The latest SRA Risk Outlook reiterated the threat of fraudsters for a second time this year; the banging of the bogus firm drum is getting louder. More and more law firms are implementing risk management strategies and processes to combat the criminal conveyancer.
Walker Morris’ Banking Litigation specialist Alasdair Urwin explains how to best mitigate and minimise the latest fraud risk of which lenders, borrowers, conveyancers and the general public should be aware.
Combating conveyancing cybercrime
So, what can be done to minimise the risks? Alasdair offers his expertise and top tips:
- Clients should be advised of the risks. It will always be in the clients’ interests to avoid fraud and if they are alive to the risks they can help. Furthermore, all bank account-holding clients will be subject to obligations not to write down or tell others their passwords or PINs and to the general obligation to take care of their account details. A failure to take care on the part of the client could ultimately jeopardise any subsequent compensation claim.
- Where possible, meet and speak, rather than always communicating by e-mail. This can be particularly valuable when it comes to undertaking initial ID/anti-money laundering checks and providing or exchanging sensitive personal or financial information, documents and bank account details. Be extremely cautious of giving any sensitive information electronically.
- Parties can be asked to provide, at the outset of a conveyancing transaction, copies of bank statements for the destination accounts into which completion monies will be paid. Dormant or otherwise unusual-looking accounts should be treated with caution.
- Lawyer Checker can be used to verify solicitors’ accounts.
- Buyers and sellers should specifically advise at the outset that they will not be changing their bank account during the transaction or prior to completion.
- Bank account details should be confirmed in person or on the telephone. This should include asking security questions to which only the genuine party or solicitor would know the answer.
- Any instructions that are given to change bank account or payment details should be treated with the utmost caution, investigated thoroughly and ideally confirmed in person.
- Where time allows, corresponding via letters and faxes might be more secure than using e-mail.
- Where electronic communication is essential, encypted e-mails and password protected portals offer a much greater level of data security.
- All IT and communication devices should be properly protected with adequate security software, which is updated regularly.
- Legal and financial firms dealing in conveyancing transactions should have clear policies and procedures in place for dealing with the risk of fraud. All staff involved with any stage of the conveyancing process should be made aware of the risks and trained on the firm’s policies and safeguards.
- If you do find yourself a victim of this type of fraud you should immediately notify the police. They may be able to recover some of the stolen monies and potentially take action against the fraudsters.
- In addition, you should seek immediate specialist legal advice. Walker Morris’ Banking Litigation team has significant expertise in fraud claims and would, if necessary, be able to urgently initiate a freezing injunction to try to preserve stolen monies in the fraudsters’ bank account(s) and to pursue tracing claims and civil action to recover lost funds.
As professional and regulatory requirements for ascertaining the identity of clients have become increasingly rigorous, not least within the financial and legal sectors, so fraud techniques have become increasingly prevalent and sophisticated.
With the rise of e-conveyancing and a decline in face-to-face dealings, this trend looks set to continue. Unless firms and institutions engaging in real estate transactions take urgent and adequate action, it seems that they and their professional indemnity insurance policies – not to mention their clients – are highly vulnerable.
If you would like any advice or assistance in relation to conveyancing fraud or any other matter, please do not hesitate to contact Alasdair Urwin or any member of Walker Morris’ Litigation and Dispute Resolution team.
To learn more about how Lawyer Checker can help you combat the criminal conveyance and discuss your risk management processes please call 0800 133 7127.