When it comes to anti-money laundering compliance, conveyancing law firms are increasingly walking a tightrope between legal professional privilege (LPP) and the duty to report suspicious activity.
The stakes are high, but the guidance can be confusing. At Teal Compliance, we’ve seen a marked increase in firms asking: ‘Can we rely on client privilege to avoid filing a suspicious activity report?’ or ‘Are all our conversations with clients automatically protected?’
In truth, the answer isn’t straightforward. Relying on privilege without careful consideration could expose your firm to serious risk under the Proceeds of Crime Act 2002 (POCA).
In the words of the Law Society:
“There is no LPP for communications made with the intention of furthering a criminal purpose, whether or not the lawyer is aware that this is the case.”
When must you file a suspicious activity report (SAR)?
Under section 330 of POCA, conveyancers and any professional in a regulated sector who knows, suspects or has reasonable grounds to suspect that someone is laundering money, will be personally liable if they fail to submit an SAR. This applies to fee earners and support staff alike.
The obligation isn’t automatically negated by privilege. You must always ask: Is the information genuinely privileged under LPP? Or does it relate to the client attempting to use your services for a criminal purpose?
If it’s the latter, you must file an SAR, even if it feels uncomfortable.
During a recent webinar with our fraud specialist Mark Heffer, one conveyancer asked: ‘What if I’m not sure whether it’s suspicious enough?’
Mark’s guidance was simple but clear:
“If in doubt, document your reasoning, consult your MLRO, and lean toward disclosure. The regulators will not criticise you for reporting too early, but they will for not reporting at all.”
Myth-busting: ‘Privilege means I can’t report’
This is one of the most dangerous misconceptions in legal compliance, reinforced by SRA guidance: privilege must not be used to shield activity that may involve financial crime. If you mistakenly apply privilege where it doesn’t belong, you risk an SRA investigation and potential enforcement action.
Five tips for conveyancers navigating SARs and LPP
- Understand the privilege test
Ask yourself: Is this communication truly confidential legal advice? Or is it about executing a transaction that raises red flags? - Train your teams
Make sure all staff, not just fee earners, understand when to escalate a concern to the MLRO. - Record your rationale
If you decide not to file an SAR due to privilege, document your reasons clearly. Regulators will expect to see your thinking. - Involve the MLRO early
Don’t carry the burden alone. If you’re unsure, escalate. It is your MLRO’s role to assess suspicion and manage the disclosure process. - Don’t delay legitimate transactions
If you do file an SAR and require a Defence Against Money Laundering (DAML), be mindful of the statutory waiting periods. Communicate clearly with clients and counterparties, without tipping off.
Be clear on what you’re shielding
Privilege is a vital protection, but it is not a cloak for crime. As the money laundering landscape grows more sophisticated and the SRA raises expectations around AML supervision, conveyancing firms must be bolder in their compliance decisions.
Knowing when to protect, and when to report, could be the most important compliance decision you make this year.
Saba Janjua is an associate at Teal Compliance
One Response
The Post Office scandal is a clear example of where privilege was used to try and cover up wrongdoing; lawyers knew they were doing wrong and went out of their way to try and make sure all correspondence was covered by LPP by telling those they liaised with to use language that would be seen as asking for advice when that was not the matter.