Are you a potential fraud target?

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5 December 2013


By Riliance

Getting caught up in fraudulent activity is a real risk for law firms, just look at the regular Scam Alerts that are issued by the SRA to see how this is happening; in many cases criminals have hijacked the identities of legitimate law firms and solicitors to further their activities.

So what have you done to address this risk?

  • Have you put fraud in your risk register and looked at how you can mitigate it?
  • Do you do regular web searches on your firm to see if your website has been hijacked?
  • Have your staff had recent anti-money laundering training?

If the answer to these questions is no, you need to act fast.

Fraud prevention is one side of the SRA that many don’t see but it is one that firms should be aware of; fraud can’t be tackled unless we all play our part.

We would like to thank Steve Wilmott, SRA Director of Intelligence and Investigation, for providing the following insight into the topic of fraud and the work his team is doing to help tackle it.

“The one certainty in our work rooting out wrong-doing involving the legal services market is that criminals are extremely creative; they are always trying new ways to get around the protections put in place to guard against them.

It could be compared to Jason fighting the Hydra – as soon as one head is chopped off, two more appear. But that doesn’t mean our endeavours are fruitless. While we can never claim to have totally eradicated fraud, the work we do has proven very effective.

However, our successes would not be so great without help from you, the profession. Information from solicitors – either through the Red Alert system or via direct contact with the SRA and primarily the intelligence unit – helps us to crack down on criminal activity.

Three areas where this is most apparent are advanced fee fraud, money-laundering and bogus firms. There is a lot that you the profession can do to help and at the inaugural COLPs and COFAs Conference in October, I outlined how this could be achieved.

With bogus firms, we have continually enhanced our measures to ensure clients do not give criminals their hard earned monies, believing their work will be carried out. This has involved greater development of the warning section of our website, publicising these warnings through traditional channels and social media.

Firms are at risk because even if they are said to be the victim of the fraud, a legal precedent has already been set and they could be held liable for breach of trust in paying away mortgage monies. Unfortunately, you cannot assume that we or the police can take direct steps to protect your firm because in many circumstances what occurs is beyond our regulatory remit.

We each will do what we can, but we do not regulate the people perpetrating these frauds and our powers over them are relatively limited. Any firm that discovers it has had its identity stolen should contact, ACTION FRAUD, the SRA red alert line and their insurers and also consider legal action such an injunction either to stop misleading statements or to freeze assets if money has gone missing.

While of course we would rather that these instances hadn’t happened in the first place, we’re taking heart that our call for greater vigilance is being heeded. By working together in this way we can drastically limit the opportunities for criminals to operate in the legal services market.

SRA RED ALERT & ACTION FRAUD CONTACT DETAILS

For those who are not aware, the Warning Notice is available at www.sra.org.uk/identitytheft. Any firm that thinks its identity might have been stolen should contact ACTION FRAUD via their website http://www.actionfraud.police.uk/ and the Red Alert Line on 0845 850 0999 or 01926 439673, or e-mail redalert@sra.org.uk. as soon as they can. These frauds, from experience, can be perpetrated very quickly.

We publish alerts about any bogus firms it finds out about on the consumer pages of our website at www.sra.org.uk/consumers.”

A full version of the article is available to Riliance subscribers; if you would like a copy please contact clientservices@riliance.co.uk or visit the Riliance Knowledge Base.



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