Q: I act for a young couple in the purchase of a small local business. Part of the funding is coming from their respective parents with the remainder provided by a high street lender.
What anti-money laundering considerations would I need to consider to comply with the Money Laundering Regulations 2017 (the Regulations)?
A: In addition to undertaking the usual customer due diligence (CDD) on the couple, you should consider undertaking similar checks on the parents as well as making enquiries about the source of funds coming from the parents.
The first question you should ask your clients is why are the parents providing such funding? It is important to document the answer given on your file.
You should also ask on what basis the parents are providing such funding - is it a loan or a gift? Consider writing to the parents to advise them of the need to take independent financial and/or legal advice. In addition, if you are also acting for the lender, check that the funding arrangement has been communicated to the lender.
In terms of compliance with the Regulations, consider Regulation 8 which imposes the obligation to scrutinise transactions, where necessary, including source of funds. Therefore, depending on the level of risk involved, you may deem it necessary to seek evidence of source of funds from the parents starting with CDD material and/or bank statements.
Ultimately, the onus is on you to demonstrate on your file that you have taken steps to understand the nature of the instructions and the profile of the funders in order to determine whether or not such funding is consistent with the particular retainer.
If you undertake these initial steps at the outset, it should enable you to be alert to any warning signs that may arise during the retainer such as a change in instructions. It will also enable the clients to begin collating relevant information regarding the funding to assist in expediting their transaction.
For further information, please see our anti-money laundering guidance for the legal sector.
Q: I am my firm's money laundering reporting officer (MLRO). I recently submitted a suspicious activity report (SAR) to the National Crime Agency (NCA) on a conveyancing transaction. Consent was eventually given to us for the transaction to proceed but before we heard back from the NCA the date for completion had passed.
My firm has now been served with a claim in which the client is claiming damages arising from the delay in completion. I have reported the matter to the firm's professional indemnity insurers. Is there any statutory protection that we can rely on in these circumstances?
A: You may be able to rely upon the provisions of s37 of the Serious Crime Act 2015 (the Act) which came into force on 1 June 2015. This section provides the reporting person or business with statutory protection against civil liability arising from the submission of a SAR provided the report is made in good faith. The Act amended s338 of the Proceeds of Crime Act 2002 by inserting a new subsection 4A, which provides:
'Where an authorised disclosure is made in good faith, no civil liability arises in respect of the disclosure on the part of the person by or on whose behalf it is made.'
For further information, please see the Home Office Circular.
Q: I am acting for the two lay trustees of a trust. One of the beneficiaries is unhappy with the way in which the trust is being administered and has asked me for a copy of my firm’s complaints procedure. The beneficiary is not a client of the firm – the trustees are, so must I comply with his request?
Yes. You should inform your clients about the request from the beneficiary for your complaints procedure and explain that you will have to supply this.
If you decline to supply it, the beneficiary could complain to the Legal Ombudsman whose Scheme Rules at paragraph 2.8(c) state that the Ombudsman will look into complaints which relate to the service which a firm provides to a trustee where the complainant is a beneficiary of that trust.
For further information, please see the Legal Ombudsman's Scheme Rules and our practice note on handling complaints.