Individual solicitors and legal firms will come under greater scrutiny in 2009 as prosecutions against money laundering increase and the ripple effects of increased fraud from the credit crunch hit the legal industry, according to compliance and screening specialists Datanomic Ltd, and risk management and compliance experts, Legal RM. In particular, solicitors acting as Money Laundering Reporting Officers, or individuals who facilitate the acquisition, retention, use or control of laundered money, should expect hefty fines and prison sentences.
Last month, Isleworth Crown Court fined Jonathan Krestin, 60, the managing partner at Butcher Burns, a commercial and property firm of solicitors, £5,000 on one count of money laundering. He was convicted of using the firm's client account to launder money belonging to Michel Namer, a French national and convicted fraudster. An investigation by HM Revenue and Customs showed that Krestin transferred €14,000 from Namer to an Italian account of Namer's mistress and former lap dancer, Dzindzer Jeles, knowing or suspecting the monies to be criminal property. This sum was part of the proceeds of a €35,000,000 Missing Trader Intra Community Fraud orchestrated by Michel Namer.
“Law firms are obliged under the 3rd EU Money Laundering Directive to regularly and thoroughly screen their clients against Sanctions lists,” said Dr Jonathan Pell, CEO of Datanomic Ltd. “Know-Your-Customer and risk management protection initiatives have already become mandated and defensive strategies in protecting financial institutions against money laundering, and we expect the legal sector to follow suit. Law firms must ensure the proper protection measures are in place to protect both individual members of staff, as well as a firm’s reputation.”
Datanomic believes that Enterprise Screening, the systematic screening of employees and internal contractors, as well as external partners, agents, third parties, and distributors, will become standard business practice for large organizations in all major vertical markets over the next three years.
“We’re already seeing many law firms adopt more comprehensive screening policies and technology solutions for anti-money laundering compliance,” said Christopher Giles, Managing Director of Legal RM. “The ability to analyse data from internal systems as well as external sources and screen it against sanctions lists is imperative. In today’s legislative environment, law firms large and small require sophisticated tools to seamlessly screen their clients. Every firm must ensure its risk exposure and reputation are protected by adopting an inclusive Enterprise Screening approach.”
Until now, Client Screening has largely been an automated process in the financial services industry and hasn’t seen the same level of interest in the legal sector. However, the credit crunch has seen law firms’ look to reduce cost and drive through efficiency with the implementation of the same technology as part of their proactive fraud and risk management strategy.
Datanomic’s dn:Director Sanctions & PEP (Politically Exposed Persons) Screening software enables organisations to rigorously and systematically identify heightened-risk entities within their customer bases. It relieves the burden of manual or semi-automated client screening by enabling automated screening in an easy-to-use/easy-to-implement solution purpose-built for Compliance. Datanomic includes powerful screening rules to match against both commercial and regulatory body/Government watch lists, and has worked with leading law firms to deliver a highly intelligent data matching solution that is designed for ease of use by non-technical users. Legal RM has been working in partnership with Datanomic, implementing tailored Sanctions and PEP Screening solutions to law firms throughout the UK, Europe and Asia.
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