Law firms warned of greater money laundering risk during Olympics
Olympics: solicitors should ask ‘why?’
Law firms need to be alert to increased risks of being targeted by fraudsters and money launderers during the London Olympics, the Law Society has warned.
In a briefing issued this week, it said firms should be wary of issues such as fake passports, sham disputes and visits by foreign politically exposed persons (PEPs).
Though a range of more mundane fraud is being highlighted in the media – such as selling fake tickets and passing off counterfeit currency – the society said the nature of the event increased the risks for firms.
“During the Olympics there will be an increase in people from a wide range of nationalities visiting the UK. There is a possibility that organised criminals may seek to use this opportunity to make use of false foreign passports or identity documents created in document factories in the UK in money laundering enterprises,” it said.
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“There may be the hope that firms who mainly deal with domestic clients will not find instructions from foreign clients unusual during this period and therefore may not undertake as much scrutiny of the identity documents as they might otherwise.”
Similarly there is the potential for an increased number of PEPs and their associates visiting the UK this summer and the society reminded firms that they are required to have in place a risk-based approach for assessing whether they are being instructed by a PEP.
There is also likely to be an increase in litigation. “Organised criminals may take this opportunity to create sham disputes as a way of moving large amounts of money obtained from other types of crime during or shortly after the Olympics.
“Even where you are satisfied that you are dealing with a genuine dispute, you should still consider whether the dispute really is just a civil matter, or if there are criminal offences and as a result there are proceeds of crime involved.”
More broadly the society encouraged solicitors to remember the importance of asking the question ‘why?’ when assessing the risks of money laundering or other criminal activity for each retainer.
“Firms should consider closely any answer along the lines of ‘Well I was just in the country for the Olympics and while I was here thought I would…’. This is particularly if the retainer in question includes activities such as purchasing a property or two, setting up a company or establishing a trust.
“While some people may combine business trips with sightseeing or other cultural activities, consider whether this particular client’s proposed activities are consistent with the client’s background and really do make sense under all of the circumstances.”
Tags: anti-money laundering, fraud
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