Stamp Duty is on holiday, Money Laundering is not
This article has been written by Nikki Shorto a newly qualified CLC Licensed Conveyancer based in Bournemouth, Dorset.
We are all experiencing the pull of the never-ending volume of work to do at the moment, and doing our best to line up as many completions as we can to help our clients enjoy a Stamp Duty saving before July.
While we are so busy, it’s more important than ever to keep this in mind as the end of the month approaches:
Money Launderers are not on holiday.
This is your gentle but important reminder that you may be at your wits’ end, but the criminals who want to take advantage of us are not. They are waiting expectantly for us to slip up, miss obtaining some client ID, and run out of time to review our files properly before completion. They know that thousands of payments are made between firms every week, primarily on Fridays.
Please keep your eyes peeled – not just held open with matchsticks – for anything that doesn’t sit right with you.
Here are some situations that you may well be dealing with currently, and what to look out for. It’s not meant to be exhaustive, but if one point reminds you of something on a file that you want to double check, then it was worth me writing this…
- Clients being evasive about source of funds, or unwilling to provide details to allow you to be certain that they are from a legitimate source. It can seem intrusive to some clients, but we must communicate to them that strict regulations require us to see such evidence. No exceptions. It’s not worth the consequences.
- If you’re acting for more than one client, but you only ever seem to have contact with one of them, are you sure you have the consent and authority to act from both of them? Are the proceeds going to a joint account? If not, have you obtained written authority to confirm this?
- If your client’s funds are coming from outside of the UK – can they provide evidence so that you are satisfied that their funds were accumulated from legitimate sources in another country? Is there a reasonable cause as to why they want to make a purchase in this country?
- If the source of funds is a previous sale dealt with by another solicitor, do you know why the client is not instructing them again? Have you obtained a completion statement noting the sale proceeds due to the client? If so, will your client need more funds than this to complete? What is the source of the remainder?
- In the case of a gifted deposit- first, the client may think this is ‘easier’ than obtaining a mortgage, and expect to provide little further information. You will of course need evidence of identity of the donor(s) and evidence of their source of funds, as well as a signed declaration of the gift. Also, just because there is a gift involved does not mean the client is automatically a First Time Buyer – make sure to get a declaration signed to confirm the same.
- A cash purchase – trace that paper trail of funds to evidence accumulation of the amount required. Be prepared to ask for what you need, not just obtain 3 months’ bank statements – if this is not enough to make the history clear, ask for more evidence until you are satisfied.
- If a client is selling property but they are not a Registered Proprietor on the title, make sure you know why and obtain evidence of the same – are they personal representatives, have power of attorney, a trustee, child of a deceased proprietor etc. In short, do they have the right to sell the property?
Remember Money Laundering’s neighbour, Cyber Crime?
It’s an active threat.
We spend a lot of time making sure we are sending funds to the correct accounts, but what if client funds never made it to us? Cyber criminals like to impersonate firms of solicitors, by sending their clients what appear to be legitimate emails asking for money. The technology exists to disguise where their email is truly coming from. This is why it is not safe to send your firm’s bank details by email, because even a .pdf attachment can be intercepted, altered and sent on to an unsuspecting client. The client may then make a payment believing the email was from you. The funds never arrive in your firm’s client account because they have gone into the cyber criminal’s pocket.
Further, fraudsters may also try phoning a client directly to advise that your firm’s bank details have changed, and give them new details to send their deposit to, which are of course their own account.
How to protect yourself and your firm
- Change your password regularly to help keep client information safe. Make sure you use a password which is only for work. Add in special characters and capital letters where they would least expect it, and don’t make it related to your firm’s name.
- Do not open email attachments that you are not expecting to receive, especially those with .exe files. These are programs (read likely viruses) which will start running when you try to open them. Report .exe attachments straightaway to your tech people to investigate.
- Do not accept Replies to Requisitions on Title by email only, or those which are unsigned. Yes, we are trying to work quickly, but no, an undertaking which has not been signed by the other side because they are also in a hurry is not acceptable. Can you be sure that their bank details on the document have not been intercepted and/or tampered with?
- Make it clear in your client care letter that your firm’s bank details will not change throughout the matter, and if they ever do, the client will be notified in writing (NOT by email).
I hope this article is a useful and timely reminder of some important points which we all know, but perhaps haven’t had time to really think about recently. May all your files be risk assessed, pass your due diligence checks, and make the auditors proud.
We’ve got this!