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When it comes to money laundering and terrorist financing, there are some ‘Red Flag Indicators’ that conveyancers should be aware of. This advice could be particularly important following the announcement that conveyancers could be liable for identity fraud under new proposals put forward by the Law Commission.
The CLC has published two documents to provide conveyancers with an overview of the types of red flags that should raise concerns. While not an exhaustive list, these resources should help to highlight circumstances that are unusual and need to be adequately acted on. For example, making further enquiries of a client.
In particular, the CLC states that “several red flag indicators together, without reasonable explanation, are more likely to provide grounds for suspicion”.
AML (anti money laundering) red flags include:
- Where a client is secretive or evasive about who they are, the reason for the transaction, or the source of funds
- Where a client avoids personal contact without good reason
- Where a client refuses to provide information or documentation or the documentation provided is suspicious
- Where a client has criminal associations or an unusual level of knowledge about the money laundering process
- Where the source of funds or wealth are unusual (e.g. large cash payments, unexplained payments from a third-party, etc.)
- Where the transaction has unusual features (e.g. an excessively high value is placed on assets/securities, it is potentially loss-making, where a Power of Attorney is used in unusual circumstances, etc.)
- If the instructions are uncommon for your business (e.g. outside your or your practice’s area of expertise or regular business, a willingness to pay high fees, where the client is not local to you and there is no reasonable explanation as to why your practice has been chosen)
- Where there are geographical concerns such unexplained connections with and movement of monies between other jurisdictions.
In addition, the CLC has also provided more detailed warning signs that conveyancers may come across. This list includes red flags around the source of business, client and seller characteristics, property characteristics, and transaction characteristics. This document can be downloaded as a PDF and can be accessed here.
While neither of these documents are intended to be used as a tick-box exercise, together they provide advice as to what concerns or circumstances may indicate a higher risk of money laundering taking place.