Kaur: Sought to instruct several law firms
The Solicitors Regulation Authority (SRA) has urged law firms to protect themselves from sham litigation, which can be used to bypass anti-money laundering rules.
In new guidance issued this week, the regulator highlighted a recent case where a serial fraudster tried to instruct multiple law firms in a bogus dispute.
Sham litigation involves criminals or their associates orchestrating fake disputes and instructing lawyers to pursue a claim whose outcome – whether a judgment or settlement – serves as a front to transfer illicit funds or assets.
As litigation is not an activity within scope of the 2017 Money Laundering Regulations, it is “attractive to money launderers”, the SRA said. This means requirements such as verification of identity do not apply to purely litigation work.
But law firms are still within scope of the Proceeds of Crime Act, it added.
The guidance highlighted the case of Narinder Kaur, also known as Nina Tiara, who was jailed last year for 10 years primarily for defrauding retailers of more than £500,000 by returning items that she never actually purchased.
But the SRA said she also engaged in sham litigation, using what appeared to be a legitimate dispute with her brother to commence several sham claims via a number of law firms. The aim was to launder money through various firms’ client accounts to Ms Kaur, obscuring its origin and making it more complicated for the money to be recovered.
Ms Kaur had, as part of a genuine legal dispute, successfully sued her brother and obtained judgment for a large sum of money. As a result, he was declared bankrupt. Ms Kaur approached law firms to claim a supposed judgment debt, stating that her brother had been persuaded to settle by a third party.
“This turned what had once been a genuine claim into sham litigation,” the SRA recounted. “A man posing as her brother then contacted the affected firms and offered partial payment from a stolen credit card.”
What made the case noteworthy was the use of genuine documents from a previous claim to establish “a well-crafted fabrication”.
The SRA asked the firms impacted about their involvement with Ms Kaur. All of them “developed suspicions about her”, it said.
“Some turned her away at the outset, others had an initial interview. Very few got to the stage of receiving payments before becoming suspicious and cancelling the instructions. Some filed suspicious activity reports with the National Crime Agency as a result of their suspicions.”
Others grew suspicious due to inconsistencies in her identification details. “Among other things, she demonstrated an unexpectedly deep understanding of legal processes. Although not necessarily an issue in isolation, firms should consider such factors where other warning signs of potential sham litigation might be present and flag accordingly.”
Firms also noted “the odd behaviour” of Ms Kaur and her accomplice, who independently contacted firms for debt payments. “A fraudulent payment led the firms to investigate and uncover the deception. Additionally, persistent calls from the accomplice offering swift debt settlements raised concerns.
“Ms Kaur’s eagerness to settle for a fraction of the owed amount, along with her sense of urgency, raised suspicions across multiple firms. Separately, some firms reported missed appointments and unresponsiveness from her.”
One firm’s onboarding checks revealed that Ms Kaur’s brother was bankrupt, which rendered the claim against him void. Furthermore, the supposed debtor’s use of credit cards with different addresses indicated the fraudulent nature of the case.
Among the regulator’s recommendations were that AML training should address sham litigation and that firms regularly reassess risk management protocols.
