Law firms need to be aware of their attractiveness to criminals who seek to launder the proceeds of crime through conveyancing transactions. Image copyright Images Money.
The Solicitors’ Regulation Authority (SRA) is stepping up its efforts to ensure that law firms do not become embroiled in money laundering activity and are compliant with the various regulations and legislation associated with anti-money laundering compliance.
In their Risk Outlook 2014-15, published in July, the SRA highlighted how law firms are an attractive vehicle through which to launder the proceeds of crime, such is the magnitude of funds being transferred by legal practices.
Preventing money laundering is a high priority for both the UK and international Governments and its prevention is clearly in the public interest.
Paul Philip, SRA Chief Executive, went on record recently and said: “Law firms often handle large sums of money and this means they attract those who seek to launder the proceeds of crime. We want to work with the profession to ensure that all firms, no matter how large or small, have the systems in place to guard against money laundering and that they are compliant with the current regulations and legislation.
“We will also be testing the systems used within firms to report money laundering, and how widely these systems are known within each firm.”
It is expected that the SRA will publish their findings in May 2015.
In 2013 the Financial Action Task Force identified that a client failing to provide any valid identity documents is a key money laundering alert. This finding was backed up by the SRA Conveyancing Thematic Study 2013 where one in four firms have experienced cases of attempted money laundering; with the majority of these identified through the clients’ attempts to avoid or cheat identity checks.
This begs the question of how can firms counter these issues; anti-money laundering controls are a legal obligation and not just a regulatory requirement. The easiest solution is for firms to take the issue of providing documentation away from the client. Online verification is readily available, inexpensive, comprehensive and instantaneous and covers UK and International clients. Reliance on bank statements, passports and utility bills should be consigned to the past.
If this is coupled with a firm-wide awareness of the money laundering policies, easy access and reporting of any issues to the nominated money laundering reporting officer (MRLO), the firm will be able to demonstrate and rely upon a robust approach to identifying and reporting these issues and will be compliant with both legal and regulatory requirements.