Law firms’ involvement with Russian “dirty money” comes under the microscope

Law firms’ involvement with Russian “dirty money” comes under the microscope

Following Russia’s invasion of Ukraine, UK law firms’ involvement with Russian “dirty money” laundering, namely through the London property market, is coming under increasing scrutiny in light of the sanctions placed on those with ties to the Kremlin.

The Solicitors Regulations Authority (SRA), Council for Licensed Conveyancers (CLC) and Financial Conduct Authority (FCA) have all issued guidance for solicitors insofar as dealing with Russian entities in light of the current sanctions. The financial sanctions regime identifies organisations and individuals who pose a risk to the UK. Under the Money Laundering regulations, solicitors must not act for those on sanctions lists.

Compliance with the guidance, along with the sanctions imposed by the government, is irreconcilable with the accusations being levelled at law firms of involvement with the very activity that the sanctions aim to tackle.

Monday saw Boris Johnson announce the Economic Crime (Transparency and Enforcement) Bill, which aims to “tear back the façade that those supporting Putin’s campaign of destruction have been hiding behind for so long”.

Some UK law firms are being accused of helping to uphold that façade. Liz Truss, Foreign Secretary, blamed the delay in imposing sanctions on Russian oligarchs on London law firms, as reported by The Independent. Labour MP Ben Bradshaw said:

[Truss] explained that they had to make certain their actions were legally watertight, because of the litigiousness of the London law firms representing these men. It is absolutely outrageous – the British public have a right to know which legal firms based here in London are trying to prevent the sanctioning of Putin’s cronies.”

Truss then repeated this sentiment on the BBC’s Sunday Morning, though the Foreign Secretary’s allegations were rejected by some in the legal sector. Jessica Simor QC tweeted:

Yet, Truss is not alone in making these allegations. Baroness Wheatcroft said that the government must scrutinise the “highly commercial approach of some of our major law firms”, going on to reference a recent case of a firm breaching anti-money laundering (AML) regulations, resulting in a large fine. Lord Carlile, a barrister, added that the government should create a register to document all activity of lawyers acting for Russians. Baroness Kramer said in the House of Lords last week that there was a “network of professionals involved… laced with respectable names”.

Cabinet Office minister Andrew Griffiths, writing in the Financial Times, said firms and businesses must “go further, faster, wherever they can”.

The European Commission’s statement at the weekend referred to the “enablers” of Russian schemes of laundering and elitism, which may be in reference to those law firms purportedly assisting in such schemes.

The Law Society has responded to these concerns over how law firms advise clients about sanctions regimes, offering their support for “watertight” sanctions against Russia. Law Society of England and Wales president I. Stephanie Boyce said:

It is the job of solicitors to represent their clients, whoever they may be, so that the courts act fairly. This is how the public can be confident they live in a country that respects the rule of law – unlike Putin’s tyrannical regime.

Solicitors are highly regulated and are not allowed to bring spurious objections to processes – if they challenge the government’s actions, it’s because they think the government is at risk of breaking its own rules.

If Parliament wishes to change those rules, they have the power to do so democratically. The Law Society and our profession stand ready to support the government to build a watertight sanctions regime against Russia.”

Jamie Lennox

Content Editor. Contact: [email protected] Twitter: @JamieLennoxTM

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