Legal practitioners and conveyancers provide certain services that operate as a gateway to property and financial markets, financial institutions and other regulated professionals.
These ‘gatekeepers’ provide financial and business services that can be abused to disguise beneficial ownership, conceal the origins and purposes of financial transactions, facilitate tax evasion and, ultimately, launder the proceeds of crime. Operating through or behind a professional adviser can provide a veneer of legitimacy to criminal activity.
Legal practitioners can be used to create complex (but legal) structures that can create distance between criminals and their illicit wealth and through conveyancing facilitate a process that allows for the transfer of ownership of property, a high-value asset that provides ideal opportunities for laundering large volumes of illicit funds.
The Money Laundering and Terrorist Financing (ML/TF) risks associated with legal practitioners include:
- Criminals may seek to conduct their financial activity through a legal practice to disguise their criminal involvement;
- Criminals may seek out lawyers as gatekeepers to the financial system to give the impression of respectability and legitimacy;
- Criminals may misuse a legal practices’ trust accounts for deposits or international wire transfers to avoid detection;
- Criminals may seek the assistance of lawyers to establish companies or trusts which they then use to obscure who really owns or controls the funds and assets (that is, the beneficial owner);
- Conveyancing can facilitate a process that allows for the transfer of ownership of property, a high-value asset, that provides ideal opportunities for laundering large volumes of illicit funds; and
- Conveyancing transactions that involve a disproportionate amount of private funding/cash, which is inconsistent with the profile of the purchaser.
Legal practitioners must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/ CFT laws.