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High street law firms at risk of money launderers

High street law firms are leaving themselves wide open to money launderers, research by Conveyance Link reveals.

Despite the well publicised increase in identity fraud in the UK, many small law firms still do not have rigid enough systems and procedures in place to check and validate clients’ IDs.

A survey of 400 conveyancing law firms carried out by ConveyanceLink, found 91% admitted they photocopied documents such as passports and driving licences as proof of identification but did not check or verify them against a number of official databases.

When the firms were shown a passport and driving licence and asked if they were genuine or fake, 71% chose incorrectly. Of the firms that were correct, most admitted they made an educated guess.

Malcolm York, director of ConveyanceLink, says: “This survey illustrates how difficult it is to tell a fake from a real document unless you have a high level of expertise in such areas.

“What is concerning is the number of law firms that are still relying on the fact that if a client can produce a number of different forms of personal identification then they must be authentic.

“The Money Laundering Regulations 2003 stipulates that all persons carrying on relevant business must ‘establish such procedures of internal control and communication as may be appropriate for the purpose of forestalling and preventing money laundering’.

“This means, according to ML Regulations 2003, that law firms must obtain ‘satisfactory evidence’ of the identity of each client which clearly in most cases they are not doing.

“It is vital that law firms recognise that with the vast improvement in the quality of fake ID on the market, and the ease of obtaining such documentation over the internet, that they need to ensure that their verification procedures are watertight and comprehensive.”


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