Preventing money laundering—Q&A
The Anti-Money Laundering regime is one that solicitors should continue to monitor.
Each fortnight, we will share new questions and answers highlighting issues pertinent to this area.
What constitutes money laundering?
Money laundering is the process of disguising the illegal or unlawful origins of money or property and disguising of ownership of illegal property to enable criminals to use and enjoy the funds without attracting government attention. It can take various forms and use a variety of methods. All the processes are designed to disguise the illegal or unlawful origin, particularly of cash. It takes place in three stages.
- the direct or indirect placement of funds generated by crime into the financial system
- separating illicit proceeds from the source by disguising the audit trail to provide anonymity
- laundering the proceeds back into the community through various means to make the money appear legitimate.
Managing risk with respect to money laundering
Criminals are guided by considerations with respect to opportunity and capability to clean the proceeds of crime. Solicitors need to manage this risk. The principal features of a proportionate response to money laundering would include:
- internal procedures, systems and control (including staff awareness) that adequately reflect your risk assessment (who is my client, where have they come from, what are they asking me to do and where are the funds coming from)
- ensuring a rigorous client intake / matter policy exists to reflect the risk characteristics of the client, and
- ensuring that there are robust arrangements to monitor the risks.