Money laundering: solicitors’ reports have helped uncover crime
A third of suspicious activity reports (SARs) submitted by solicitors seeking consent to continue working on a matter do not contain enough information on which to make a decision, the UK Financial Intelligence Unit (FIU) has found.
One in seven consent requests were also unnecessary as they did not refer to a prohibited act.
As the request of the FIU, the Solicitors Regulation Authority has now issued FIU guidance on how to make consent requests. It said consent requests from solicitors have played a key role in investigations relating to a range of crimes.
“Recent feedback shows that consent requests from solicitors have instigated or supported investigations relating to mortgage fraud, rogue trader activity, fraudulent investment schemes and other crimes.
“They have also helped identify the disposal of assets by relatives of convicted criminals. Arrests have been made and multi-million pound criminal proceeds confiscated as a result, and where appropriate, these will be paid back to the victims.”
An FIU analysis of four months’ worth of requests – aimed at identifying ways in which the consent process could run more smoothly – found that of the 818 legal sector requests processed, 269 (33%) required additional information. Of these, 190 did not specify the prohibited act, while others left out why the reporter was suspicious, did not describe the criminal property or did not identify the people concerned.
Without this information the FIU was unable to process the request and make an informed decision.
Some 134 of the 952 requests from the legal sector in the sample (14%) were ultimately considered, either by the FIU or the reporter, not to relate to a prohibited act under sections 327, 328 or 329 of the Proceeds of Crime Act or offences under sections 15 to 18 of the Terrorism Act. As a result, they could not be processed as consent requests.
Some of these were whether the lawyer should accept a new client. The FIU’s guidance said: “The consent process cannot replace customer due diligence, which remains the responsibility of the regulated business. Consent only provides a defence against money laundering or terrorist financing offences and does not mean the National Crime Agency approves of the activity or that the reporter is obliged to carry it out.”
The other main problem identified by the FIU was difficulty in contacting the SAR reporter, which occurred in 198 of the 818 legal sector requests which were processed, including 108 (40%) of those which required additional information. Issues included inaccurate or out-of-date contact details on the reporter’s SAR Online account, unavailability during normal working hours, and no voicemail or alternative contact provided.
The guidance can be found here.
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