The SRA (Solicitors Regulation Authority) believes that two–thirds of its regulated firms need to comply with the latest regulations. Earlier this year, the SRA wrote to 400 law firms, reminding them of their obligations in relation to money laundering controls within their conveyancing practices. There are concerns that many firms are failing to live up to their Anti-Money Laundering (AML) responsibilities. More than 40 solicitors have already been struck off or have voluntarily left the roll amidst suspicions of money laundering. Be under no illusion - non-compliant firms are set to face significant penalties and sanctions for non-compliance in the future.
Why is Conveyancing attractive to money launderers?
Conveyancing is particularly attractive to money launderers because of the large sums of money involved in each transaction and the legal market is an attractive target for those wishing to launder the proceeds of crime. Criminals instruct legal professionals to give legitimacy to holding or transferring money.
Solicitors and law firms are at an increased risk because they:
Regularly hold large sums of money in pooled client accounts;
Advise and transfer money relating to property and financial transactions;
Have access to financial markets and can facilitate buying large assets.
Money laundering means that criminals can profit from drugs trafficking, fraud, corruption, people trafficking and other illegal activities. Organised crime can only operate if the criminals can move their money into the legitimate financial world.
What can conveyancers do to prevent money launderers?
Solicitors working in conveyancing should take extra care, particularly when the transaction has the warning signs of potential money laundering. Warning signs include purchases of very high value properties by overseas companies and trusts with complex or opaque ownership, or purchases involving money from high risk countries. Solicitors who facilitate money laundering, whether deliberately or unknowingly, can face serious consequences including criminal prosecution and regulatory sanctions.
Following the Panama Papers scandal in 2016, the UK took steps to crack down on money laundering. To prevent money laundering, solicitors within scope of the money laundering regulations must:
Carry out CDD (customer due diligence) on their clients
Verify the client’s identity and check the source of funds (where appropriate)
Check the circumstances of the proposed transaction
Be aware of the warning signs for money laundering risks, particularly in high risk work such as conveyancing
Be very careful to avoid the client account being exploited
Submit a SAR if there is suspicion about a client or transaction
Create and maintain a risk assessment.
How Can Lysis help?
Lysis Group delivers a unique combination of expert consulting, managed services, training, resourcing and an innovations lab in Financial Crime Compliance (FCC) and Client Lifecycle Management (CLM). We can work with low firms to assess the maturity and effectiveness of their AML programme and design and implement remedial enhancements which will increase the level of identifying and protecting against potential money laundering.
For more information please contact: email@example.com
By Louise Green, Consultant at Lysis Group