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A Guide to Escrow Services

An Escrow Agent is required where two parties agree to a transaction, but wish to use a neutral and independent third party (an Escrow Agent) to ensure that the terms of the transaction are strictly adhered to and that funds, or documents, are released only upon fulfillment of the conditions of the transaction.

A simple example would be where a buyer agrees to buy a plot of land ONLY upon the understanding that the land is first granted the required planning permission.

The buyer wishes to make sure that the land is conveyed to him only with the benefit of the planning permission and the seller wishes to ensure that the sale proceeds are freely available to him as soon as planning permission has been granted. In these circumstances the Escrow Agent would hold the buyer’s purchase monies pending receipt of the required planning permission and would ensure that those funds are handed over to the vendor immediately upon receipt of the planning permission.

Escrow Agents are used in a large number of financial transactions as well as in any number of other situations where a neutral party is needed to act as an honest broker between two contracting parties.

E-business is fast growing and there is an increasing need for alternative internet payment options due to the concerns of internet users using credit cards. There have been a number of high profile cases where websites have been targeted by hackers, who have successfully obtained credit card numbers by the million!

However, the most common type of Internet auction fraud is the “invisible goods” fraud, where the seller does not actually own the goods offered for sale. The buyer sends his payment as agreed, but no goods are delivered and inevitably, he cannot contact the seller as false contact details were given in the first instance. Similarly, non-payment fraud occurs in reverse, where the buyer uses false details to induce the seller to send particular goods, but thereafter fails to make payment as agreed. This may happen where the seller agrees to payment after delivery, or where a stolen credit card is used to make payment to an escrow service, and this is not discovered until after the goods are sent. (Note that this is different from the case where there is no payment made as a result of a dispute between buyer and seller. This is not a fraud and is, instead, a civil matter).

Genuine escrow services offered online go a long way to cutting the risk of invisible goods fraud as the buyer’s payment is held in trust until such time as the seller has received the goods. The buyer then checks the goods and authorizes the escrow service to release the payment to the seller. Unfortunately, a number of fraudsters have created apparently genuine websites offering escrow services in order to defraud would-be customers. Sellers follow the instructions on how to pay money to the escrow site. The escrow site then fails to pass the money on to the seller, and can no longer be contacted by either party.

Basel Escrow Services Limited has significant experience in acting as an Escrow Agent in a wide variety of situations, especially for internet payment processors by acting as a neutral party to hold credit card reserves for internet merchants (funds held as security against chargeback’s etc.).

The benefits of using Basel Escrow Services Limited are as follows:

  1. an experienced, friendly and efficient team acting as an Escrow Agent to a wide variety of international financial transactions.
  2. fully licensed and regulated by the Jersey Financial Services Commission.
  3. managed and controlled from within the neutral tax environment of Jersey in the British Channel Islands.
  4. the established state of the art software required to provide escrow services in a complex and high volume financial environment.
  5. independence and willingness to work with any good quality financial institution.
  6. total access to the extremely sophisticated infrastructure of the Jersey financial services market.
  7. easy communication and travel between Jersey and London and the same time zone as London.

Whatever your escrow requirements please contact us at the address below.

This document is a brief guide to subject matter covered, and is not intended to be a detailed or comprehensive statement of the law. It should not be treated as legal advice. Clients are urged to take professional legal and other appropriate advice before pursuing any particular course of action. For more detailed information and professional advice on your own situation please contact Michael Blackie, Frank Gee or Julie Coward at Basel Trust Corporation.

Basel Trust Corporation (Channel Islands) Limited
PO Box 484
3 Old Street
St. Helier
Jersey
JE4 5SS

Telephone: +44 (0)1534 500 900
Facsimile: +44 (0)1534 500 901

E-mail: [email protected]

Regulated by the Jersey Financial Services Commission in the conduct of Trust Company business.