Money Laundering & the Accounts Rules
Introduction
The Money Laundering Regulations 2007 affect all law firms in Scotland, regardless of whether the firm deals with client funds.
Regulation 3 sets out the type of person to whom the Money Laundering Regulations 2007 apply. These are referred to as “relevant persons”. While the definition of “Independent Legal Professional” contained in Regulation 3(9) would appear to be the most obvious application of the Regulations to the work of solicitors, firms must be aware that Regulations 3(6), 3(8), 3(10) and 3(11) can also apply. These sections relate to insolvency practitioners, tax advisers, trust or company service providers, and estate agents.
Many solicitors do not come within the definition of “relevant person”, as described in the Regulations. However, you should be aware that Rule 24 of the Accounts Rules extends the scope of the Regulations to treat all business undertaken as if it were undertaken by a relevant person. In doing so the Society is mindful of the risk based and proportionate basis on which the Regulations are founded and will expect solicitors to apply the same considerations whether business is caught under the Regulations and by Rule 24, or by Rule 24 alone.
In practical terms, all firms must assess the risk for each transaction and ensure that they have sufficient information to verify the identity of the client.
Further information is available in the Anti-Money Laundering section, including advice on Client Due Diligence and how to identify money laundering issues.
Role of the Society
In terms of the Regulations, the Law Society of Scotland, as the professional body for Scottish solicitors, is the supervisory authority for relevant persons regulated by the Society. While the Society is committed to the education and support of our members in preventing the Scottish Legal system being used to launder criminal or terrorist funds, it also has a duty under the Regulations to take appropriate action where members do not comply with the requirements of the Regulations.
Firms should be aware that the Society has adopted the JMLSG Guidance Part 1 in full. The Law Society Guidance Part 2 provides further clarification and guidance specific to law firms in Scotland. You are encouraged to refer to these resources, although you must read the Money Laundering Regulations 2007 first to ensure the guidance is taken in context.
Money laundering subscription email service
HM Treasury's Financial Crime Team provides a money laundering subscription email service that will be of interest to all firms of solicitors. The purpose of the service is to allow the Treasury to communicate directly with subscribers when there are important anti-money laundering developments.
Regulators such as the Law Society of Scotland have been asked to highlight this service to our member firms. Instructions for subscribing to this service are available at http://www.hm-treasury.gov.uk/fin_crime_Mailinglist.htm
Updated: June 2010
