Property lawyers complacent about money laundering

Property lawyers are complacent about money laundering fraud, a former SRA professional ethics executive has warned as she urged firms to prepare for new requirements to have written risk assessment procedures, expected to come into effect by early 2015.

"Conveyancing remains the most common and easiest way of cleaning money", Alison Matthews told delegates at Solicitors Journal's conference SJ Live yesterday. Yet, she said, "We suffer from complacency".

Last year, SRA research first reported in Solicitors Journal showed that 1 in 4 firms had experienced money laundering attempts. A similar number felt they would not. "They are wrong," Matthews said.

Between 2008 and 2012 conveyancing fraud accounted for more than half of the value of professional indemnity claims, most of which were the result of "weak risk management and compliance systems within the practice resulting in a failure to detect fraudulent activities or other dishonesty", according to the SRA.

The former Irwin Mitchell associate director said conveyancers should make sure their staff were all aware of the signs that a transaction may be fraudulent, that they should be able to spot them, and knew what to do.

Acknowledging the fact that there were no hard and fast rules to ascertain the legitimacy of a transaction, she said lawyers should be confident about probing clients until they were satisfied they had complied with regulatory requirements.

"Ask about the source of the funds and the amount, up to the point where you feel comfortable. Being given loads of bank statements may not be sufficiently clear," she said, before adding that if lawyers were not convinced, they should go by "the niggle in your stomach".

She went on saying lawyers should not be afraid of asking themselves questions such as: "Does this feel right? Isn't this chap very young for so much money?" and go back to their clients with further questions.

Asked whether lawyers should also ask about the source of the funds where most came from a lender, Matthews replied that this was an opportunity to ask more detailed questions than the lender would need to ask.

This should be the case even with long-term clients. "Unless you really know them - say, you have been to their house - you should always ask about the source of the funds. You are the one who certifies, so your liability is engaged."