Background
This practice note is issued jointly by the Regulation of Practice and Conveyancing Committees. Its purpose is:
- to remind solicitors of their reporting obligations relating to money laundering and terrorist financing, and the consequences for solicitors who fail to comply;
- to draw attention to certain client behaviours in conveyancing transactions which, in the opinion of those Committees, should cause practitioners to consider if a suspicious transaction report (STR) may be warranted; and
- to suggest some best practices.
Both Committees wish to emphasise that the considerations in this note apply equally to past instructions, as well as to current and future cases.
Reporting obligations
Solicitors have an obligation to submit a STR to FIU Ireland[1] and to the Revenue Commissioners if a solicitor knows, suspects, or has reasonable grounds to suspect that another person has been or is engaged in an offence of money laundering or terrorist financing.[2]
Failure to comply with this obligation is a criminal offence (except as provided for under the legislation[3]) for the solicitor concerned rendering the solicitor liable to a fine or imprisonment (or both)[4].
In addition, it could result in a referral of the matter to the Legal Practitioners Disciplinary Tribunal on misconduct grounds potentially leading to a solicitor being struck off.
Where an STR might be warranted
The following client behaviours should cause a solicitor to consider the reasons for such behaviours, and whether an STR might be required. In particular, the solicitor should consider if the client’s objective might be to conceal the transaction or the source of funds and/or ownership of the property from relevant statutory authorities:
As regards stamp duty:
- a failure or refusal on the part of the client to put the solicitor in funds for stamp duty in advance of completion, noting that a solicitor must be in funds in any event in standard residential mortgage lending cases;
- a client seeking the return of stamp duty funds paid by the client to the solicitor where such stamp duty has not been paid to the Revenue Commissioners.
- an instruction not to file a stamp duty return, notwithstanding the solicitor’s advice that such a return should be filed, or a refusal to provide information relevant to or funds necessary for such a filing; or
- an instruction to complete and file a return in a particular manner that is not in accordance with the solicitor’s advice or typical practice.
As regards registration of title:
- a failure or refusal on the part of the client to put the solicitor in funds for registration fees in advance of completion, noting once again that a solicitor must be in funds in any event in standard residential mortgage lending cases;
- an instruction not to register the title to the property, or to delay or abandon an application for registration;
- an absence of assistance from the client to progress a registration application.
Best Practice
- Firms are strongly encouraged to ensure they are registered with the goAML portal (see goAML) so that relevant personnel can access it promptly when required.
- A STR arising out of a conveyancing case should contain details of the property concerned, to include folio numbers and eircodes, where available, to enable relevant authorities to investigate the matter
- Solicitors must ensure that actions taken in response to a suspicion do not constitute tipping off or otherwise prejudice an investigation.
- Firms should have clear internal escalation procedures, including prompt referral to the person responsible for AML reporting within the practice, where applicable.
References
[1] FIU-Ireland@garda.ie
[2] Section 42 Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended) and Regulation 19 of the Solicitors (Money Laundering & Terrorist Financing) Regulations 2020
[3] Section 46 Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended)
[4] Section 42(9) Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended)