For money launderers it is becoming more challenging to move large amounts of money around the financial system without a legitimate sounding cover story, and involving a lawyer in a payment helps to add that much needed legitimacy.
From calls to our Practice Advice Service we have seen two types of litigation specifically targeted to date: debt recovery and matrimonial law.
In the debt recovery scenario
The client presents as a director or manager in a company. They will approach a small to medium sized firm, usually through the internet or by email, and ask them to recover a debt.
Before the firm has even written the first letter of demand, they will be contacted by the debtor. The debtor 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 your 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 the accounts rules by providing a banking facility for the clients, there is a risk that you have just moved the proceeds of crime.
In the past, the client companies were allegedly companies based in the Far East and the contractual disputes focussed on barrels of oil. More recently the range of contractual disputes is widening and the client companies are alleging that they are foreign branches of a local company – when such a branch does not exist.
For more details about this methodology see our previous warnings.
In the matrimonial scenario
Individuals, who are usually presenting themselves as foreign nationals, are contacting solicitors by email and asking them to help enforce a collaborative law agreement arising out of their divorce some years ago. They say that they believe that the other party is in your jurisdiction, provide a generic email address but no postal address for the other party, and a copy of the agreement.
Upon closer inspection, the agreement does not state the jurisdiction or court in which it was made, the lawyers who allegedly acted for each party are merely mentioned by name but no information on the firm is provided, the contents of the agreement while extending to a few pages does not actually cover anything of substance and in one case a completely different person to the prospective client was named as a party to the agreement.
This particular methodology has the attraction for the criminals of moving reasonable sums of money through a lawyers account, while also potentially giving them access to the letterhead and client account details of the firm and lawyers signatures, enabling them to perpetrate frauds against the firm at a later date.
Press release link from Law Society UK: click here