There is a significant emphasis in the 2010 Act on taking a risk based approach in terms of compliance with the terms of the legislation. We consider that the area of our business that is most likely to give rise to potential money laundering concerns is transferring property / money between spouses.
The provisions of paragraphs 2.12 to 2.14 of the Law Society’s 2010 Guidance Notes are specifically drawn to the attention of solicitors. They provide as follows:-
“2.12 Practitioners should be particularly careful where they act to transfer property, even between spouses, if there are suggestions that the assets have been purchased with untaxed income or if the solicitor or barrister has other reasons for believing that the assets have been so acquired. A solicitor or barrister who advises on or effects such a transaction could commit the offence of money-laundering. The legislation does not require actual knowledge on the part of the solicitor or barrister that the assets are ‘tainted’. The test is recklessness. The legislation does not contain any de minimis provision and an asset is considered tainted even if only a small proportion of the funding arose from untaxed income and regardless of the length of time that has elapsed since the asset was acquired.
2.12 Where the transfer of such ‘tainted’ assets is being ruled or ordered by the court, practitioners should ensure that the court is fully aware of the provenance of the assets or of any suggestion of funding, whether in whole or in part, from untaxed income. A failure to disclose to the court a fact relating to the status of such property could amount to concealment on the part of the practitioner.
2.14 Where the transfer of such ‘tainted’ assets is being sought by agreement of the parties, without the intervention of the court, a practitioner should not complete any such transaction until the client has regularised the situation in respect of those assets. If a client refuses to do so, the solicitor should cease to act. Penalties for money-laundering offences include imprisonment for up to 14 years.”
Any concerns in relation to the application of the anti money laundering provisions to the circumstances of a particular case should be brought to the attention of the MLRO.