The Money Laundering Regulations 2007 states that clients who do not meet the regulated professional in person pose a higher risk of money laundering.
Solicitors are required to conduct enhanced due diligence with respect to these clients.
The reasons behind this approach include:
- Clients who are seeking to engage in criminal activity will often try to limit the amount that a solicitor knows about them and their transaction - this may be easier to achieve if they do not meet them in person.
- When you meet a client you have an opportunity to verify their identity against a photographic identification document, or to otherwise ascertain whether they conform to identification information that you may have about them.
- If you have concerns about a transaction and ask them questions in a face-to-face interview, you may be better able to assess whether they are answering you honestly.
Regulation 14(2) outlines a non-exhaustive list of ways you can conduct enhanced due diligence:
- use additional documents, data or information to establish identity
- use supplementary measures to verify or certify the documents supplied, or obtain certification by a credit or financial institution that is subject to the money laundering directive
- ensure the first payment in the retainer is made through an account opened in the client’s name with a credit institution.
Additional material may include the use of e-verification either to confirm the validity of the passport provided or to see if the person has a credit or electoral history at the address they have provided.
The suggestion that you rely on regulated credit or financial institutions is on the basis that they will already have conduced client due diligence on the person before opening the account.
Further, EU regulations which entered into force on 1 January 2007 require that credit institutions must provide the payer's name, address and account number with all electronic fund transfers.
As such you will be able to check whether the account details are the same as the identity details which you were provided with by the client.
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