Money launderers set sights on new targets, Chancery Lane warns
PUBLISHED August 29, 2012
Wednesday 29 August 2012 by Catherine Baksi
The Law Society has warned litigation practices that money launderers are targeting matrimonial law and debt recovery. Guidance to help firms avoid being the victim of fraudsters has been reissued by Chancery Lane.
According to the Society, a perception that solicitors engaging in litigation may not be sufficiently vigilant on client due diligence has lead both money launderers and fraudsters to target law firms. In a scheme aimed at family practices, it warns, firms have received instructions, usually from individuals presenting themselves as foreign nationals, to enforce bogus collaborative law agreements arising out of their 'divorce' some years ago.
The fraudster claims the other party is in this jurisdiction, provides a generic email address but no postal address for the other party, and a copy of the agreement.
But on closer inspection, the agreement does not state the jurisdiction or court in which it was made; the lawyer's details are not given fully; and the contents of the agreement do not cover anything of substance. In one case, it said that a completely different person to the prospective client was named as a party to the agreement.
The Society explains that this scheme allows criminals to move substantial sums of money through a lawyer's account. The scheme also potentially gives the criminal access to the letterhead and client account details of the firm, together with lawyer signatures, enabling them to perpetrate frauds against the firm at a later date.
In the debt-recovery scenario, the Law Society said that the client presents as a director or manager of a company, typically targeting a small to medium-sized firm, usually through the internet or by email, asking the firm to recover a debt.
Before the firm has written the first letter of demand, they will be contacted by the debtor, who will say they received a letter from the client company advising that they had now put the matter in the hands of the lawyer and provided the firm's details to them.
The debtor sends a cheque to settle the bill in full. The solicitor pays the sum, less their fees, to the client's account. In addition to possibly breaching accounts rules by providing a banking facility for the clients, Chancery Lane warns that there is a risk that the firm has moved proceeds of crime.