Are your conveyancing team up to speed with the frauds that you might inadvertently get caught up in?
The Financial Action Task Force (FATF) which describes itself as the global money laundering and terrorist financing watchdog, including organisations like Interpol etc, have recently held a series of webinars which might help shed some light on the situation.
FATF significantly influences the UK Government’s anti-money laundering policies and ultimately what conveyancers have to do on a day to day basis.
A series of international experts pointed out that fraud and organised crime has both disrupted criminals normal activity and increased the opportunities available to them as a result of lockdowns that were implemented across the globe.
What opportunities have criminals had as a result of the pandemic?
The lack of travel opportunities and the closure of many cash rich businesses such as restaurants, bars and coffee shops has disrupted the criminals’ ability to launder cash. This has ultimately resulted in changes in criminals’ behaviour.
Criminals have been seeking out new ways to use the cash that they have been stockpiling from illegal activity such a drug dealing.
As cash has been used less across the globe, criminals have increasingly used cryptocurrencies as a way of stockpiling their financial assets.
However, Interpol revealed that there could be a bigger threat than that. The fact that criminals have been stock piling cash, means that criminals can acquire or support businesses or individuals that are under financial pressure, and in turn pressurise them into laundering the money for them.
Pushing cash through the accounts of vulnerable businesses or individuals who are struggling financially heightens the need for conveyancers to consider source of funds and question where the money comes from.
Equally criminals have found opportunities in the new ‘normal’ that impact on conveyancers.
FATF demonstrated that cyber criminals are taking over business emails and bank accounts, so as to fraudulently obtain money.
It’s important that with so many conveyancers still working from home you ask yourself “are our control and training mechanisms adequate?” It is expected that as Government support packages end and with a potential second wave this could become increasingly prevalent.
It was also pointed out that the real estate market was a real area of concern as criminals will try to launder money through buying and selling properties particularly to very keen sellers or buyers.
As a lawyer, what should I be considering to enhance my due diligence?
The points below outline some of the steps you could take, which could help you enhance your due diligence processes:
- Think about source of funds where cryptocurrencies are involved.
- Be careful about email account and bank account takeover when dealing with other businesses, including conveyancing firms.
- As we come out of the Covid-19 lockdown think about what the criminals are likely to be doing with the cash reserves they have built up.
- Review whether your AML training is still appropriate, and update staff as appropriate.
- Consider your cyber defences, and whether obtaining Cyber Essentials or ISO27001 would be appropriate.
Brian Rogers, Regulatory Director, at the Access Group, commented:
“Criminals will use every opportunity to further their activities, and they will be looking at how they can use the fallout from Covid-19 to do this. With so many people having lost or facing losing their jobs, it is likely that once firms get back on their feet criminals will use the opportunity to try and place their accomplices in businesses so they can carry out both money laundering and fraudulent activities, so be careful who you recruit and screen them thoroughly”.
Colette Best, Director of Anti-Money Laundering, Solicitors Regulation Authority, said:
“We have published guidance for solicitors on upholding their money-laundering obligations in the current working environment.
“We have also seen firms targeted by cyber criminals trying to take advantage of those who are working at home for the first time. The National Crime Agency recorded a 400 per cent increase in cyber crime incidents in the first two weeks of lockdown alone. So, we have produced further resources on cyber crime to help keep firms safe.”
