There’s evidence of fraudsters intercepting clients’ emails and duping them into sending money to the fraudsters by purporting to be the law firm acting in the purchase. This can lead to the client unknowingly sending potentially hundreds of thousands of pounds to a fraudulent account and then attempts being made to recover the money from the bank.
It was hoped that the new Confirmation of Payee (COP) system introduced by the banks would ensure that payments went to the correct payee. It’s clear from some cases we have seen that if the name of a firm is used with some other additions made at the end of it and the fraudsters have opened the account in this name, then the confirmation of payee provisions do not protect against fraud.
The Confirmation of Payee (COP) to tackle circa £320 million a year lost from this fraud and protect victims is currently only applicable to the six largest banks:
- Lloyds Bank Group
- Royal Bank of Scotland Group
- HSBC Group (excluding M&S Bank) and
- Nationwide Building Society
This was delayed from July 2019 to 31 March 2020 and now with COVID-19, the Payment Systems Regulator (PSR) has deferred any action against banks meeting the deadline until 30 June.
We understand this is an issue that the AML and Economic Crime team are working on through the newly established cross-sector public-private partnership fraud groups.
We've recently updated this practice note. The changes include:
- highlighting the continued threat of fraudsters targeting the properties of both individuals and companies. We have issued this practice note to assist conveyancers in encouraging their clients to be more aware of how they may protect their property interests against fraud and safeguard their rights as legitimate property owners on the register (Dreamvar confirms that solicitors can be held liable for any losses caused by acting for a fraudulent party)
- clarifying that a written risk assessment should be carried out at the start of the transaction and be updated and amended as the details of the transaction become known
- reaffirming the importance of undertaking thorough anti-money laundering checks (signposting existing Law Society, HM Land Registry and Legal Sector Affinity Group guidance where appropriate)
- regulatory updates to reflect the new SRA Regulations that came into force in November 2019
Fraud and fraudsters targeting the properties of both individuals and companies continue to be a threat to conveyancing transactions.
This joint practice note will assist you when acting in property transactions.
It may also help you to encourage your clients to be more aware of how they may protect their property interests against fraud and safeguard their rights as legitimate property owners on the register. This is important because Dreamvar confirms that solicitors can be held liable for any losses caused by acting for a fraudulent party.
This advice is not exhaustive. Many aspects of mortgage fraud can also be adapted to commit title fraud. For further information, see our practice note on mortgage fraud.
Firms should also be aware of their anti-money laundering (AML) obligations as these may help protect the firm and clients against fraud.
For further information, see the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and Legal Sector Affinity Group guidance.
This practice note is the Law Society’s view of good practice in this area, and is not legal advice. For more information see the legal status.