AML: Transactions had several unusual features
A partner who failed to conduct proper client due diligence (CDD) in property transactions that had signs of money laundering has been fined £15,000.
Kalwant Chauhan (known as Tony), a commercial property partner at London firm Bowling & Co, was sanctioned for his conduct when acting in five conveyancing transactions between April 2017 and May 2019.
“Owing to a lack of CDD, it was unclear who Mr Chauhan’s client was in each of the completed transactions,” the SRA said in a notice last week. “He took instructions from an individual who directed the transactions but was not a formal party to them.”
All the transactions had “unusual features” and signs of money laundering, including payments for the purchase price being made directly into the firm’s client account by third parties “with no logical connection to the transaction, including a payment from abroad by a person in a country Mr Chauhan identified as high risk for money laundering”.
There was also a back-to-back property transaction with the asset rapidly changing value, while payment for part of the purchase price of one transaction was made directly between the buyer and seller and not to the firm.
There was a transaction where the source of funds was a loan from a non-institutional lender, and one where the money was provided by one company but title to the property was registered in the name of another.
The SRA said Mr Chauhan failed to conduct adequate CDD and ongoing anti-money laundering and risk assessment checks.
He also did not undertake adequate checks on third parties sending funds or on how they had obtained the funds and he failed to maintain proper files or documentation about the transactions.
These failures “left the firm vulnerable to the risk of money laundering”, the SRA said “and had the potential to cause harm to the public interest and to public confidence in the legal profession”.
