Solicitors reminded of AML reporting obligations
The Regulation of Practice and Conveyancing Committees have published guidance for solicitors on obligations relating to money-laundering and terrorist-financing, and how this relates to conveyancing transactions.
The purpose of the guidance 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 emphasise that the considerations in the note apply equally to past instructions, as well as to current and future cases.
Reporting obligations
The committees say that solicitors have an obligation to submit an STR to FIU Ireland and to Revenue if they know, suspect, or have reasonable grounds to suspect that another person has been or is engaged in an offence of money-laundering or terrorist-financing.
Failure to comply with this obligation is a criminal offence (except as provided for under the legislation) for the solicitor concerned, rendering the solicitor liable to a fine or imprisonment (or both).
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 guidance lists client behaviours that should cause a solicitor to consider the reasons for such behaviours, and whether an STR might be required.
In particular, the note says, 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.
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 Revenue,
- 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.
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
- The guidance strongly encourages firms to ensure that they are registered with the goAML portal so that relevant personnel can access it promptly when required,
- An 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, and
- Firms should have clear internal escalation procedures, including prompt referral to the person responsible for AML reporting within the practice, where applicable.