Do litigation firms have to carry out customer due diligence?

We’re a niche litigation firm. We’re unsure of our obligations under the Money Laundering Regulations 2017. Do we need to carry out customer due diligence?

Regulation 19 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLR 2017) requires firms in the regulated sector to have written policies, controls and procedures in place.

HM Treasury has confirmed that participation in litigation is not covered by the MLR 2017.

You’re therefore not obliged to identify and verify your clients (see chapter one of the Legal Sector Affinity Group’s anti-money laundering (AML) guidance for the legal sector.

However, you should still consider how such systems can help you to comply with your obligations to report suspicious transactions in accordance with the:

As the firm specialises in litigation, you should also be familiar with Bowman v Fels [2005] EWCA Civ 226.

You should also consider paragraphs 8.1 of the SRA Code of Conduct for Solicitors, RELs and RFLs and 7.1 (c) of the SRA Code of Conduct for Firms, which require you to identify who you’re acting for in relation to any matter.

Disclaimer

While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.

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