Money laundering is defined as “the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses” and “the process by which criminal proceeds are sanitised to disguise their illicit origins”
These days, you hear increasing stories of people who have fallen victim to a money-laundering scam. When solicitors deal with client money it is imperative that they put in place adequate controls to prevent them falling foul of such a scam.
The Money Laundering Regulations 2007, the Proceeds of Crime Act 2002 and the Terrorism Act 2000 require law firms to act vigilantly and conduct what is known as “due diligence” to verify the identity of all clients. Law firms are also required to have a nominated money laundering reporting officer to whom staff are able to report cases where they consider money laundering is an issue. The money laundering officer has a duty to consider the risks and, where necessary, report suspicious activity to the National Crime Agency.
For example, say a client purchasing a property were to ask if their solicitor would accept £50,000 cash from their buyer as part payment towards the £150,000 purchase price, and further explained that the buyer had recently won this sum at bingo. The solicitor would advise against this, not only because of regulations they are bound by which would prevent them from holding such a sum of money in their client account, but also because the source of funds was unusual. The solicitor would then have to consider making a referral to the National Crime Agency.
By way of further example, solicitors are required to conduct “source of funds” checks where appropriate. This is because they have to satisfy themselves that the funds are coming from a legitimate source. It may be that the solicitor would request six months’ bank statements in order to do this. By way of example, it could be found that the bank statements show months of no deposits into the account and then regular large deposits from a company not mentioned previously in the transaction. The solicitor would be obliged to conduct a search for the legitimacy of the company making the payments and, given the pattern of payments, refer the case to the firm’s money laundering reporting officer.
At Hancock Quins in Watford we take all of this this extremely seriously. We recognise our responsibility to our clients and as such our staff are trained to know what information is required from clients and also to explain properly why they are requesting certain information.
At the start of every transaction we identify our clients by requesting that they produce two forms of identification.
The person named on the identity documents must visit our offices or have their documents verified by another firm of solicitors. Until we receive this documentation and are able to verify their identity we will not conduct any work for the client. We need to be sure who our client is.
Also, we enjoy meeting our clients – in a world dominated by social media and where face to face contact is dwindling, we pride ourselves on our traditional views in that you are welcome to drop by the office to see us if that’s more convenient for you.
For more advice on taking the risk of money laundering seriously, please contact Glynis Wainman on 01923 650862 or email firstname.lastname@example.org.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.