UK lawyers failing to flag suspected money laundering – watchdog
Lawyers are failing in their duty to combat suspected money laundering and have ignored repeated warnings to increase their reporting of suspicious activity by clients, Britain’s top law enforcement body has said.
Donald Toon, the director of economic and cybercrime at the National Crime Agency (NCA), said the number of reports it had received from lawyers had fallen by 10% this year, despite of a host of recent scandals that have led to London being described as the moneylaundering capital of the world.
Toon questioned whether lawyers were taking their obligations seriously enough, given that failure to report suspected money laundering and terrorist financing is a criminal offence punishable by up to five years in prison.
“We believe that we do not get the level of reporting from legal firms of suspicious activity that we would expect,” Toon said. “We have said it a number of times and there has been no significant change.”
He said the NCA was working closely with the Solicitors Regulation Authority to identify legal professionals who were not following the rules. Toon is the latest public figure to raise concerns about UK solicitors and their proximity to controversial clients.
MPs censured the City firm Linklaters this year for its decision to advise on the stock market listing of an energy company belonging to the oligarch and Kremlin insider Oleg Deripaska, months before he was placed on the sanctions list by the US government.
Linklaters said its 70-member team in Moscow, which includes 12 partners, followed the highest standards and abided with all regulations against bribery and corruption, anti-money laundering and sanctions.
The scale of the problem that NCA investigators are required to tackle is vast. The government estimates that £90bn of cash is laundered in Britain every year.
This year the agency launched its first prosecutions under the new unexplained wealth order legislation, which targets non-EU nationals.
“What you are trying to do is create a change in the climate,” Toon said. “Successive governments, for reasons that seemed right at the time, have wanted the UK to be an open, inviting market. That carries real opportunity and that carries some risk. The important thing is to get the balance right.”
The government’s historically lighttouch approach to the flow of money into London has been a boon for its banks and for lawyers. However, at least one senior solicitor, a senior partner at the firm Child & Child, has been referred to the solicitors disciplinary tribunal for allegedly failing to carry out proper checks on a client. The hearing has yet to take place and the allegations are as yet unproved.
Solicitors and other professionals working in particular sectors have a legal duty to file what is known as a suspicious activity report (SAR) when they have grounds to suspect they are being asked to handle the proceeds of crime or transactions connected to terrorist finance.
The fall in alerts from lawyers comes as the overall number of reports is rising. The total increased by 9.6% to 464,000 in the year to March 2018, according to the NCA. A full breakdown by profession will be released this year, but a look at previous periods shows lawyers trail those working in finance. The release two years ago of the Panama Papers, a crackdown on holders of secretive Swiss accounts by the US tax office, and a series of swingeing fines imposed on HSBC and Standard Chartered, among others, have led to yearly increases in the overall number of SARs.
▲ The government says £90bn of cash is laundered in Britain every year