Money laundering:
Solicitors seeking defences in large numbers
Efforts to encourage lawyers to make more suspicious activity reports (SARs) are not succeeding, with the number of reports from the legal sector down 12% last year, figures from the National Crime Agency (NCA) have shown.
Lawyers made just 2,660 of the 463,938 SARs made in 2018, the overall figure being nearly 10% up on the year before.
The NCA’s annual SARs report showed that the vast majority of the legal SARs came from solicitors, with 77 from licensed conveyancers, nine from barristers and 181 from other legal professionals. Solicitors made 30 SARs involving terrorist finance.
Solicitors were more active in making defence against money laundering (DAML) requests, which is where a reporter seeks the NCA’s consent to carrying out an activity that may result in a person committing a principal money laundering or terrorist financing offence.
Solicitors sought DAMLs on 1,753 occasions, the second most active sector after banks (12,053). Licensed conveyancers (58), barristers (7) and other legal professionals (97) also sought consent.
In total, there were 22,619 DAML requests, up 20% on 2017.
The report said that an evaluation of the ‘Flag it up’ campaign – focused on increasing anti-money laundering compliance among accountants and lawyers – showed that those who recognised ‘Flag it up’ were twice as likely to have submitted a SAR, compared to those professionals who did not know of the campaign.
In his introduction to the report, Donald Toon, the NCA’s prosperity director, stressed that the intelligence contained within SARs “enhances the intelligence picture against money laundering and all serious and organised crime threats. It results in tasked operations and enquiries and enhances existing activity”.
The SARs regime is currently being reformed, and will in part address lawyers’ engagement, which has been a long-running issue.
In November 2017, Mr Toon said the legal profession was worse [1] than any other financial services sector in reporting money laundering suspicions.
In March, it emerged that 12% of law firms assessed by the Solicitors Regulation Authority for compliance with their anti- money laundering obligations were referred for disciplinary action [2].
In July, the Law Commission warned [3] that high numbers of low-quality SARs were making it difficult to investigate money laundering, with lawyers generally making ‘technical’ reports for the purposes of compliance rather than reports of substantive value.