A phrase I use quite often in training is, “You’d think so, wouldn’t you?”. As in, “If the payment is coming to us from another regulated bank, won’t they have done all the checks?” Or, “Given that CDD checks have been in place for decades now, shouldn’t clients be used to being asked to verify their identity?” Or indeed, “If a lawyer suspected a client of wrongdoing, wouldn’t he want to protect himself and his firm by reporting that concern?” And yet it seems that we are still battling the reticence of lawyers to – as I have been told they often see it – betray their clients’ confidence by making suspicious activity reports.
At the end of October last year, Donald Toon – who holds the marvellous title of “Director of Prosperity” at the National Crime Agency – spoke to over a thousand UK solicitors at a conference in Birmingham, and he was not happy with them. He said that said solicitors were “absolutely at the front line of the detection mechanism for money laundering” but that “something is not working effectively”, with the net result that they are not making enough SARs. In the 2017 annual report on the SARs regime, published on 11 October 2017, it was noted that “independent legal professionals contributed 0.77% (4,878) of the total number of SARs received over the 18 months [October 2015 to March 2017]. In comparison to the 2014-15 figure of 3,827, the sector saw a 9.93% drop.” And this is against the background of an overall increase of 9.94% in the number of SARs. To be fair to lawyers, decreases in reporting levels were also exhibited by building societies, money service businesses, accountants and TCSPs – but Mr Toon made the point to his audience of solicitors that lawyers have a particularly close relationship to their clients: “There is a question over whether everyone in the legal profession understands the value of what is being asked for. You see high-value transactions in a way that no other part of the financial services sector can. Those with the closest relationship in client terms are not reporting to us.”
Full disclosure: in twenty years of providing AML training to the regulated sector, I have been able to count my legal clients on the fingers of, well, two fingers. It is generally accepted that lawyers preferred to be trained by other lawyers, and I am certainly not that – I am simply a nosy and doggedly determined layperson with an unhealthy interest in one specialised area of legislation. But I do wonder whether, in isolating themselves like this, attending conferences and gatherings only with others from their profession, lawyers are missing out on learning from other parts of the regulated sector. Banks, accountants, TCSPs, casinos and estate agents could open their eyes to the range of laundering that goes on, and to the multifarious (and convincing) disguises that launderers will assume. Lawyers may well be the experts in legislation, but perhaps they are more trusting in the purported honesty of their clients than we had realised.