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English Law Society's comments on money laundering due diligence

Publication: 
Editorial Staff
chiefofficersnet

The Law Society of England and Wales has issued an e-mail circular to solicitors referring to acceptable documents for client identification in relation to money laundering. Is it sufficient?

The Law Society's guidance at says

"It is considered good practice to have either:

* one government document which verifies either name and address or name and date of birth,
* or a government document which verifies the client's full name and another supporting document which verifies their name and either their address or date of birth."

That' says Nigel Morris-Cotterill, Head, The Anti Money Laundering Network and himself an English solicitor (retired) is simplistic and dangerous.

"The UK issues very few "government documents." There is no compulsory identity card scheme, passports and driving licences are voluntary documents, as are benefit entitlement cards. With electronic filing of tax returns, correspondence with the only government department that has, in the past, habitually contacted citizens has also been lost."

But it's not only the lack of documents that concerns Morris-Cotterill: "there is a host of recent cases in which financial institutions have been duped by sufficiently good copies of official documents. A good-enough fake UK driving licence can be bought in Bangkok street stalls, name and details produced to order with any photo the user selects, for the equivalent of about GBP20. A good-enough UK passport - dated to precede the current security enhancements - can be bought in a Kuala Lumpur print shop for the equivalent of around GBP250."

But fake documents are not the main concern, Morris-Cotterill says. "The fact is that while putting the burden of due diligence onto financial institutions and others such as law firms, government departments are terrible at the due diligence they do prior to issuing government documents. For lawyers and others, a very substantial risk is that of genuine documents with fake data. All over the world, including the UK, there are frequent cases of criminals operating multiple accounts all supported by genuine documents in fake names and with fake addresses.

Ironically, one of the easiest pieces of government identification to get hold of, he says, is a VAT certificate and a series of VAT returns. "It's ironic because HMRC loses thousands of millions of pounds each year to VAT fraud yet it appears to do little or no due diligence on who it issues VAT certificates to. And those certificates may well end up as the only "government document" needed for the next stage of a tax fraud - the setting up of a money laundering scheme. And that part of the scheme is where lawyers are most likely to be needed as a part of the criminal's shield."

 


 

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