David Corker attempts to ease solicitors' minds by giving his view of the grounds on which suspicion of money laundering must be reported


The obligation on solicitors to report any suspicion of money laundering to the police remains a major source of worry to the profession. Solicitors, especially those practising family law, are often fearful that unless they report any suspicion they themselves might commit a criminal offence.


This worry may be causing many solicitors to make reports, when in fact under the relevant statute, the Proceeds of Crime Act 2002, this is unnecessary. Moreover, such excessive reporting - often termed 'defensive reporting' - serves no useful purpose to anyone, including the law enforcement authorities.


It is fundamental to remember that unless a solicitor is working within the 'regulated sector', there is no obligation to report an activity unless that solicitor is genuinely suspicious that it relates to past or present criminal conduct. That suspicion must be reasonable and not irrational or even paranoid.

It is a simple and practical test, and is subjective in the sense that the solicitors must form a genuine suspicion in their own minds that a person is committing a laundering offence. In part it is also objective, that there must be reasonable grounds for that suspicion.


All too often solicitors misunderstand this concept. What is genuine and reasonable suspicion? They jettison the same qualities of judgement and assessment that are intrinsic to the nature of our profession.


Nothing in the Act obliges solicitors to suspend their judgement and act without any sense of proportion. Before reporting, it is the solicitor who must be satisfied that on the facts known there is a real possibility of laundering.


For those solicitors whose work brings them within the regulated sector - which, incidentally, does not include litigation or any other work funded by legal aid - the reporting regime under the Act is a little tougher. Irrespective of whether the solicitor was suspicious or not, he could nonetheless be convicted of an offence for not reporting if a court was later to hold that there were reasonable grounds for being suspicious.


It is fundamental not to misunderstand this test; it is not one of a reasonable person making an assessment of the whole picture with the benefit of hindsight. Instead, it is more specific and individually focused; on the information that at the material time the solicitor knew about, did he have reasonable grounds for suspecting?


This test does not oblige solicitors to ask themselves what someone else might conceivably think in the same circumstances. If that were the test, then there would be no need for the criterion of reasonableness at all. Again the faculties of judgement and discernment must be employed, not negated. Whether there are reasonable grounds depends on the source of the information and its context seen in the light of all the circumstances. A diligent solicitor is at little risk. Where a statute calls for the exercise of reasonable judgement by someone, the courts have generally afforded a wide margin of appreciation.


On the question of reporting, there is the issue of whether repeated or multiple reporting is required. If one client's financial transaction is reported, does it follow that every other similar one should also be reported?


On a strict construction, the Act does require this if the suspicion remains. I doubt the courts would expect solicitors to report every subsequent transaction where it was part of a similar pattern. Once the solicitor has alerted law enforcement to the transaction, and the reasons for suspicion, it should then be job of the authorities to monitor future and successive transactions if they so wish.


The Act gives them adequate powers to do so through account monitoring orders. Solicitors cannot reasonably be expected to do law enforcement's job for it.


David Corker is a partner in London criminal defence law firm Corker Binning