Solicitor fails to review money laundering risk after police warning
The following case illustrates the importance of solicitors carrying out their own due diligence on clients, and the very serious consequences of failing to do this.
Mrs A was a senior partner and the money laundering reporting officer (MLRO) of a medium-sized law firm. On a visit to a bank she was acting for, a director introduced her to Mr Z, saying he required a solicitor’s services.
Mrs A agreed to act for Mr Z. She decided to forgo the usual due diligence checks as she was informed that Mr Z had accounts with at least two major banks, and was recommended to her by a regulated professional. Over the next three years, Mrs A acted for Mr Z in straightforward commercial matters.
One day, Mrs A was contacted by the police. They advised they were investigating
Mr Z for 
suspected involvement in a fraud ring. They also warned her about the criminal offence of tipping off.
Shortly afterwards, Mr Z called to ask Mrs A to transfer a significant sum of money she was holding for him in the client account to an overseas bank. Mrs A felt uncomfortable doing this, but felt she had no choice so she did as instructed.
The police became aware of this and started criminal proceedings against Mrs A. Mrs A resigned from her position as senior partner of the firm. She was subsequently convicted for facilitating money laundering.
It emerged that the bank director who had referred Mr Z to her had also been convicted of money laundering. However, unlike Mrs A, the director had been actively involved in Mr Z’s criminal activities and had profited personally from their dealings together.
The red flag in this case was that the client was suspected of having criminal associations.
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