Would investigation comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017?
A banker’s draft is a cheque drawn directly on the institutional funds of the drawer’s bank, which, unless the bank becomes insolvent in the meantime, will always be covered with sufficient funds.
The main risk for the solicitor is not the insolvency of the bank, but the ability of the client to stop the banker’s draft before it clears. Therefore, a banker’s draft should be treated in the same way as a cheque and the relevant number of working days for a cheque to clear should be allowed before the funds are used.
Just because the money is coming directly from the bank, it does not mean that you need not consider the source of funds further. The client will still be the ultimate source, not the bank. You should therefore consider whether you need to check the source of the client’s funds, as part of your ongoing monitoring under Regulation 28 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
On a more general note, please remember that a banker’s draft can be regarded as being analogous to cash. It is therefore sensible to take precautions to prevent theft and fraud, by not sending a banker’s draft through the post or handing it to an agent. Where completion is due to take place by post or by the attendance of an agent, some other method of transmission should be used.
For further information, please see the Law Society’s Conveyancing Handbook (24th edition), which is available to purchase from the Law Society’s online bookshop