---
title: "Client money handling checklist and procedure for an AFS licensee (s 981B accounts)"
url: "https://ailawframework.com/precedents/financial-services-regulation/client-money-handling-checklist"
type: "precedent"
site: "AI Law Framework"
id: "a28-client-money-handling-checklist"
area_id: "A28"
kind: "checklist"
ai_level: "red"
version: 1
law_stated_as_at: "2026-10-18"
---

# Client money handling checklist and procedure for an AFS licensee (s 981B accounts)

> A procedure and checklist for an AFS licensee that receives client money: identifying it, banking it into a designated ADI account by the next business day, keeping the account clean, reconciling, and controlling…

Canonical page: https://ailawframework.com/precedents/financial-services-regulation/client-money-handling-checklist  
Law stated as at: 2026-10-18

Site index for agents: https://ailawframework.com/llms.txt

A procedure and checklist for an AFS licensee that receives client money: identifying it, banking it into a designated ADI account by the next business day, keeping the account clean, reconciling, and controlling withdrawals and payment changes.

## Key facts

- Kind: Checklist. Steps or checks to work through and tick off.
- Practice area: [Financial Services Regulation](https://ailawframework.com/precedents/financial-services-regulation.md)
- Jurisdictions: Australia
- AI level: Red. Keep AI out of the decisive steps. A lawyer does the work.
- Law stated as at: 2026-10-18
- Status: Maintained. Checked on 2026-10-18 against the 2 authorities it cites, for Australia.

## When to use it

Use when setting up or reviewing a licensee’s client money arrangements, and as the checklist for the people who receive and bank client money. Check the licence conditions and the regulations, which can add requirements.

## How AI may be used

AI may help prepare reconciliation working papers and flag unmatched items for a person to investigate, but it must have no access to payment functions, and people decide every deposit, withdrawal and change of payment details.

**AI may:**

- Match receipts in the client money account to client records and list unmatched or misdirected items
- Prepare a draft reconciliation working paper for the responsible person to check
- Flag deposits that may not be client money, or client money banked later than the next business day

**AI must not:**

- Must not have access to initiate, approve or release payments from a client money account
- Must not change client or payee bank details, or accept changed details from an email, without independent verification by a person
- Must not decide whether money is client money or whether a withdrawal is permitted

**The lawyer checks:**

- The account is with an Australian ADI (or a prescribed kind of account) and is designated for the purposes of s 981B
- Only permitted money is paid into the account, and the licensee’s own money is not mixed with it
- Client money is banked on the day of receipt or the next business day, and late banking is investigated and assessed as a possible reportable situation
- Withdrawals are made only as the regulations and the client’s instructions permit, with two-person authorisation

## Authorities

- [Corporations Act 2001 (Cth) s 981B(1) (client money paid into a designated account with an Australian ADI or prescribed account, containing only permitted money, on the day of receipt or the next business day; additional requirements in regulations and licence conditions)](https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s981b.html)
- [Corporations Act 2001 (Cth) s 981B(2) (licensee may maintain one or more accounts)](https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s981b.html)

## Full text and drafting notes

The full text and the drafting notes are not part of this public page. Signed-in firm accounts can read them at https://ailawframework.com/precedents/financial-services-regulation/client-money-handling-checklist and through the signed-in MCP connector https://ailawframework.com/mcp/firm.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*