SRA tells firms: Check exactly where your client’s money came from

Law firms should know exactly where their client’s money came from if they want to be effective fighters against money laundering, the regulator said today, stressing that solicitors should ask questions about client wealth before facilitating any transaction.

Mark Boyle, policy lead on anti-money-laundering for the regulator, said that the idea that firms need to check only whether clients have a UK bank account is a myth.

Mark Boyle told the regulator’s annual compliance conference:

“The key is knowing who your client is and understanding who your client is and understanding why they have come to you – does it make sense?

“You really need to be checking how did the person get their money? Be it through salary, investment or gifts. It can be many legitimate means, but you need to understand that and be evidencing that.”

Boyle said firms should prioritise training for staff as they are ‘arguably the only line of defence against being used for money-laundering’. He added that the SRA is likely to ask in future for more information from firms about what they are doing to combat risk.

Speaking at the same virtual event, Helena Wood, associate fellow with the Centre for Financial Crime and Security Studies, suggested that law firms unknowingly enabling money laundering posed as big a threat as those deliberately doing so.

Helena Wood said:

“It is not the complicit solicitor or compliance officer who are the full part of the problem here. I would say it’s the complacent, the unwitting and it’s the negligent that are really allowing people to access the financial and legal systems in this country. It is those that see compliance as a tick-box exercise.

“If you want criminals to stop, what they really rely on is weak systems and controls, complacent compliance officers and those activities helping them access the credibility and respectability they need.’

The UK is seen as a high-risk jurisdiction for money laundering, with law firms and solicitors seen as attractive because of the position of trust they hold. The SRA says the number of money-laundering related matters it deals with is increasing, with firms doing conveyancing work, handling client money and managing trusts at most risk.

Kindly shared by The Law Society Gazette

Main article photo courtesy of Pixabay