • The lawyer or paralegal’s law firm or legal services firm name (if it is not preprinted)
    • The lawyer or paralegal firm’s bank account number (if it is not preprinted)
    • The source of each receipt
    • The name of the client associated with the cheque deposit
    • The amount deposited

    It is important to note that although some mobile RDC applications include a memo field that lawyers and paralegals can use to enter information about the cheque being deposited, the memo field may be limited in length or character count.
  • How do I obtain a deposit slip record when using a mobile RDC application?
    A deposit slip is not automatically created using a mobile RDC application. However, an original source document with the required information could be provided through the mobile RDC application’s deposit transaction history.

    The deposit transaction history will contain most of the information lawyers and paralegals are required to record on the deposit slip, which lawyers and paralegals can print out or maintain as an electronic copy. Any required deposit slip information identified above that does not appear on the transaction history record (i.e., source of receipt, client name, etc.) should be added to the record and then filed.
     
  • How long do I need to maintain the mobile RDC deposit slip record?
    Pursuant to Part V of By-Law 9, lawyers and paralegals are required to maintain cheque deposit transaction source documents and make them accessible for ten (10) full fiscal years for trust account deposits, and six (6) full fiscal years for general account deposits. As a result, lawyers and paralegals should confirm with their financial institution how long the transaction information will be stored in the mobile RDC application deposit history logs. Some financial institutions impose time limits on a user’s ability to access this information.
     
  • How long should I retain the original cheques deposited using mobile RDC?

    Lawyers and paralegals should retain the original deposited cheques until they reconcile that month's trust or general bank accounts. Cheques deposited using a mobile RDC application should be copied or scanned in PDF format for future reference. In addition, lawyers and paralegals should be mindful of their remote deposit financial institution’s agreement requirements on deposit cheque retention, protection, and destruction.

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