Society warns solicitors to be prepared
10 Dec 07
Advice ahead of changes to money laundering legislation
The Law Society of Scotland is urging solicitors to ensure they are prepared for new regulations to combat money laundering and the funding of terrorism due to come into force this week (15 December).
The Money Laundering Regulations 2007 implement the EU Third Money Laundering Directive.
The Society’s deputy director of professional practice, James Ness, said: “There are a number of things solicitors can do to ensure they do not fall foul of the regulations, including simple precautions such as reviewing money laundering systems and process at least twice a year and making appropriate changes where necessary.
“Even if a firm is unfortunate enough to be the victim of a money laundering fraud, the fact that robust procedures are in place is a significant defence to a suggestion that solicitors were actively involved.
“Solicitors should also be aware that they are not obliged to take on a piece of business and should not do so if they have money laundering concerns. Anyone who does have concerns can always contact the Society’s professional practice team and we will do all we can to help and advise.”
Mr Ness explained that the new system moves away from the former “tick box” approach to a risk-based and proportionate one, which takes a broader view of the client and the transaction.
One of the major issues will revolve around the definition of “beneficial ownership”, which requires account to be taken of who is behind the transaction as well as who is instructing the solicitor.
Also, responsibility will shift from the sole concern of the money laundering reporting officer to full corporate responsibility involving all the principals in the firm and potentially all members of staff. Non-compliance carries criminal sanctions.
Morag Newton, the Society’s Guarantee Fund director, added: “Those who had a good system in place before these latest regulations will be well placed to deal with the changes.
“We want to keep all solicitors safe because some criminals will find a way past procedures and the police will turn up at the door. Our robust inspection process will help to avoid that happening by giving firms the opportunity to put matters right.”
For further information on money laundering, solicitors can contact the Society or visit www.lawscot.org.uk/Members_Information/moneylaundering .