A complaint was made by the Council of the Law Society of Scotland against Eric Robert Lumsden, Sneddon Morrison, Whitburn. The Tribunal found the respondent guilty of professional misconduct in respect that (a) he failed to advise his client he had been requested to give and had given undertakings to make two payments from her ledger totalling more than £70,000 to two third parties; and (b) he failed to make a required disclosure in terms of s 330 of the Proceeds of Crime Act 2002 and failed to advise the purchaser’s Scottish solicitor regarding the contact with their client or make enquiries of the purchaser’s Scottish solicitor regarding the source of their client’s deposit. The Tribunal censured the respondent and fined him £1,000.
The transaction involved the sale of the property of the client, a distressed borrower, and the purchase by her of an interest in that property. It is never acceptable to pay a client’s money to a third party without the written instruction of the client. Clients and the public must have confidence that solicitors will deal properly with their money. The importance of transparency when handling clients’ money has been fundamental for many years. Paying off a purchaser’s loan (particularly when acting for the seller) is very unusual and should have raised suspicion. Any payments to the purchaser ought to have been paid to her solicitor. The client’s money was sent out without express authority of the client. The respondent took no steps to verify the purchaser’s mandate. This created a risk for the client. There was a need for an informed instruction from her. This conduct was a serious and reprehensible departure from the standards of competent and reputable solicitors and therefore constituted professional misconduct.
The respondent failed to make a required disclosure in terms of s 330. He failed to advise the purchaser’s agent about his contact with the purchaser and did not make enquiries with them about the source of their client’s deposit. The property investment club provided a mandate from the purchaser which bore to be signed by her. The respondent took no steps to verify this document. He was aware of apparent third party funding over and above that provided by the purchaser’s lender. He ought in the circumstances to have disclosed this arrangement to the purchaser’s solicitors and to SOCA. It was unclear whether the purchaser’s lending bank was aware of the additional third party funding and source of purchase deposit. It seems likely that they were not. The respondent did not make the required disclosures to the purchaser’s solicitors or SOCA, which was a significant error of judgment. Making these disclosures is essential in the prevention of money laundering. It is essential that the public can have confidence that the profession will adhere to anti-money laundering provisions which exist to protect society from criminal acts. The Tribunal considered the failure to make the disclosures to be a serious and reprehensible departure from the standards of competent and reputable solicitors and therefore constituting professional misconduct
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