The Solicitors Regulation Authority (SRA) have released new guidance surrounding the continuing concern of money laundering within the legal industry. This is designed to be a reminder for all conveyancers to take note and keep applying the appropriate precautions.
According to the SRA, it is estimated between £23 billion and £57 billion is laundered within the UK every year, with conveyancing firms being one of the prime targets for criminals.
The Financial Action Taskforce (FATF) claim criminals use legal professionals in order to "devise complicated schemes to launder vast amounts of money". Those who fall victim to money laundering are labelled as "professional enablers" by the SRA.
The main types of money laundering schemes, according to the FATF, usually fall within the following groups:
- Misuse of client accounts
- Property purchases
- Through the creation and management of businesses and trusts
- Managing client affairs and making introductions
This latest SRA report entitled "Cleaning up: Law firms and the risk of money laundering" sets out practical guidance extracted from a wide range of sources that can be put into practice by firms across the nation.
To support this resource, the SRA are working with the National Crime Agency (NCA) and the Home Office to provide advice on how conveyancing firms can safeguard themselves against money laundering.
As part of this partnership, the Home Office is planning to launch an anti-money laundering campaign aimed at solicitors. The NCA are also said to be formulating a supporting action plan.
Good practice advice has been given by the SRA as a reminder to all those within the legal industry of their obligations. Actions that firms are advised to take to detract money laundering include:
- Meeting clients face-to-face and using original ID documentation. Extra care must be taken if this is not possible.
- Investigating further and seeking advice where necessary.
- Ensuring the Money Laundering Reporting Officer (MLRO) is competent in applying sufficient safeguarding and reporting any issues.
- Providing adequate training to all staff.
This advice within the report complies with legislation set out in the Money Laundering Regulation 2007, the Proceeds of Crime Act 2002 and the Terrorism Act 2000.
Many conveyancers merely ask to see their clients with their documentation, making no electronic checks at all. With the FATF investigating the issues in more detail, it raises the question as to whether more conveyancers will start to look into taking more advanced precautions against these issues.
Money laundering schemes are said to develop and adapt on a regular basis, so the SRA recommends to keep up to date with the latest trends, which are alerted on the SRA website, as well as through the Law Society, FATF, and the NCA.
If your firm suspects any suspicious activity, the SRA reminds to seek advice and report the issue to the NCA using Suspicious Activity Reports (SAR). Further guidance is soon to be released regarding what is required within a SAR, as the NCA will reject any reports that fail to contain the required details.
For more information on anti-money laundering guidance, visit the SRA website.