National Crime Agency Targets Lawyers in Money Laundering Crackdown
The National Crime Agency is this week launching an attack on money laundering in the City of London. London has recently been referred to as the "money laundering capital of the world", and the elite crime agency plans to target seemingly legitimate legal and banking businesses that have been involved in laundering money for criminal organisations.
The operation is expected to result in the arrest of lawyers who are suspected of having knowledge that the source of their clients' funds is not entirely honest. The issue may often rest on the extent of the lawyers' knowledge at the time funds are transferred. The question for a jury will often be whether the defendant may have believed the source of funds to be legitimate. If they did, then they are entitled to be acquitted. But, if the jury believes that the defendant "knew or suspected" that their fees were paid from the product of criminal conduct, then they are likely to convict.
Saunders Law acted as recently as February 2014 in the Privy Court appeal of Jenny Holt, a lawyer who was convicted of money laundering in 2009 when it emerged that legal fees sent to her employers were in fact the proceeds of theft. Following her appeal, however, the court decided to quash all convictions after they accepted Ms Holt's position that she believed that the money was the result of a legitimate loan.
The case highlights the importance of satisfying oneself as to the source of funds received by a law firm, particularly in cases where clients have complex financial affairs. Firms must ensure that their compliance regimes are up to scratch and, perhaps more importantly, that all fee earners are alive to the risks. Particular dangers arise when decisions are taken at speed and under pressure; but the moment funds arrive, questions should be asked as to their source.
The actions of the NCA should remind all lawyers of the importance of maintaining proper money laundering systems and checks. Practitioners should consider whether the evidence they have of source of funds is consistent with the risk profile of their client and the scope of their retainer. It is often uncomfortable to ask clients, particularly pre-existing clients, about the source of funds; but lawyers must remember that these questions can be crucial in protecting their own position when it comes to money laundering.
Saunders Law also acts for numerous clients involved in similar matters brought under the Proceeds of Crime Act, including:
- Restraint orders
- Civil money orders