Lawyers and client accounts: sand through a colander

Published date04 January 2008
Date04 January 2008
DOIhttps://doi.org/10.1108/13685200810844488
Pages34-46
AuthorDavid J. Middleton
Subject MatterAccounting & finance
Lawyers and client accounts:
sand through a colander
David J. Middleton
Solicitors Regulation Authority, Leamington Spa, UK
Abstract
Purpose – To report empirical information about the scale of suspicious money movements through
solicitors.
Design/methodology/approach – Review of selected criminal, civil and disciplinary cases.
Findings – The cases disclose at least £240 million moving through solicitors’ hands in the absence
of an underlying transaction in which the solicitor is providing legal advice.
Originality/value – A contribution to: the empirical data about laundering; raising the possibility of
better control by regulatory rules about how lawyers hold and transfer money.
Keywords Lawyers, Moneylaundering, Regulation
Paper type General review
Although lawyers like to deny it, there is no doubt that they assist criminals and
money launderers, sometimes with full knowledge of what they are doing but also
unwittingly[1]. Bell (2002) has provided a useful overview of numerous cases of
lawyers convicted of laundering in various jurisdictions. The work of the FATF is
peppered with examples[2] (some of which are reviewed by He, 2006) as is the
important paper prepared by Blum et al. (1998). What is much more difïŹcult to assess
is the scale of the problem. This paper provides a modest addition to the empirical
evidence from experience in England and Wales particularly two recent cases
involving law ïŹrms: Ford, a criminal and disciplinary case which involved ÂŁ193
million passing through client account, regarding a missing trader VAT fraud; and
Zambia v. MCD (the Zambia case), a civil case in which it was found that two law ïŹrms
assisted a theft from the Zambian Government by passing just under US$11 million
through their client accounts. Some of the lessons evident from these and other cases
might assist regulators in other jurisdictions, particularly of lawyers, to understand
and consider how to address the issues that arise.
There have also been other ïŹndings of interest in criminal, regulatory and civil
litigation proceedings. There may be a tendency to focus on criminal prosecutions in
this context but the contribution of regulatory control and enforcement should not be
overlooked. Good regulatory protections ïŹt the principles of situational crime
prevention as deïŹned by Clarke (1997):
Situational prevention comprises opportunity-reducing measures that (1) are directed at
highly speciïŹc forms of crime, (2) involve the management, design or manipulation of the
immediate environment in as systematic and permanent way as possible, (3) make crime
more difïŹcult and risky, or less rewarding and excusable as judged by a wide range of
offenders.
In this context, the Money Laundering Regulations are a good example of situational
prevention: they are targeted at a highly speciïŹc crime, they seek to design the
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
11,1
34
Journal of Money Laundering Control
Vol. 11 No. 1, 2008
pp. 34-46
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200810844488

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