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Anti-money laundering Q&As

2 July 2019

The Law Society's anti-money laundering helpline is a confidential telephone-based helpline for solicitors.

Our team of solicitors answer questions on a wide variety of subjects, including anti-money laundering, costs, conveyancing, client care and complaints handling.

The service operates Monday to Friday from 9am to 5pm and you can call us on 020 7320 9544.

Here is a selection of questions and answers compiled by the Practice Advice Service:

I am in the process of setting up a new firm as a sole practitioner. I will be dealing mainly with conveyancing and probate matters and I am considering my obligations under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Will I be required to appoint a nominated officer?

Both areas of work are activities within the regulated sector.

Regulation 21(6) provides that there is no requirement to have a nominated officer where you:

  • are an individual providing regulated services
  • neither employ nor act in association with any other person

In essence, you will be the nominated officer as you will be the person making reports to the National Crime Agency.

For further information, see Chapter 3 of the anti-money laundering guidance for the legal sector.

Do the Money Laundering Regulations 2017 require firms to keep records of suspicions and disclosures?

Regulation 40 requires that supporting records in respect of a business relationship or occasional transaction which is the subject of customer due diligence measures or ongoing monitoring must be kept.

Therefore, it is suggested that you keep comprehensive documentary evidence of suspicions and disclosures as this may be used as a defence in criminal proceedings.

Such records may include notes of:

  • ongoing monitoring undertaken and concerns raised by fee earners and staff
  • discussions with the nominated officer regarding concerns
  • advice sought and received regarding concerns
  • why the concerns did not amount to a suspicion and a disclosure was not made
  • copies of any disclosures made
  • conversations with the National Crime Agency (NCA), law enforcement, insurers, supervisory authorities etc regarding disclosures made
  • decisions not to make a report to the NCA which may be important for the nominated officer to justify his position to law enforcement agencies in the future

You should ensure records are not inadvertently disclosed to the client or third parties to avoid offences of tipping off and prejudicing an investigation, and to maintain a good relationship with your client.

This may be achieved by maintaining a separate file, either for the client or for the practice area.

For further information, see Chapter 3 of the anti-money laundering guidance for the legal sector.

I have been instructed to act in the purchase of a property through a power of attorney where the attorney is the buyer’s daughter. The actual buyer is away in Canada. Should I conduct customer due diligence on the buyer, or should I identify only the daughter?

In this situation, the proposed buyer is your client.

You should undertake client due diligence (CDD) on the buyer to comply with your obligations under Regulation 28 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

Regulation 33 provides that you must take into account that the client is not physically present when assessing whether there is a high risk of money laundering.

If you determine that the risk is high, you must undertake enhanced due diligence.

You should also be alert to the possibility that the purported agency relationship is actually being used to facilitate a fraud so you will need to satisfy yourself about the reason behind the agency.

Understanding the reason for the agency and documenting this will assist to mitigate this risk. You should also identify the daughter.

For further information, see the anti-money laundering guidance for the legal sector.

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.

This article is compiled by the Law Society's Practice Advice Service. Comments relating to the questions should be sent by email to practiceadvice@lawsociety.org.uk.

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