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PAYMASTER AND ESCROW SERVICES

ABRAMS Law offers Paymaster and Escrow services to many clients, both domestic and foreign. Various transactions involving such areas as Corporate Transactions, Disputes and Real Estate as well as in various commodities, such as Note Transactions, Oil, Jet fuel, Gold and Diamond and Crypto transactions.

Absolute Compliance– All such transactions must be compliant with federal authorities including the U.S. Treasury Department and Homeland Security and with any local laws, such as Anti-Money Laundering.

Prompt Payment– We assist and work with such clients to ensure prompt payment of their fees within the guidelines of governmental authorities and regulations.

What is a Paymaster and what services do they provide?

  • A Paymaster Attorney acts as a neutral third party who receives funds from any transaction between two separate individuals or businesses.
  • The Paymaster maintains an Escrow Account, then disburses those funds to the Seller, subject to any deductions or set-offs, in accordance with the parties’ agreement.
  • After taking a commission as payment for his services, the paymaster reconciles the escrow account and fills out the necessary IRS paperwork.

Paperwork

  • Paperwork must include the following for all parties seeking to employ ABRAMS Law as their Paymaster and Escrow provider:
    • A copy of valid and in date Passport or Driving Licence,
    • Complete IRS form W-9 for U.S. citizens involved,*
    • For non-U.S. citizens: Completed IRS form W-8BEN,
    • Copy of all executed Transactional Documents, including any specific Payment Agreements,
    • Copy of the ABRAMS Law Escrow Agreement and related documentation,
    • Recorded report of pending dealings that ABRAMS Law is involved with.

Payments

Payments and disbursements can only be made in the form of Federal wire transfers of SWIFTs. Cash, money orders or bank checks are not permitted.

What type of transactions do Paymaster services handle?

  • Paymasters are usually used in transactions which involve large sums of money.
  • For example:
    • Payment of part of the purchase price in M&A transactions,
    • Transfer of large quantities of various financial instruments and commodities such as Bank Guarantees, oil, gold or steel.
    • The Paymaster’s services can be used to facilitate the payments and disbursement of funds.

Why use Escrow?

  • Placing the funds into Escrow with a neutral and trustworthy third party reduces the risk to both buyers and sellers in Corporate and Commodities transactions, giving assurances to:
    • Sellers that sufficient funds are or will be available for payment in accordance with the agreement, and
    • Buyers, who in return, receive title to the goods or stock in question, whilst protecting the risk in the event of a default or defect.

Does a Paymaster have to be an attorney?

  • No, Paymasters do not have to be attorneys. However, attorneys often serve in the role of a Paymaster because they are regulated professionals. Key considerations:
  • Regulated Account- Attorneys are able to use an Attorney’s Trust Accounts (also known as “IOLA” or “IOLTA” accounts, which are used for short term escrow transactions). These are monitored by the state bar where the attorney is licensed and provide an additional measure of security for handling large sums of money.
  • Compliance- As a licensed attorney, the Paymaster is subject to heavy penalties and stands to be disbarred if any funds are misappropriated.
  • Neutrality- And the Paymaster may not provide legal services for any of the Paymaster clients, since it is considered to be a conflict of interest.

What to expect when using Paymaster services

  • The Paymaster is not party to the transaction, and does not know the exact time that it will close. Ordinarily, the Attorney Escrow Agent is notified and will check periodically with the Escrow Account is in funds, to ensure that the payment has been transferred in and showing cleared funds.
  • The Attorney Escrow Agent will disburse the funds as per his directions under the Escrow Agreement.
  • Sometimes, in confidential discussions involving the sale of commodities, the Paymaster is not allowed to disclose the identities of the parties to the transaction, for example where the transaction has been brokered by third party agents.
  • Paymaster services facilitate the transfer of commodities and financial instruments without the inconvenience that can arise through using Letters of Credit.
  • We do not usually require credit scores or bank references from any parties, allowing new companies with no established credit history to trade freely.
  • We do at all times require full transparency on parties and their agents and full KYC and AML documentation must be provided.
  • If you have a potential Escrow Paymaster service requirement and wish to employ ABRAMS Law for your legal services, please fill out our Paymaster client information sheet and W-9 form and email to: [email protected] with a copy of the same mailed to the following addresses:
    • Pearl House, 746 Finchley Road, London, NW11 7TH
    • 575 5th Avenue 14th Floor, New York, NY 10017

Footnotes:

IRS Forms To Use:

W-9 – U.S. entity or U.S. citizen or resident

W-8BEN (Individual) or Form 8233 – A foreign individual

W-8BEN-E (Entity) or Form 8233 – A foreign entity

W-8ECI  – A foreign individual or entity claiming that income is effectively connected with the conduct of trade or business within the United States (unless claiming treaty benefits)

W-8IMY – A foreign partnership, a foreign simple trust, or a foreign grantor trust (unless claiming treaty benefits) (see instructions for exceptions)

W-8ECI or W-8EXP – A foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U.S. possession claiming that income is effectively connected U.S. income or that is claiming the applicability of section(s) 115(2), 501(c), 892, 895, or 1443(b) (unless claiming treaty benefits) (see instructions for other exceptions)

W-8IMY – Any person acting as an intermediary (including a qualified intermediary acting as a qualified derivatives dealer)