This article discusses about the consequences, when a conveyancing solicitor knowingly or unknowingly involves himself in money laundering. It also gives guidelines that serve as warning signals for a solicitor that the process is doubtable.
Money laundering is defined as the conversion of money obtained from illegal sources into money that may appear as legitimate. Investment in land & property is a popular way of money laundering and conveyancing solicitors should avoid their services being misused for money laundering, or else face criminal charges. Assisting a client in money laundering or failing to report a client suspected of money laundering shall make the prosecutor liable under the Proceeds of Crime Act 2002. This applies to all professionals who are involved in a property transaction. Thus conveyancers are required to:
- Verify the identity of the client with the help of documents, data, or other information provided by the client.
- When there is a beneficial owner of the property who is not the client, the conveyancer or the conveyancing solicitor should ensure that the beneficial owner’s identity is verified.
- Obtain information from the client on the purpose and the relation of the business relationship.
This is referred to as due diligence and must be obtained at the beginning of the transaction and also from time to time during the course of the transaction. Conveyancing solicitors working for a firm usually represent such matters to a ‘nominated officer’ who must come to a conclusion on the basis of a report. He should also report this to the Serious Organised Crime Agency. Such requirements override the duty of confidentiality towards the client.
To help conveyancers identify warning signals of a money laundering transaction, the Law Society has issued an Anti-Money Laundering Practice Note. Noticeable signs include clients offering large sum of money in cash, or sudden change in ownership of property, or a third party funding the transaction but the property being registered in someone else’s name, exchanging of cash directly between the clients, unusual sale price, etc.
Photo courtesy: Jeffrey Beall
