Can I submit a formal offer without having first carried out due diligence?
Can I continue to rely on pre-1994 identity following the changes?
Can I accept certificates as to identity from other people and should I give such certificates myself?
I have been told there is a six-month honeymoon period during which enforcement will not take place. Is that correct?
Can I tell the solicitor on the other side that I have submitted a report to SOCA?
There appears to be significant staff training obligations. Is the Society producing any material to assist with this?
I have been offered a Regulation 17 Certificate of identity from a solicitor/accountant/bank in a foreign jurisdiction. I see that I am allowed to accept them from "equivalent jurisdictions". Is there a list of these?
Can I submit a formal offer without having first carried out due diligence?
Regulation 9 of the 2007 regulations deals with this. SOCA have confirmed to the Society that they view conveyancing as "high risk". Accordingly no business relationship should be established nor any work carried out on behalf of a client in conveyancing matters (and indeed many other matters) without completing due diligence. While the Society accept that this may cause difficulties for both the profession and their clients it is important that solicitors avoid committing a criminal offence under the regulations. Solutions practitioners might consider include (a) ensuring that introducers’ correspondents and prospective clients are aware of the regulation and the requirement to establish the business relationship early. (b) seek certificates from third parties as to identity in terms of regulation 17 (particularly suitable when parties are migrating from other jurisdictions) (c) use electronic “client not present” identification systems.
Solicitors should bear in mind that a common money-laundering tactic is to create tight deadlines to put pressure on the solicitor to compromise their systems.
Can I continue to rely on pre-1994 identity following the changes?
The regulations make clear that part of your risk assessment requires you to update identity as frequently as the overall risk justifies. This might mean that a client ID only a year old requires to be updated because of the nature of the new transaction. In any event the Society take the view that identity should be refreshed in all cases where it is over five years old at point of new instruction. Accordingly you may no longer rely on pre-1994 identity.
Can I accept certificates as to identity from other people and should I give such certificates myself?
Regulation 17 significantly increases the circumstances in which you can rely on third-party certificates which under the old regulations were only good for one-off transactions. Care should be taken in both granting and receiving certificates because there is a responsibility beyond the envisaged current transaction. When receiving certificates the authenticity of the certificate should be independently checked (perhaps with a phone call direct to the granter using a phone number obtained from the professional body web site rather than the letterhead provided).
I have been told there is a six-month honeymoon period during which enforcement will not take place. Is that correct?
The Society have heard this on a number of occasions and have checked it with SOCA. There is no honeymoon period and SOCA expect those who are subject to the regulations to comply fully with effect from 15 December 2007.
Can I tell the solicitor on the other side that I have submitted a report to SOCA?
Essentially the answer is yes you can in certain circumstances. This issue is covered by The Terrorism Act 2000 and Proceeds of Crime Act 2002 (Amendment) Regulations 2007 which amend section 333 (c) of the Proceeds of Crime Act 2002 effective 26 December 2007.
Section 333C as amended reads:
(1) This section applies to a disclosure-
(a) by a credit institution to another credit institution,
(b) by a financial institution to another financial institution,
(c) by a professional legal adviser to another professional legal adviser, or
(d) by a relevant professional adviser of a particular kind to another relevant professional adviser of the same kind.
(2) A person does not commit an offence under section 333A in respect of a disclosure to which this section applies if-
(a) the disclosure relates to-
(i) a client or former client of the institution or adviser making the disclosure and the institution or adviser to whom it is made,
(ii) a transaction involving them both, or
(iii) the provision of a service involving them both;
(b) the disclosure is for the purpose only of preventing an offence under this Part of this Act;
(c) the institution or adviser to whom the disclosure is made is situated in an EEA State or in a country or territory imposing equivalent money laundering requirements; and
(d) the institution or adviser making the disclosure and the institution or adviser to whom it is made are subject to equivalent duties of professional confidentiality and the protection of personal data (within the meaning of section 1 of the Data Protection Act 1998). "
There appears to be significant staff training obligations. Is the Society producing any material to assist with this?
The Society ran a series of seminars around the country in early December and the DVD of those of seminars is available from Update for a modest charge of £30 plus VAT. The Society is developing a CPD online module in respect of the new regulations which is currently at final review and should be available shortly.
I have been offered a Regulation 17 Certificate of identity from a solicitor/accountant/bank in a foreign jurisdiction. I see that I am allowed to accept them from "equivalent jurisdictions". Is there a list of these?
The list can be seen on the Treasury web site.
