Money laundering: new case raises fresh worries over reporting clients

A landmark trial starts today (1 July) of a partner accused of money laundering that is likely to have significant implications on the requirements of lawyers reporting on suspicious clients.
The current law states that lawyers have to report clients they believe are involved in suspicious activities. However, in this case the partner is charged with assisting in laundering even though at the time there was no evidence his client was acting suspiciously, his lawyers say.
Jonathan Duff, a former equity partner of Chester firm Drummonds, has been charged with three counts of failing to disclose suspicion of money laundering because he was aware of “certain transactions” carried out by a businessman who, a year later, was charged with illegally importing cocaine.
However, at the time these “certain transactions” took place, Duff’s client, businessman Gene Gibson, was not under suspicion.
Duff’s lawyer, Ian Cooper at Cooper Kenyon Burrows (formerly fraud firm Burton Copeland’s Manchester office) said: “It means if a lawyer in a mixed practice assists in a conveyancing transaction for a client, who five years later is convicted of a burglary, then the lawyer could be charged for failing to act on his suspicions relating to his client.”
The importance of this case is heightened as it coincides with the current passage of the Proceeds of Crime Bill through Parliament. This will widen the powers of prosecuting authorities to confiscate the assets of all criminals, and not, as the current legislation states, just drug traffickers.
Duff’s lawyers will ask the judge today at the launch of his trial at Manchester Crown Court to explain how he proposes summing up the law to the jury.
About a year after the transactions in question took place, Gibson was arrested in March 1998 after he was caught at an airport in possession of £5m worth of cocaine. At the time, Gibson was involved in buying equipment from overseas for his transport company and frequently flew in his own plane between Germany and the UK. He was eventually convicted in May 1999 of conspiracy to evade the prohibition on the importation of a controlled drug.
Duff has also been charged with assisting Gibson to retain the benefits of drug trafficking after Gibson, following his arrest, hired Duff to sell several US Dodge Viper racing cars, each worth £175,000.
Customs alleges that Duff, who set up a client account in which to place the proceeds of the sales, should have known that the cars were purchased by Gibson through the proceeds of his illicit drug business.
Last year, the Solicitors Disciplinary Tribunal suspended Duff’s practising certificate for two months after it found him guilty of seven breaches of conduct unbefitting to solicitors and had failed to be entirely frank with clients.