How To Spot The Red Flags Of Money Laundering
When it comes to money laundering and organised crime, there are some ‘Red Flag Indicators’ that conveyancers should be aware of. This advice could be particularly important following the announcement that conveyancers could be liable for identity fraud under new proposals put forward by the Law Commission.
In particular, the CLC states that “several red flag indicators together, without reasonable explanation, are more likely to provide grounds for suspicion”.
AML (anti money laundering) red flags include:
- Where a client is secretive or evasive about who they are, the reason for the transaction, or the source of funds
- Where a client avoids personal contact without good reason
- Where a client refuses to provide information or documentation or the documentation provided is suspicious
- Where a client has criminal associations or an unusual level of knowledge about the money laundering process
- Where the source of funds or wealth are unusual (e.g. large cash payments, unexplained payments from a third-party, etc.)
- Where the transaction has unusual features (e.g. an excessively high value is placed on assets/securities, it is potentially loss-making, where a Power of Attorney is used in unusual circumstances, etc.)
- If the instructions are uncommon for your business (e.g. outside your or your practice’s area of expertise or regular business, a willingness to pay high fees, where the client is not local to you and there is no reasonable explanation as to why your practice has been chosen)
- Where there are geographical concerns such unexplained connections with and movement of monies between other jurisdictions.
This list is not exhaustive.
The reason why solicitors are such good targets for criminals is that. “They are the gatekeepers for a range of services and markets,” according to Juliet Oliver, General Counsel of the Solicitors Regulation Authority.
“This is therefore something that we take very seriously, and fortunately which the majority of the profession takes very seriously too.
“If solicitors are complacent, they could ultimately be helping to enable serious crime, such as human trafficking, drug offences and even terrorism. Individuals who are involved run the risk of both police action and disciplinary processes.”
“They should give the NCA as much information as they can,” says Oliver. “The more information they provide, the more likely it is that law enforcement can get to the bottom of whether there is a money laundering issue and take the action needed to protect us all.”
All reports are treated confidentially, she says, and as long as solicitors are reporting in good faith, they need not worry. Solicitors need to keep up-to-date with changes in legislation. For example, the Government introduced new money laundering regulations last June, while at the start of next year a new oversight regulator will be put in place for the legal sector.
Oliver advises: “They should also regularly review the Treasury’s financial sanctions list, which sets out who they should not be doing business with. Firms should make sure they are supporting their employees and that training is regularly refreshed. People are just as important as process.”
The bottom line is that solicitors’ obligations go well beyond the needs of their client. Oliver adds: “They must consider the wider public interest and are legally required to take action where they suspect someone is trying to break the law, or risk involvement with the activities of serious criminals.”