Money laundering and other serious issues

[chiefmegawatty]

A female friend of mine sold a property back in Oct 2013.

 

She had no mortgage on that property so all the proceeds from the sale went

into her bank account as you would expect.

 

She then proceeded to buy a new property.

 

Everything was going well regarding the buying of the new property.

 

The conveyancing company accepted her bank money transfer to pay outright for the new property.

She was expecting to collect the keys to her new property.

 

However, the conveyancing company said that she had to prove that the money

she paid for the new property wasn't obtained by criminal means in order to prevent money laundering.

 

My lady friend was fuming angry and had to prove that she obtained the money

from the sale of her previous property.

 

She did that and all went through ok.

 

I was angry over this issue for two reasons.

 

Firstly, the conveyancing company accepted all her money into thier bank account

and then wanted her to prove that the money wasn't obtained by criminal means.

 

Secondly, I thought that it was up to the accuser to prove guilt rather

than the accused having to prove their innocence.

 

I therefore assume that the law has completely changed.

 

A person is now guilty until they prove themselves innocent even though

the accusing party has no evidence to to support their accusations.

[BazzaS]

A female friend of mine sold a property back in Oct 2013.

She had no mortgage on that property so all the proceeds from the sale went

into her bank account as you would expect.

She then proceeded to buy a new property.

Everything was going well regarding the buying of the new property.

The conveyancing company accepted her bank money transfer to pay outright

for the new property. She was expecting to collect the keys to her new property.

However, the conveyancing company said that she had to prove that the money she paid for the new property wasn't obtained by criminal means in order to prevent money laundering. My lady friend was fuming angry and had to prove that she obtained the money from the sale of her previous property. She did that and all went through ok.

I was angry over this issue for two reasons. Firstly, the conveyancing company accepted all her money into thier bank account and then wanted her to prove that the money wasn't obtained by criminal means.

Secondly, I thought that it was up to the accuser to prove guilt rather than the accused having to prove their innocence.

I therefore assume that the law has completely changed.

A person is now guilty until they prove themselves innocent even though the accusing party has no evidence to to support their accusations.

 

They never accused her of a crime : however, due to the anti-money laundering regulations, they face strict penalties if they get caught having not checked they aren't being involved in money laundering.

 

However, they could smooth the task by explaining requirements in advance, so purchasers don't have unmet expectations and don't face unexpected delay.

[AndyOrch]

Thread moved to the appropriate forum

[steampowered]

Conveyancers and similar professionals are now under a legal obligation to do money laundering checks as standard practice. This is now relevant whenever you open a bank account, buy a house or engage solicitors.

 

'innocent until proven guilty' thing applies when you are prosecuted for a criminal offence. It doesn't mean that you don't have to go through client acceptance procedures.

 

However the conveyancers should have sorted this out right at the start and not when she was waiting for the keys.

[JoeyJoeC]

I guess they accepted the money first to stop her going elsewhere.

[chiefmegawatty]

Thanks for your replies chaps.

I suspect that the conveyancing company took her money before checking that it wasn't laundered so they could invest it for a few weeks to obtain some interest.

Now investing someone elses money without permission is embezzlement which should result in a prison sentence.

[Ganymede]

Thanks for your replies chaps.

I suspect that the conveyancing company took her money before checking that it wasn't laundered so they could invest it for a few weeks to obtain some interest.

Now investing someone elses money without permission is embezzlement which should result in a prison sentence.

No that is not embezzlement not even close.

 

The money would have been held in the solicitors client account and not invested anywhere.

 

The story in the OP is normal. When buying a house outright with cash you need to prove where that cash has come from. Your friend needs to be less sensitive.

[chiefmegawatty]

Thanks for your reply Ganymede.

However, I still wonder why the conveyancing company didn't ask for proof of the cash source

before they took the money.

Regarding investing the funds, back in the 1980's there were some solicitors in the Bristol area who

were investing clients money without permission.

Thay all lost their licences to practice as solicitors and went to prison for embezzlement.

[Ganymede]

That was 30 years ago and very rare now. Regulation is a lot stricter now but obviously you'll always get the odd bad 'un.

[chiefmegawatty]

On the subject of suspected money laundering when buying property outright a thought has crossed my mind.

What would happen if you worked and saved hard for many years until you had enough cash to buy a property outright?

You would have to prove from where you obtained the cash.

You would say that you saved it up over many years, but how would you prove it?

I therefore assume that under these circumstances you would be convicted of money laundering and your hard earned money frozen even though you were innocent.

 

I save money and keep it in cash. Should I wish to eventually spend the cash, how do I prove that my cash hasn't been obtained by criminal means?

Does this mean that if I save up loads of money it will be frozen when I attempt to spend it until I can prove I saved it up? I therefore feel that any conveyancing company who suspects a client of money laundering should have to prove you have been money laundering. You should not have to prove that you haven't been money laundering.

[Ganymede]

You may have difficulty in proving where the cash is from.

 

The individual solicitor could go to jail for many years if they don't follow the correct money laundering procedure so you can see why they are thorough.

 

The solicitor doesn't need to "prove" anything in fact they are not allowed to "tip off" the client that they are suspected of money laundering as again the individual could face jail.

 

All the solicitor does is carry on with the transaction but advises the firm's money laundering officer who in turn would report it to SOCA.

[chiefmegawatty]

You may have difficulty in proving where the cash is from.

 

The individual solicitor could go to jail for many years if they don't follow the correct money laundering procedure so you can see why they are thorough.

 

The solicitor doesn't need to "prove" anything in fact they are not allowed to "tip off" the client that they are suspected of money laundering as again the individual could face jail.

 

All the solicitor does is carry on with the transaction but advises the firm's money laundering officer who in turn would report it to SOCA.

 

How would SOCA prove that cash that was saved over many years had been obtained by criminal means? Having no evidence of any criminal activity I assume they would have to accept that the money was saved honestly. I wonder what the threshold is for suspicion of money laundering. I recently bought a car with cash I had saved up. The seller didn't question the source of my cash and accepted my payment.

[Ganymede]

How should I know what SOCA would do? I'm not in the police.

 

All a solicitor has to do is report anything suspicious to SOCA and then that's where their obligations end

 

 

No offence to anyone on here but there's a bit of a difference between a used car salesman and a solicitor lol.

[steampowered]

chiefmegawatty, if a solicitor has reasonable grounds to suspect money laundering they must make a report to NCA (which recently replaced SOCA). Failure to make a report is a criminal offence.

 

Once a report has been made, the solicitor is required to hold onto the money until they get consent from the NCA to proceed with the transaction. Until they get consent the solicitor can't complete the transaction, can't return the money and can't tell the client that a report has been made to the NCA. This obviously puts the solicitor in a difficult position but that is what the law says. The same rules apply to regulated financial institutions.

 

In a situation where you have earned the money over many years, you don't have to account for every cent but you do basically have to account for where the funds have come from. This has to be basically consistent with your risk profile. Often the funds will have come from many years of work, which is fine. If you are interested the law society's guidance on this is here: https://www.lawsociety.org.uk/advice/articles/help-im-a-new-mlro-your-firms-compliance-culture/.

[Ganymede]

Sorry yes the NCA.

 

Showing my age lol.

[steampowered]

Not that old, it was only last year

[chiefmegawatty]

chiefmegawatty, if a solicitor has reasonable grounds to suspect money laundering they must make a report to NCA (which recently replaced SOCA). Failure to make a report is a criminal offence.

 

Once a report has been made, the solicitor is required to hold onto the money until they get consent from the NCA to proceed with the transaction. Until they get consent the solicitor can't complete the transaction, can't return the money and can't tell the client that a report has been made to the NCA. This obviously puts the solicitor in a difficult position but that is what the law says. The same rules apply to regulated financial institutions.

 

In a situation where you have earned the money over many years, you don't have to account for every cent but you do basically have to account for where the funds have come from. This has to be basically consistent with your risk profile. Often the funds will have come from many years of work, which is fine. If you are interested the law society's guidance on this is here: https://www.lawsociety.org.uk/advice/articles/help-im-a-new-mlro-your-firms-compliance-culture/.

 

OK thanks for your reply. Regarding my lady friend who recently bought a property outright I say the following. There were no grounds whatsoever to suspect her of money laundering as she had sold a property two months previous which would have been recorded on the land registry. Therefore her conveyancing company had no reason to suspect money laundering. That's why I suspect something dodgy was going on with the conveyancing company. Now if her conveyancing company have no understanding of land registry records, then surely they shouldn't be in the conveyancing business.

[steampowered]

The conveyancer is under a legal obligation to take steps to establish the source of the money whether or not it actually suspects money laundering. However I do understand why it sounded dodgy at first. The conveyancer should have informed your friend earlier that this would be necessary.

[Ganymede]

OK thanks for your reply. Regarding my lady friend who recently bought a property outright I say the following. There were no grounds whatsoever to suspect her of money laundering as she had sold a property two months previous which would have been recorded on the land registry. Therefore her conveyancing company had no reason to suspect money laundering. That's why I suspect something dodgy was going on with the conveyancing company. Now if her conveyancing company have no understanding of land registry records, then surely they shouldn't be in the conveyancing business.

 

A solicitor can't just ignore the fact that they've received hundreds of thousands of pounds in cash.

 

Unless they dealt with the sale of the previous house how would they know where the money had come from?

 

Sounds like your friend was asked to give evidence of where her funds came from, she did and everything was fine.

 

I don't see the problem here.

[chiefmegawatty]

A solicitor can't just ignore the fact that they've received hundreds of thousands of pounds in cash.

 

Unless they dealt with the sale of the previous house how would they know where the money had come from?

 

Sounds like your friend was asked to give evidence of where her funds came from, she did and everything was fine.

 

I don't see the problem here.

 

The conveyancing company would know where the money had come from by simply checking land registry records. The problem was that they took her money before checking it's source. This caused considerable delay with the completion. They should have asked for proof of the money source before taking the money in my opinion. The delay caused loss of rent income from the prospective tenant who was waiting to move in whilst this money laundering lark was sorted out.I remember at one point my lady friend was so cheesed off with waiting that she told the conveyancing company and the estate agent she was going to back out.

Amazingly things then went through like greased lightning. Therefore I smell a rat.

[Ganymede]

I'm not sure what Land Registry records you think the solicitors could have checked that would have shown where the money came from?

 

How long were the delays?

 

I'm sure that as part of the initial pack of documents your friend received there would have been information on money laundering and the requirements.

 

I think you smell a rat where none exists.

[chiefmegawatty]

I'm not sure what Land Registry records you think the solicitors could have checked that would have shown where the money came from?

 

How long were the delays?

 

I'm sure that as part of the initial pack of documents your friend received there would have been information on money laundering and the requirements.

 

I think you smell a rat where none exists.

 

Surely using simple logic the solicitors would check the land registry for recent property sales in the name of the client who is buying the new property.

Is that so complicated for them to carry out?

I would have thought it was obvious.

The delay was one month.

One month's rent lost due to unjustified suspicion based upon no evidence of money laundering. I don't know the conditions contained in the initial information pack. I am nearly 60 years old and from my experience I have found most solicitors to be money motivated professional liars. I am surprised that you don't seem to realise this. Tony Blair is a surperb example to prove my point.

[Ganymede]

Yes it would be complicated for the solicitors to do seeing as though no such database exists!

 

I think you're letting your past experiences and preconceptions of solicitors cloud your judgment.

 

You need to get out if this mindset of "suspicion" and "accusation" of money laundering.

 

It's a legal requirement for the solicitor to check where hundreds of thousands of pounds of cash came from. They can't just ignore it when the individual solicitor himself/herself is the one that will potentially go to prison.

 

Oh and Tony Blair was a barrister, not a solicitor.

[steampowered]

Parliament have decided that regulated financial institutions, legal professionals and coneyancers have to take steps to establish the identity of their clients and the source of their funds, in order to prevent criminals from using them to launder the proceeds of crime into the system.

 

Blame parliament if you disagree with it. Its not the choice of solicitors to have to spend time (which they usually can't charge for) checking this stuff. It would be much easier for them to just ask no questions.

 

In any event, it sounds like your friend instructed a coneyancing company and not a solicitor.

[BRIGADIER2JCS]

Surely using simple logic the solicitors would check the land registry for recent property sales in the name of the client who is buying the new property.

Is that so complicated for them to carry out?

I would have thought it was obvious.

The delay was one month.

One month's rent lost due to unjustified suspicion based upon no evidence of money laundering. I don't know the conditions contained in the initial information pack. I am nearly 60 years old and from my experience I have found most solicitors to be money motivated professional liars. I am surprised that you don't seem to realise this. Tony Blair is a surperb example to prove my point.

 

 

I don't think Blurr is/was a solicitor, failed barrister I think.