Solicitors were warned this week to be on guard for money launderers in new guidance published by the Law Society's Money Laundering Task Force in anticipation of the Money Laundering Regulations 2003, which come into force on 1 March 2004.
Law Society chief executive Janet Paraskeva said there was a balance to be struck "between the public interest in fighting crime, clients' interests and the public interest in access to justice". The guidelines were drafted in consultation with the Government, the National Criminal Intelligence Service, law enforcement agencies and other regulatory bodies.
"We continue to press for proportionality in the application of the money laundering regime to the provision of legal services," Paraskeva said. "However, we recognise that solicitors have a key role to play in helping to fight crime and secure the confiscation of the proceeds of crime."
The guidance is published in 'pilot' form so that it can be revised following feedback from the profession and developments in the enforcement and interpretation of the law. A revised version is expected to be published in six months.
"Solicitors will have to be aware of the new law under the Proceeds of Crime Act 2002 and that means considering whether they have knowledge or suspicion of money laundering; and the crimes that give rise to an offence can now be any crime and not just serious crime as before," commented Louise Delahunty, chair of the Law Society taskforce. "They also need to be aware that the new regulations now govern nearly all solicitors in the work they do and the procedures they will have to adopt in order to comply with those regulations."
The effect of the new rules will be that far more solicitors practices will fall into the regulated sector for many areas of legal work, including property transactions, company and trust work. The new 'failure to disclose' provisions in the act will apply to this extended sector – there is now an objective test based on "reasonable grounds" for knowledge and suspicion, as opposed to a subjective test based on actual knowledge or suspicion.
Delahunty pointed out that firms caught by the regulations should implement a number of practical measures, such as appointing a money laundering reporting officer, implementing proper identification and record-keeping procedures, as well as training staff to be aware of the law and regulations.