Consequences of not preventing economic crime: solicitor case studies

Read case studies on: 

• scrutiny and monitoring
• red flags
• suspicious activity reporting
• tipping off a client
• deliberate dishonesty
• misuse of a client account
• enabling fraud
• enabling tax evasion

These case studies should be read alongside our guidance on professional enablers and firm case studies.

Insufficient scrutiny and monitoring 

A solicitor who allowed deposit monies to be transferred to a fraudster was fined £3,000 by the Solicitors Regulation Authority (SRA). 

The solicitor had been the fee earner on a commercial property sale for a purported client who provided bank details in the name of a third-party company. 

The SRA said there was no evidence the solicitor made enquiries into the company. 

The firm received the deposit money from the buyer’s solicitors and the solicitor requested that a colleague transfer this to the purported seller. 

After almost £68,000 was transferred to the third-party account, it transpired the client was a fraudster impersonating the real owner. 

The firm notified the authorities, and the transaction did not complete.  

The solicitor admitted failing to conduct sufficient scrutiny and monitoring of the transaction, saying this was an isolated incident and a mistake caused by an oversight. 

It happened a week after the solicitor had COVID-19 and the fraud was sophisticated, having passed customer due diligence. 

The seller’s deposit was not refunded by the bank for another year. 

The SRA identified that the breach was serious but there was a low risk of repetition, particularly in the light of the degree of insight and remorse shown by the solicitor. 

Missing warning signs 

A solicitor and sole equity partner was struck off for failing to carry out sufficient checks on fraudulent conveyancing transactions that paid over £1.2 million to third parties. 

The transactions were the subject of fraud by the solicitor’s clients.

The clients purported to own the properties and then instructed the solicitor to transfer monies to third parties on completion. 

The SDT found the solicitor allowed the frauds to happen through serious mishandling of the conveyancing. 

The solicitor missed several money laundering warning signs, including:

• warnings on AML checks that the subjects’ dates of birth could not be verified and that there was no electoral roll match
• discrepancies between the sex, appearance and name on a passport
• differences between the client signature on the contracts and passport
• requests to change the account details for payment of the sales proceeds at short notice before completion

The SDT found that significant harm had been caused by the solicitor’s actions, dishonesty and lack of integrity.

On appeal, a High Court judge said it was “inevitable [the solicitor] would be thrown out the profession after being found to have acted without integrity”.

Failing to disclose suspicions 

A solicitor was struck off and jailed for nine months after being convicted of seven counts of failing to comply with money laundering regulations and one count of failing to disclose suspicions. 

The solicitor handled conveyancing transactions for several criminals who were later convicted of serious criminal offences, including drug dealing, mortgage frauds, tax evasion and money laundering.  

The SDT found the solicitor dealt with the transactions in a way that facilitated mortgage frauds, dishonest acquisition of properties by clients and money laundering.

The CPS also identified several issues with the solicitor’s client files:

• many files lacked identity documents or inadequate evidence of appropriate proof of identity
• most files lacked sufficient proof of identity
• an absence of client care or terms of business letters
• no instructions from or evidence of calls or correspondence with named purchasers
• an unusually high proportion of credits made by cash or banker’s draft, third-party payments, and inappropriate and abnormal ledger transfers

The solicitor also admitted to separate charges of: 

• making a personal unsecured loan of £60,000 to a client who did not obtain independent legal advice
• providing a banking facility through the firm’s client account 
• failing to ensure lender clients were advised of all material facts pertaining to property transactions 

Failing to disclose suspicious activity 

A money laundering expert and money transfer business owner was found guilty of four offences in connection with laundering the proceeds of an £850,000 investment fraud.

A police investigation found evidence linking the expert to an investment fraud that defrauded £850,000 from 60 victims around the world. 

This investigation revealed that the expert allowed his business to be used by the fraudsters to transfer money to Hong Kong and China.  

The prosecution was able to prove the expert should have known or suspected that the money passing through the business’s bank accounts was criminal property.  

Despite his substantial knowledge and expertise of money laundering, the expert failed to alert the authorities to the suspicious activity and allowed it to continue.  

The expert was found guilty of failing to alert the authorities to money laundering, breaching the MLRs 2017 and four counts of retaining a wrongful credit. 

Tipping off a client 

A solicitor was convicted by the Serious Fraud Office (SFO) for ‘tipping off’ a client by: 

• disclosing confidential details about an investigation, and 
• forging a legal document to mislead SFO investigators 

Investigators made covert enquiries about the solicitor’s client, who had paid £4 million toward the purchase of a luxury property. 

The solicitor immediately contacted the client about the investigation and they met multiple times over five months to discuss the matter, including: 

• flying out to the client’s home in a high-risk third country)
• meeting at a private dining club 

The solicitor supplied the SFO with a fake “letter of engagement” setting out their role as solicitor for a British Virgin Islands company purchased by the client and used to move funds for the property purchase. 

When investigators searched the solicitor’s office, they discovered evidence of the forgery on their computer and handwritten notes detailing the discussions with the client. 

The solicitor was suspended for 18 months and sentenced to nine months in prison. The solicitor was also ordered to complete 100 hours of unpaid work and pay £5,000 towards the SFO’s costs.

Deliberate dishonesty 

A solicitor was struck off by the SDT and jailed for seven years after being convicted of three money laundering offences.

The conviction came as the result of a police investigation into an organised group who had been laundering the proceeds of their criminal enterprise, including drug-dealing, tax evasion, mortgage fraud and property fraud.  

The solicitor was found to have been complicit in the group’s criminal activities by providing conveyancing services for the money to be laundered. 

Deposits were put down on houses where the illegal source of the funds was disguised from the lenders, mortgage applications used nominees instead of the names of the legitimate purchasers, and claims about income were exaggerated to secure the loans.

The solicitor was responsible for the conveyancing in over 80 property transactions for several criminals, all of whom were subsequently convicted of serious criminal offences, including money laundering and fraud.

The solicitor was aware that the purpose of the transactions was to launder criminal proceeds and was deliberately dishonest in facilitating them. 

Misuse of a client account 

A former lawyer was convicted of money laundering offences after almost £1.5 million was channelled through their firm’s client account. 

The High Court trial followed an investigation into the Scottish firm by the Law Society of Scotland. 

The case centred on four separate transactions, with the largest involving an unauthorised transfer of £985,000 of an individual’s money into the firm’s client account. 

The individual only became aware of the transfer when contacted by their bank's fraud team. 

Other transactions involved a £79,340 cheque due to be paid to a law firm in Jersey, and fraudulent property transactions. 

The lawyer claimed to have been duped and that the firm was targeted by criminals. The lawyer and four other men denied the charges but were found guilty. 

The prosecutor told the court the lawyer’s part in the criminality "was plain”. The lawyer “had access to the client account ... and pay out to others all while making it seem transactions were legitimate". 

Enabling fraud 

A solicitor was sentenced to 10 years’ imprisonment for helping their client channel $37 million in stolen funds through shell companies and offshore accounts. 

The client was governor of a Nigerian state.  

The solicitor was central in stealing the funds from two Nigerian states, setting up front companies to issue fake consulting invoices at way over normal rates.  

Sentencing the solicitor, the judge observed: “this fraud required special expertise and you lent yourself to it”. 

The solicitor plead guilty and was convicted of money laundering, prejudicing a money laundering investigation and conspiracy to defraud.

The solicitor was found to have benefitted from the fraud by over £42 million.

The judge determined that over £28 million in assets were available and should be used to pay a confiscation order or serve a further six-year prison sentence.

Enabling tax evasion

A solicitor was struck off by the SDT after being sentenced to prison by a US court for their role in facilitating tax evasion.

The SDT found the solicitor had made statements to third parties that were misleading and that the solicitor “knew or ought to have known” were liable to be misleading.

The tribunal said the solicitor had been convicted for “serious criminal offences carried out over a number of years”.

The SDT was satisfied that it was “entirely contrary to the ethical standards of the profession to be engaged in serious criminality” and it undermined the public’s confidence in the provision of legal services.

The solicitor was ordered to pay over £11,000 in costs.