MONEY LAUNDERING

Question 1

Definition

Answer 1

Money laundering is the
process by which the proceeds of crime (either cash or other property) are converted into assets which appear to have a
legitimate (rather than illegal) origin.

Question 2

law

Answer 2

The main source of legislation for addressing money laundering in the UK is the Proceeds of Crime Act 2002 (‘POCA’). The National Crime Agency (‘NCA’) is charged with enforcement of POCA. Regulations (such as** the Mon-ey Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017**, as amended (the ‘Regulations’)) set out required procedures for certain businesses, including law firms, to prevent the use of professional services for money laundering

Question 3

STAGES OF MONEY LAUNDERING

Answer 3

There are three acknowledged phases to money laundering: placement, layering, and integration

Question 4

Placement

Answer 4

cash generated from crime is placed in the financial system. Because banks and fnancial institutions have developed anti-money laundering procedures, criminals look for other ways of placing cash within the fnancial system.

Question 5

Layering

Answer 5

Once the proceeds of crime are in the financial system, layering involves **obscuring the origins **of the proceeds by passing them through complex transactions. The transactions often involve diferent entities, for example, companies and trusts, and can take place in multiple jurisdictions.

Question 6

integration

Answer 6

Once the origin of the funds has been obscured, the criminal is able to make the funds appear to be legitimate funds or assets. We refer to this as the integration stage. The criminal will invest funds in legitimate businesses or other forms of
investment

Question 7

DIRECT INVOLVEMENT MONEY LAUNDERING OFFENCES POCA
Scope

Answer 7

1. POCA applies to all persons, although certain offences regarding failure to report and tipping of apply only to persons who are engaged in activities in the ‘regulated sector.’
2. The regulated sector is defined in POCA as being those who participate in financial or real property transactions (that is,transactional work and not contentious).

Question 8

‘Predicate Offence’ Defined
POCA

Answer 8

1. Money laundering offences assume that a criminal offence has occurred in order to generate the criminal property which is now being **laundered. This is referred to as a ‘predicate offence.’
2. No conviction for the predicate offence is necessary for a person to be prosecuted for a money laundering offence.
3. POCA reinforces that laundering the proceeds of **any **crime can constitute an offence (an ‘all crimes’ approach).

Question 9

Conspiracyand Aiding and Abetting
Direct involvment money laundering offense

Answer 9

When considering the principal money laundering offences, be aware that it is also an offence to conspire or attempt to launder the proceeds of crime, or to** counsel, aid, abet**, or
procure money laundering

Question 10

Concealing
definition

Answer 10

1. One of the principal money laundering offences under POCA is concealing. A person commits the offence if they** conceal, disguise, convert, or transfe**r criminal property, or remove criminal property from the UK.
2. The term ‘criminal property’ includes any property derived from criminal conduct, such as money,real and personal property, intangible property, and so on,whether situated in the UK or abroad.
3. Concealing or disguising includes not only concealing or disguising the property’s nature, but also its source, location, ownership, and so on.

Question 11

mental state
concealing

Answer 11

To be guilty of this offence, the offender has to subjectively **‘know or suspect’ **that the criminal property represents a beneft from criminal conduct.

Question 12

defences
concealing

Answer 12

1. Authorised Disclosure by the Offender
2. Disclosure Does Not Violate Other Confdentiality
   Rules
3. Privilege Excuses Not Disclosing

Question 13

Authorised Disclosure by the Offender
concealing defense

Answer 13

1. It is a defence if a person makes an ‘authorised disclo-sure’ of the transfer to the police (here, this will be the NCA), a customs officer, or the nominated officer (sometimes known as the Money Laundering Reporting Officer (‘MLRO’),) within an organisation.

2.**Disclosure should be made before the prohibited act takes place.

3. If a disclosure is made during the prohibited act, the disclosure will be a defence if:

*The person had no relevant knowledge or suspicion
when the act was started;

*The disclosure was made as soon as practicable after relevant knowledge or suspicion was acquired; and

*The disclosure was made on the person’s own initiative (that is, not, for example, prompted by the realisation of imminent discovery or the encouragement of another).

Question 14

Privilege Excuses Not Disclosing
defense of conceling

Answer 14

1. A solicitor is excused from the duty to disclose if legal professional privilege applies, as discussed in your
   Ethics and Professional Conduct materials.
2. However, the privilege does not apply if a solicitor knows that the transaction they are working on will constitute a money laundering offence. If a solicitor merely suspects that the transaction might constitute a relevant ofence, the position is more complex. If the suspicions are correct, communications with the client are not privileged. If the suspicions are unfounded, the communications should remain privileged and are therefore non-disclosable.

Question 15

Arrangements
definition

Answer 15

1. POCA makes ‘arrangement’ an offence. This offence potentially catches a large range of involvement in money launder-ing offences, usually at the layering and integration stages. It covers arrangements which the defendant **knew or suspect-
   ed **facilitated (by whatever means) the **acquisition, retention, use, or control **of criminal property by or on behalf of another person.

Exam Tip
Because a person can commit the offence of arrange-ment if they merely (but correctly) **suspect **that a transaction will facilitate the acquisition, use, and so on, of criminal property, this is an offence solicitors must watch out for and, consequently, one you should watch out for on the SQE. Be especially vigilant when questions involve the following:
*Misuse/abuse of client accounts;
*Sale/purchase of real property;
*Creation of trusts, companies, and charities; or
*Management of trusts and companies.
If you see these transactions in an exam question and
you’re told the property involved was tied to criminal activity, be sure to remember the solicitor did not actually have to know the property was criminal property to have committed the ofence of arrangement; it’s enough that they merely suspected.

Question 16

Mental State
Arrangments

Answer 16

1. the offender intentionally or recklessly entered an arrangement that faciliated the acquisition,retentniion, use or control of the criminal property by or on behalf of anotehr person, and
2. the offender** knew or suspected** taht the arrangement would have the effect

Question 17

Ordinary Litigation and Other Dispute Resolution
Excepted
arrangement

Answer 17

1. Whilst solicitors can commit the offence of arrangement in the course of practice, the offence does not cover or affect the ordinary conduct of litigation by a legal professional,
   including any step taken in litigation, from the issue of proceedings up to its fnal disposal by judgment.
2. Moreover, ordinarily, settlements, negotiations, alternative dispute
   resolution, and tribunal representation are not arrangements.
3. However, sham litigation created for the purposes of money laundering would constitute such an ofence. A sham can arise if a whole claim or category of loss is fabricated to laun-der the criminal property. In such circumstances, the offence arises upon execution of the judgment or completion of the
   settlement.

EXAMPLE
A new client contacts a solicitor’s frm’s litigation depart-
ment, from an overseas jurisdiction. Via email, they say, “We have a dispute with a business based not far from you and we need to enter into litigation–we would like you to act for us.” After the frm conducts money laundering checks and
terms of engagement are agreed, the client transfers a sum of money to cover upfront ‘expenses.’ A week or so later,
the client emails to say the dispute has been settled out of
court. Although the solicitor will not have done any work for
the client, a small fee for the initial time spent on the matter
is deducted and the balance is asked to be sent back to the client. It turns out the money was the proceeds of a crime.
This is ‘cleaned money’ and the solicitor may have commit-
ted the ofence of arrangement.

Question 18

Defence for Arrangement

Answer 18

The same defences are available for arrangement as for
concealing.

Question 19

Acquisition, Use, or Possession

Answer 19

1. Under POCA, it is also an ofence if a person acquires, uses, or has possession of criminal property.
2. Possession means having physical custody of criminal property

Question 20

defenses
Acquisition, Use, or Possession

Answer 20

1. Defences for Concealing and Arrangement Apply
2. adequate consideration

Question 21

Adequate Consideration
defense for acquisition,use,possession

Answer 21

1. The defence applies when professional advisers, such as solicitors, receive money for or on account of costs, whether from the client or from another person on the client’s behalf.
2. Disbursements are also covered.
3. The fees charged must be reasonable, and the defence is not available if the value of the work is signifcantly less than the money received.
   Exam Tip
   The defence of adequate consideration is most likely to arise in situations in which a solicitor provides legal ser-
   vices as part of a legitimate arm’s length transaction but unbeknownst to them is paid from a bank account which contains the proceeds of crime. Of course, suspicion by the solicitor of the transaction or payment would negate this defence.

Question 22

Failure to report
Timing of Required Disclosure

Answer 22

Whilst the requirement is to make the disclosure as soon
as is practicable, it may be acceptable for a delay in
disclosure if it arises from the solicitor taking legal advice,
provided they act promptly in seeking such advice.

Question 23

indirect involvement in money laudering

Answer 23

1. failure to report
2. tipping off
3. Prejudicing an Investigation

Question 24

Failure to Report
a.Obligation to Report Suspicions

Answer 24

1. Solicitors (as well as others such as bankers, jewellers, art dealers, estate agents, and so on) have obligations under POCA to make disclosures of suspicions of money launder-ing. Such reports are known as** ‘suspicious activity reports’ or ‘SARs’. **The Terrorism Act 2000 provides for broadly equivalent provisions regarding the reporting of knowledge, suspi-cion, or reasonable grounds for suspicion of terrorist fnancing. **
2. Actions to Watch for
   *Transfers between bank accounts,often held in multiple names, at multiple banks, and in multiple countries;
   *Buying investments and cashing them in;
   *Overpayment of tax; or
   *Depositing money with a solicitor or accountant, then requesting the return of funds.

Question 25

Failure to Report
Requirement Includes Information Obtained in the course of business

Answer 25

1. The disclosure requirement relates to any information coming to the solicitor in the course of business, and
   not just information relating to clients and their afairs.
2. This means that reports may be required on the basis of information about potential clients, associates, and
   counterparties of clients, acquisition targets, and even employees of businesses the solicitor is dealing with.

Question 26

Failure to report
mental state

Answer 26

Note that it is possible to commit this offence by failing to report any information which raisesreasonable grounds for suspicion. This is an objective test, which means an offence can be committed if a person **should have known or been
suspicious **in the circumstances.

Question 27

Failure to report
Defense

Answer 27

1.Privilege and Privileged Circumstance
2.Lack of Training

Question 28

Privilege and Privileged Circumstance
failure to report defense

Answer 28

1. It is a defence to failure to report that the information falls within a privilege that has not been excluded by the anti-money laundering laws or that it has come to the solicitor in privileged circumstance, including information that came to the solicitor:
   *From a client, or a representative of a client, in con-nection with the giving of legal advice to the client;
   *From a client, or a representative of a client, seeking legal advice from the professional adviser; or

*From a person in connection with legal proceedings or contemplated legal proceedings.

Question 29

Lack of Training
failure to report defense

Answer 29

1. Employees of firms who have no knowledge or suspicion of money laundering, even though there were reason-able grounds for suspicion, have a defence if they have not received training from their frm.
2. However, the firm’s partners may be prosecuted for a breach of the Regulations if they fail to train staff.

Compare
Receiving insufficient training is not a defence to terrorist funding charges.

Question 30

Tipping Off
There are two tipping of offences under POCA and a solici-tor must be mindful of both:

Answer 30

1. Disclosing to a third person that a suspicious activity report has been made to the police, HMRC, the NCA, or the firm’s nominated offcer/MLRO if that disclosure might **prejudice any investigations **that might be carried out; and
2. Disclosing an **investigation **to a third person.

A tipping of disclosure can arise from a writing or verbally, and it might be direct or indirect, including through inclusion of relevant details in published information.

Question 31

exceptions to tipping off

Answer 31

1.Normal Enquiries About Instructions and Retainer
2.Language Included in Standard Terms of Engagement

Question 32

Normal Enquiries About Instructions and Retainer
Tipping off Exception

Answer 32

1. There is nothing in POCA preventing a solicitor or firm employee from making normal enquiries about their client’s instructions and the proposed retainer in order to remove, if possible, any concerns and enable them to decide whether to take on or continue the retainer.
2. These enquiries will be tipping of only if the relevant person discloses that** a SAR has been made** or that a money laundering** investigation** is being carried out or contemplated. **

Question 33

Language Included in Standard Terms of Engagement
Tipping Off Exception

Answer 33

It is not tipping of for a relevant person to include a para-graph about their obligations under the money launder-
ing legislation in their standard terms of engagement.

Question 34

Defense for tipping off

Answer 34

1.Disclosures Within an Undertaking or Group
2.Disclosures Between Institutions

Question 35

.Disclosures Within an Undertaking or Group
defense for tipping off

Answer 35

1. It is not an offence if an employee, officer, or partner of a practice discloses to a** fellow employee, officer, or partner** involved in the same undertaking that a SAR has been made
2. legal professional will also not commit a tipping of offence if a disclosure is made** to another legal professional **in a diferent undertaking, provided that the undertakings the parties work in:
   *Share common ownership, management, or control;
   and
   *Carry on business in the UK, a European Econom-ic Area state, or a country or territory that imposes money laundering requirements equivalent to the European Union.

Question 36

Disclosures Between Institutions
defense for tipping off

Answer 36

A legal professional will not commit a tipping of offence if all the following criteria are met:
1. The disclosure is made to another legal professional in the UK, a European Economic Area state, or an-other state with an equivalent antimoney laundering regime;
2. The disclosure relates to a client or former client of both parties, or a transaction involving them both, or the provision of a service involving them both;
3. The disclosure is made for the purpose of preventing a money laundering offence; and
4. Both parties have equivalent professional duties of** confdentiality** and protection of personal data

Exam Tip
Note the language above carefully. A legal profession-al will not commit an offence if a disclosure is made to
another legal professional. On the exam, be careful to ensure that a solicitor has made the disclosure to anoth-er solicitor before deciding the exception applies. For example, if a solicitor makes a disclosure to an accountant, the exception would not apply.

Question 37

Additional Permitted Disclosures
defense for tipping off

Answer 37

1. An offence is not committed if a disclosure is made to a supervisory body or for the purpose of the prevention, investigation, or prosecution of a criminal offence in the UK or elsewhere, an investigation under POCA, or enforcement of any order of a court under POCA.
2. In addition, an offence is not committed by the relevant professional adviser if they make the disclosure to their client for the purpose of** dissuading the client from engaging in conduct amounting to an offence.**

Question 38

Prejudicing an Investigation

Answer 38

The offence of prejudicing an investigation is committed when a person:
1. Knows or suspects that a money laundering, confiscation, or civil recovery investigation is being conducted or is about to beconducted; and
2. Makes a disclosure to any person that is likely to prejudice the investigation; or
3. Falsifes, conceals, or destroys documents relevant to the investigation, or causes that to happen.

As with tipping of offences, the person making the disclo-sure** does not have to intend to prejudice an investigation** for this offence to apply.

Unlike the tipping of offences, prejudicing an investigation can apply to those** outside the regulated sector**.

Question 39

Defense for Prejudicing an Investigation

Answer 39

1. Person Making Disclosure Did Not Know or Suspect
2. Disclosure Made in Connection with Legal Proceedings

Question 40

Person Making Disclosure Did Not Know or Suspect

Defense for Prejudicing an Investigation

Answer 40

A defence is available if the person making the disclo-
sure did not know or suspect the disclosure would be
prejudicial, did not know or suspect the documents were
relevant, or did not intend to conceal any facts from the
person carrying out the investigation.

EXAMPLE
A solicitor acting on a business acquisition for a client sus-
pects that delays arising from the other party to the transac-
tion are due to a SAR having been submitted by the other
party’s legal adviser. The solicitor is supremely confdent in
their own client’s bona fde purposes, source of funds, and
reasons for being a party to the transaction. If they inform
their client of the suspected reasons for the delay, they
would not commit an ofence since it requires a knowledge or suspicion that disclosure would be likely to prejudice any
investigation relating to that SAR. They should document
their reasons for explaining the position to their client.

Question 41

Disclosure Made in Connection with Legal
Proceedings
Defense for Prejudicing an Investigation

Answer 41

It is a defence that a disclosure is made by a professional legal adviser or other relevant professional adviser to a
client, or a client’s representative, in connection with the giving of legal advice or to any person in connection with legal proceedings or contemplated legal proceedings,
provided the disclosure is not made with the intention of furthering a criminal purpose.

EXAMPLE
A client seeks litigation advice from a solicitor over suing a previous legal adviser in respect of delays in proceeding with a business acquisition. The solicitor realises or suspects that the delays were caused by a SAR having been made by a legal adviser to the other party in the original proposed transaction. The solicitor can advise the client as to the probable cause of the delay, without committing an offence.

Question 42

MONEY LAUNDERING REGULATIONS 2017

Answer 42

The Money Laundering, Terrorist Financing, and Transfer of
Funds (Information on the Payer) Regulations 2017 outline
specifc** customer due diligence requirements** which certain
professionals must follow in order to know their clients and to monitor the use of their services by clients.

Question 43

activities covered by MONEY LAUNDERING REGULATIONS 2017

Answer 43

*Buying and selling real property or business entities;
*Managing client money, securities, or other assets;
*Organising contributions necessary for the creation, op-
eration, or management of companies; or
*Creating, operating, or managing trusts, companies, foun-
dations, or similar structures.

Question 44

Activities Not Covered by the 2017 Regulations
The following would not generally be viewed as participation in a fnancial transaction:

Answer 44

*Payment on account of costs to a legal professional or
payment of a legal professional’s bill;
*Provision of legal advice
*Participation in litigation or a form of alternative dispute
resolution;
*Will-writing, although a solicitor should consider whether
any accompanying taxation advice is covered; and
*Work funded by the Legal Services Commission.

Question 45

Must Establish Certain Procedures
All businesses regulated by the Money Laundering and Ter-
rorist Financing Regulations, including solicitors, are required to put in place policies, procedures, and controls to deter
criminals from using their facilities for the purposes of money laundering, including:

Answer 45

*Creating and applying customer due diligence proce-
dures, such as procedures to accurately identify the
client (and any benefcial owner of the client) and for
verifying the client’s identity
*Appointing a nominated ofcer/MLRO to whom certain
reports, such as reports of suspicious activities or sus-
pected money laundering, must be made;
*Establishing systems and procedures to forestall and pre-
vent money laundering and terrorist fnancing; and
*Providing client-facing relevant employees with training
on money laundering/terrorist fnancing and awareness
of their procedures in relation to the same.

Question 46

Nominated Officer (Money Laundering
Reporting Officer (MLRO))

Answer 46

1. the Regulations require firms (and other businesses within the regulated sector, such as banks) to appoint a nominated officer/MLRO to receive disclosures under POCA and to make disclosures to the NCA.
2. However, an individual who provides regulated services but who does not employ any people or act in association with anyone else need not appoint a nominated officer.

Question 47

Role and Duties of the Nominated Officer

Answer 47

1. Reporting to Authorities
2. Additional Duties

Question 48

Reporting to Authorities
duties of nominated officer

Answer 48

1. The decision to report, or not to report, must not be subject to the consent of anyone else.
2. A nominated officer acts as the central point of contact** between a firm or business and the NCA**,
   and will liaise with the NCA or law enforcement on the issue of whether to proceed with a transaction or what
   information may be disclosed to clients or third parties.

Question 49

additional duties of nominated officer

Answer 49

Nominated officers may also take responsibility for:
* Training;
* Advising on how to proceed with work once an internal report and/or SAR has been made in order to guard against risks of tipping off or prejudicing an investigation; and
* Designing and implementing internal anti-money laundering systems and policies, controls, and procedures.

Question 50

Reporting to the Nominated Officer

Answer 50

1. Report Must Reach Nominated Officer
   An individual may discuss his suspicion with managers or other colleagues
   to assure themselves of the reasonableness of their conclusions but, other than in group reporting circumstances, the responsibility for reporting to the nominated officer remains with the individual. The responsibility cannot be transferred to anyone else, however junior or senior they are.
2. When Nominated Officer Is Away
   When a nominated officer is away, best practice for firms is to make alternative arrangements, such as appointing an alternative or deputy nominated officer and informing staff about these arrangements. If a nominated officer is
   away and a firm has not made alternative arrangements, a solicitor has to report suspicions** directly to the NCA **as harm might arise from delaying until the nominated
   officer returns

Question 51

After Submitting a SAR

Answer 51

1. After a SAR is submitted to the NCA, it has 7 working days to review the SAR and ask for more information (‘the notice period’).
2. During the notice period, the act which may constitute money laundering must not be carried out but other activities on the same file such as searches or writing letters can continue.
3. If the NCA does not reply within 7 days, deemed consent is given and the act can take place.
4. If the NCA refuses consent, there is a 31-day moratorium period during which the nominated officer cannot allow the potentially prohibited act to take place, but other steps can be taken on the file.

Question 52

Customer Due Diligence
Businesses Must Adopt Identification and
Verification Measures

Answer 52

1. Identifying the client and verifying their identity
2. Identifying, when there is a beneficial owner who is not
   the client, the beneficial owner and taking adequate measures, on a risk-sensitive basis, to verify the beneficial owner’s identity so that the solicitor is satisfied that
   they know who the beneficial owner is.
3. Obtaining information on the purpose and intended nature of the business relationship.

Question 53

In What Circumstances Must Due Diligence Be
Conducted?
A solicitor must conduct customer due diligence when they:

Answer 53

*Establish a business relationship;
*Carry out an occasional transaction;
*Suspect money laundering or terrorist fnancing; or
*Doubt the veracity or adequacy of documents, data, or
information previously obtained for the purpose of cus-
tomer due diligence.

Question 54

Carrying Out an Occasional Transaction
for customer due diligence

Answer 54

1. An occasional transaction is a transaction (carried out other than as part of a business relationship) amounting to 15,000 euros or more, whether the transaction is car-
   ried out in a single operation or several operations which appear to be linked.

1.

Question 55

timing for customer due diligence

Answer 55

1. ** Before Establishing Relationships**
   Solicitors must verify their client’s identity and that of any beneficial owner before they establish a business relationship or carry out an occasional transaction.
2. exception
   Verifcation of the client and any benefcial ownership of assets may be completed as soon as practicable after contact is first established, during the establishment of the relationship, if:
   It is necessary not to interrupt the normal conduct of business; and
   There is little risk of money launde**ring or terrorist financing.
   This exception does not apply if the matter is an occasional transaction.

Question 56

Establishing a Business Relationship

Answer 56

A business relationship includes a solicitor-client relation-
ship if at the time when contact is established it is expect-
ed the relationship will have an element of duration.

Question 57

Applying Customer Due Diligence to Trusts and Other Legal Entities

Answer 57

When applying due diligence to a trust (or other legal
arrangement or entity which is not a company) involving
a class of benefciaries, solicitors must always verify the
identity of the benefciary or benefciaries before any pay-
ment is made to them or they exercise their vested rights
in the trust.

Question 58

Ascertaining Legal Position
customer due diligence

Answer 58

1. The requirement to cease acting and consider making a report to the NCA when a solicitor cannot complete
   customer due diligence does not apply when the solicitor is providing legal advice or preparing for or engaging in
   litigation or alternative dispute resolution.
2. This exception does not apply to transactional work, so solicitors should take a cautious approach to the distinction between ad-**vice, litigation, and transactional work.

Question 59

Recordkeeping

Answer 59

1. Records must be kept of clients’ identity, the supporting evidence of verifcation of identity (in each case including the original and any updated records), **the business relationships **with the clients, details of any occasional transactions, and details of the monitoring of the relationship.

Question 60

Suspicions and Disclosures
record keeping

Answer 60

Firms should keep comprehensive records of suspicions and disclosures because authorised disclosure of a suspicious
activity is a defence to criminal proceedings. Such records
may include notes of:
*Concerns raised by relevant persons and staff;
*Discussions with the nominated officer regarding concerns;
*Advice sought and received regarding concerns;
*Reasons why the concerns did not amount to a suspicion and a disclosure was not made; and
*Copies of any disclosures made.

Question 61

For How Long Should Records Be Kept?

Answer 61

Broadly, records of customer due diligence and business relationships should be kept for five years after the end of the relationship.

Question 62

Training

Answer 62

The Regulations provide that all ‘relevant’ employees are required to be** ‘made aware’** of law relating to money laundering and terrorist financing, and **regularly given training **in how to recognise and deal with transactions which may be related to money laundering or terrorist financing.

Question 63

SRA Best Practices
The SRA has published the following recommendations for
solicitors’ firms as best practice for compliance with the Reg-
ulations:

Answer 63

*When possible, meet clients in person and verify their ID using original documentation and take extra steps for ID verifcation when not meeting clients in person;
*Use a client account to hold client funds for a legal transaction only;
*Investigate further if a client asks you to perform large cash transactions and the source of funds is unclear or
involves a high-risk jurisdiction (high-risk jurisdictions include countries such as Albania, Cayman Islands, DPRK, Iran, and Jamaica—the list changes frequently so don’t worry about memorizing it);
*Take advice from the nominated officer if something does not seem right about a client and/or transaction; and
*Submit SARs to the nominated officer that are not vague or inaccurate.

Question 64

1) A solicitor is representing a buyer in a property transac-
tion. The vendor kept on asking for higher prices and the
client has agreed every time. The solicitor has noticed that
their client deposited the funds required for the purchase
from eight diferent bank accounts from three diferent
countries. What is the best course of action?

Answer 64

Using multiple accounts for transfers, especially from multiple countries, should raise reasonable suspicion of
money laundering. The chances are that the client may be entirely innocent, but the solicitor should report the client to the nominated officer and carry on doing business as usual, unless the solicitor is told otherwise by the nomi-nated officer or the NCA. Because tipping of is an offence under the law, as well as whatever the client is doing, a solicitor should not let the client know or behave in a way to make the client believe that they have been reported.

Question 65

2) A solicitor is helping a client with restructuring a business under a holding company umbrella. Based on information on company accounts and tax returns, one of the client’s
most proftable businesses is a bar. However, after the solicitor visited the bar several times with the client, the solicitor gets the feeling that the bar does not get much custom and wonders about the source of the business profts. What is the best course of action?

Answer 65

The business might be being used in the ‘integration’ stage of money laundering, where ill-gotten gains are
shown as legitimately earned (and taxed) profts of the bar. The solicitors need to report the client to their nominated ofcer.

Question 66

3) A solicitor is representing a client who is accused of being the head of a criminal organisation involved in human trafcking. The solicitor discovers that the client is the bene-fcial owner of a number of overseas bank accounts in which large sums of cash have been deposited. Does the solicitor have an obligation to report?

Answer 66

Maintaining client confdentiality trumps the obligation to
report suspicion of money laundering in cases in which a solicitor is acting for the client on a bona fide litigation.There is no need to report to the nominated officer. If, however, a solicitor was representing the same client in a property sale, the solicitor would need to alert the nominated officer.

Question 67

Ordinary Litigation and Other Dispute Resolution Excepted
Arrangment

Answer 67

1. the offense does not cover or affect the ordinary conduct of litigation by a legal professional including any step taken in litigation.
2. ordinarily settlements, negotiations, alternative dispute resolution, and tribunal representation are not arrangments.
3. however, sham litigation created for the purpose of money laundering would constitute such offense.
4. a sham can arise if a whole calim or category of loss is fabricated to launder the ciriminal property.

Question 68

mental state of Acquisition, use or possession

Answer 68

the offener must have subjectively known or suspected that the proeprty represented a benefit from coriminal conduct.