Denis Cameron examines conveyancing guidance offered by the Law Society's money laundering task force

At the most recent meeting of the Law Society's money laundering task force in December, the conveyancing sector-specific guidance was approved. It has been prepared by task force members and also by members of the conveyancing and land law committee.


At the same meeting some comments from the National Criminal Intelligence Service (NCIS) were considered, about what it called the use of legal practitioners and money laundering in the UK.


NCIS takes the view that conveyancing is the main function provided to criminals by legal practitioners. If we ignore the unfortunate phraseology, this is probably true.


NCIS also suspects that half of the reported criminal assets of organised crime groups involved laundering via property purchases. Whether this is actually true would be hard to prove one way or the other, but the problem for the conveyancing practitioner is that the police authorities undoubtedly believe it, and therefore conveyancing is very much in the spotlight so far as they are concerned. NCIS no doubt takes it into account when considering legal practitioners and their reporting records.


NCIS further suggests that conveyancing is a comparatively easy and efficient means to launder money, with relatively large amounts of criminal monies 'cleaned' in one transaction. Again the terminology could be better and in particular the use of the word 'easy', which appears to imply that convey-ancers are not terribly efficient 'gatekeepers'. This may be unfair, but again reflects a police view.


Without even probably knowing of the attitude of the police authorities, conveyancing practitioners have been rightly concerned about their vulnerability following the coming into force of the Money Laundering Regulations on 1 March 2004. There is a difficulty with the police attitude. The police assume that, just because conveyancers are lawyers, they know everything about the law. One area that conveyancers are unlikely to know much of is criminal law - and what is more, they know even less about criminals and how they operate.


In general, conveyancing practitioners are just as likely to fall prey to criminals as any other business professional. They need as much assistance and guidance as bankers, accountants and financial advisers, and the police should treat them no differently.


Conveyancing practitioners naturally wish to do as much as they can to support the forces of law and order in their fight against financial crime, but they cannot become and do not wish to become detectives or agents provocateurs. They owe obligations of confidentiality to their clients; they have obligations to other practitioners and their clients; and they also have obligations to other clients, particularly lenders who entrust their monies to them.


The guidance seeks to cover these matters as adequately as possible in this most difficult area. The regulations and the new guidance do, of course, cover both commercial and residential property work.


Residential property transfer is particularly sensitive for the public because it is generally not about a mere financial investment - it is about people's homes. It is probably the most important transaction that conveyancing practitioners' clients undertake.


The use of the term 'money laundering' has in many ways become outdated in the present climate in the UK. It may have been adequate or appropriate in the 1990s but it is no longer the case. The term was coined in the 1920s in gangland America, when organised crime syndicates used Chinese laundries as cover to 'wash their dirty money'. The laundries actually made no profit from cleaning clothes. Their 'profits' in the books of the businesses all came from the crime monies that were put through them.


When considering the NCIS comments one would be led to believe that today we are dealing with just criminal organisations in money laundering. But the Proceeds of Crime Act 2002 and the regulations deal with all crime, whether large or small, including benefit fraud and tax evasion - all with no de minimis - of which conveyancing practitioners need to be most aware.


With matters like this in mind, the task force and the conveyancing and land law committee maintained it was essential that sector-specific guidance in conveyancing was made available to the profession. It was felt there was a need for such guidance from the profession as well. The work began nearly two years ago, but the problem with money laundering legislation, and the litigation that inevitably flowed from it, is that there is an ever-moving target. The guidance was nearly finished a year ago, but the case of Bowman v Fels [2005] EWCA Civ 226 meant that a rewrite was required and, no doubt, other rewrites will be always on the agenda.


The guidance is now published on the Law Society Web site. It is not too long and is readable, and all conveyancing practitioners should familiarise themselves with it. The guidance needs to be read in conjunction with the Bowman guidance and the main work of the task force, namely the pilot guidance published in January 2004.


The new guidance attempts to cover in brief format all of the problems that can be encountered on money laundering issues in both residential and commercial conveyancing. It particularly looks at areas such as methods of funding transactions, including cash payments. In most residential transactions when acting for a buyer, the practitioner is also acting for a lender client, and the issues in these circumstances are fully explored.


The guidance encourages the practitioner to take a risk-based approach in conveyancing transactions which should avoid resources being wasted on low-risk matters, thereby allowing greater focus on resources in higher-risk transactions.


The decision in Bowman has proved important so far as the suspicious activity report regime is concerned. The new guidance takes practitioners through the changes and deals with the obligations of legal professional privilege that is owed to the client as against the duty to report.


The task force and the committee hope that this new guidance, when read with the other associated documents, will be a great help to practitioners in this most difficult area of conveyancing.


Link: www.lawsociety.org.uk

there is a link on the home page to the money laundering documents.


Denis Cameron is a member of the Law Society Council and a member of the money laundering task force