You are here

UK law firms need to improve due diligence to avoid reputational damage, warns Law Society

Partners with the UK government and the SRA to combat money laundering

30 November 2015

Add comment

The UK government has partnered with the Law Society, the Solicitors Regulation Authority and the Accountancy Affinity Group to raise awareness of the warning signs of money laundering.

The 'Flag it up!' campaign, which launches today, aims to help solicitors and accountants to spot the 'red flags' which could indicate criminal activity.

"A collective and relentless response to money laundering is vital if we want to tackle this destructive crime," said Mike Penning, Minister for Policing, Crime, Criminal Justice and Victims.

"Working with industry to help professionals spot the warning signs of suspicious activity will make things harder for those seeking to evade the law."

He noted that serious and organised crime costs the UK at least £24 billion each year. This works out as roughly £1 for every person in the UK, every day of the year.

The joint campaign, which runs until March 2016, aims to provide professionals with best practice guidance on how to protect their business reputation and ensure they are not caught up in criminality.

"This new campaign will help to raise awareness and advise those in the legal and accountancy industries how to identify and report suspected criminality that, if not dealt with, can seriously impact their careers and reputations," commented Penning.

The Serious Crime Act 2015 made it a criminal offence to participate in the activities of an organised crime group.

Under recent amendments to strengthen the Proceeds of Crime Act, law enforcement agencies have the power to recover criminal assets and freeze suspicious funds.

The Law Society has highlighted the need for solicitors to conduct sufficient due diligence on prospective clients to avoid reputational damage.

"Are there reasons not to trust your client? Are there inconsistencies in the information provided? Is the amount of funds and their source unusual? Are there discrepancies in their transactions? If the answer's YES, flag it up! If you're suspicious, submit a SAR," it said in a new campaign.

Commented Paul Philip, chief executive of the SRA: “Addressing issues as complex as money laundering requires a joined-up approach. That is why we are working with the Home Office and others to raise awareness of how legal firms can stay one step ahead of the criminals.

“Tackling money laundering has been a priority for us for years and remains a key focus. Legal service firms must be on their guard to make sure they do not unwittingly play a part in laundering the proceeds of crime.”

At Managing Partner's 10th anti-money laundering compliance for law firms conference, lack of certainty as to when a suspicious activity report should be made was highlighted as being of particular concern.

"Making reports will always be challenging," said Alison Matthews in her Managing Partner masterclass article 'Risky clients: The practicalities of reporting on clients'.

"Reporting presents competing demands but, if your MLRO takes a logical approach, ensures that she trains your staff, stays calm, submits a good quality report and is familiar with the NCA's guidance and the practice note, she should be able to comply with the legal requirements and protect herself and the practice."

Managing Partner's two-day risk and compliance conference is held on 1-2 December. Click here to book your place.

Categorised in:

Business development & Strategy Marketing Finance Risk & Compliance