Tuesday 16 February 2010

The provision of legal advice and the conduct of litigation are not covered by the Money Laundering Regulations 2007. The rationale for this exclusion is the protection of a person’s fundamental human right of access to justice.

This does not mean, however, that such activities are free from the threats posed by criminals. In fact recent calls to the Practice Advice Service and information provided to law enforcement suggest that litigation is an area of growing risk for money laundering and fraud.

The perception that law firms may be taking a more relaxed approach to due diligence and scrutiny of their client’s conduct in litigation matters may be one reason for this shift in criminal activity.

Debt recovery is an area of increasing concern for money laundering. With banks and money service bureaux tightening their approach to accepting large amounts of cash, criminals are seeking alternative methods to get the cash generated from criminal activity into the financial system.

Setting up a cash intensive business is one such method. The criminal monies can be mingled with legitimate monies and make their way into the business’s bank account without raising suspicion.

To transfer the funds from this cover business back to other parts of the criminal enterprise, documents are created to suggest that a debt is owed. A solicitor is approached to recover what they are told is a legitimate debt, the debtor agrees to make the payment, the funds are passed through the solicitor’s account and back to the client.

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