Solicitors and the Prevention of Money Laundering
| Published date | 01 April 1999 |
| Pages | 135-142 |
| Date | 01 April 1999 |
| DOI | https://doi.org/10.1108/eb027224 |
| Author | Andrew Campbell |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 3 No. 2
Solicitors and the Prevention of Money Laundering
Andrew Campbell
INTRODUCTION
'The activities of professional advisers, particularly
lawyers has, in the past, caused considerable con-
cern in the field of money-laundering activities,
due in no small part to the existence of the secrecy
generated by the attorney-client
privilege.'1
The Law Society realises that 'solicitors are con-
sidered a soft target by fraudsters and money
launderers because they lend legitimacy and respect-
ability to illegal transactions'.2 It has been reported
that a number of large City law firms are being
investigated by the police on suspicion of involve-
ment in money-laundering-related activity and
individual solicitors have faced criminal prosecutions.
It is not the purpose of this paper to discuss individual
cases but rather to consider the reasons why solicitors
may be used by criminals in the money-laundering
process and what can be done to eradicate this.
Nigel Morris-Cotterill states: 'Lawyers are targets
of money launderers for one simple reason: get a
lawyer to take his money and the launderer will
have done the most difficult part of the laundering
task — the
placement!'3
Why are firms of solicitors such a useful medium
for launderers to use? First, it is more difficult than
was formerly the case for criminals to make direct
use of the banking system, and although the banking
system will be used at some stage it is generally far
safer for the launderer that this be done through an
intermediary such as a lawyer. Secondly, there is a
much better chance that the lawyer will be prepared
to undertake the relevant transaction on behalf of the
client without any report being made to the relevant
authorities. Thirdly, the wide range of services pro-
vided by solicitors for their clients includes many
which are capable of assisting in the facilitation of
money-laundering activity. Fourthly, there is the
environment of secrecy and professional privilege in
which solicitors operate.
The range of services which solicitors can and do
provide extends far beyond what the average citizen
would consider to be legal services. On a domestic
level they can handle property-related work such as
conveyancing, set up trusts, buy and sell companies
and so on. Certain, more specialised firms will set
up companies, frequently registered in an offshore
jurisdiction, and will arrange for the transfer of
funds both within and outside of the jurisdiction in
which they are based. This is hardly an exhaustive
list of services but it can clearly be seen that should
the client in question be a launderer there is much
scope to 'place' the funds. As Bosworth-Davies
notes,
'In many cases the name of the law firm
alone was enough to give immense credibility to a
quasi-commercial undertaking.'5 Using the services
of reputable law firms leads to the possibility of
adding an air of legitimacy and respectability to
transactions which may otherwise appear to be
suspicious.
A report in The Lawyer6 entitled 'Police Probe
City Firms' Links to Organised Crime', which indi-
cated that six large City of London practices are
under investigation, probably caused shock waves
in the legal community. Detective Chief Inspector
Simon Goddard, of the NCIS, is quoted as saying:
'We know who they are! There are half a dozen,
allegedly respectable big City of London law firms
that are actually working on behalf of organised
crime.' This may not come as a surprise — using
large respectable law firms is an efficient way to
launder money — but what is perhaps more con-
cerning is the assertion by DCI Goddard that 'they
know who their clients are and know it isn't from a
legitimate activity'. If this is true it is a worrying
development in the fight against money laundering
and organised crime.
The 1997 Report of the Financial Action Task
Force on Money Laundering noted:
'As anti money-laundering regulations have
increased in many countries the criminals place
increasing reliance on professional money-
laundering facilitators. The experts reported a
significant number of cases involving lawyers,
accountants. . . . Among the most common tactics
observed have been the use of solicitors' or
attorneys' client accounts for the placement and
layering of funds. By this method the launderer
hopes to obtain the advantage of anonymity,
through the solicitor-client privilege.'
Journal of Money Laundering Control
Vol 3. No 2, 1999, pp. 135-142
© Henry Stewart Publications
ISSN 1368-5201
Page 135
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