Protect your Firm from Money Laundering

11-10-2009

The term, 'money laundering', refers to the process by which criminals and fraudulent businesses disguise money made from illegal activity. They attempt to hide the original source of the money, usually cash, by passing it through various legitimate businesses and institutions so that it becomes untraceable, turning it into a “legitimate asset”.

New Money Laundering Regulations came into force in December 2007. Their aim was to detect financial crime by reducing the possibility of legitimate businesses being used for money laundering. The regulations stipulate that all prospective and existing clients are risk assessed for money laundering at the start of the relationship. The regulations place emphasis on management control and the need to carry out a proper form of risk-assessment.

Handling funds obtained as a result of mortgage fraud could have serious consequences for solicitors involved in such transactions. It is a matter of considerable importance to all Solicitors to report transactions which are known to be, are suspected to be or ought reasonably have been known to be money laundering.

Know your Customer

As it becomes harder to launder money, criminals are now looking to represent themselves as solicitors and steal the identity of legitimate law firms. This can be a big issue for firms, especially those dealing with conveyancing matters and mortgage applications.

Letterheads from genuine legal firms are being amended with the addition of new contact details and non-existent solicitors. More advanced criminals are even seeking to register a new branch office with the Solicitors Regulation Authority (who themselves are undertaking more stringent checks on all such applications).

Law Society Guidance

The Law Society has issued guidance for solicitors seeking to protect themselves from such fraud:

• Check the identity of the solicitor/conveyancer on the other side of the transaction if you do not know them personally.
• Take care when providing letterhead to prospective clients. (If you have concerns about the validity of the identity information and decide not to accept the instruction, decline verbally rather than in writing, ensuring that you have a detailed file note of the discussion and your concerns.)
• Consider whether your suspicions should be reported to the Serious Organised Crime Agency (SOCA).

Simplify “due diligence” with LAWFUSION

The flexibility of the LAWFUSION software allows you to write your own anti-money laundering procedures into the system workflows, making sure you easily satisfy the due diligence for anti-money laundering.

To help you, useful anti-money laundering features are included in the software as standard:

• Warns you if you accept funds and the anti-money laundering checks have not been completed for the client.
• Warns you if you accept funds over a certain value.
• Reminds you if your anti-money laundering checks are out of date.
• Reminds you if the anti-money laundering checks are incomplete.
• Allows you to enter the checks done and also to scan in documents, papers, etc.
• Optionally, links to an external vertical service, such as Call ML.
• Produces a “suspicion letter” to the Anti-Money Laundering Officer (AMO) in your firm.
• Optionally, passes on your suspicions to The Serious Organised Crime Agency (SOCA).

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