Mortgage fraud and money laundering are the biggest risks facing conveyancers, but three-quarters of firms want more training to tackle them, according to research by the Solicitors Regulation Authority.
In a thematic review of conveyancing, the regulator revealed that a quarter of 100 randomly selected firms visited by the SRA last year had directly experienced a client attempting to commit fraud or money laundering. More than half identified fraud or money laundering as the areas of greatest risk.
The SRA warned that such criminal activity occurs ‘regularly’.
The most common warning signs that firms looked out for were identity issues, international connections, unusual financial arrangements, client behaviour and having no local connections.
If suspicions were raised, around a quarter of firms said that they refuse to represent the client, and a similar proportion reported their concerns to the Serious Organised Crime Agency (SOCA), the police, or their money laundering reporting officer.
But a third admitted that they did not know how they would decide whether to report a suspicion to SOCA, with a further 15% saying that they make the decision based only on ‘gut instinct’.
Three-quarters of firms indicated that they need more training on property-related fraud and money laundering.
Around one in three firms reported that they had some form of referral arrangement in place, most frequently with estate agents. Very few relied on a single referrer for more than 10% of their instructions.
A third of respondents had concerns that other firms did not disclose full information about referral fees.
Less than half of firms reported that they had received service complaints from clients about their conveyancing work in the last two years, although a quarter said that they had professional negligence claims relating to conveyancing work in the same period.
The most frequent area for conveyancing conflicts was stated as ‘acting for both the buyer and seller’ followed by the potential conflict between duty of confidentiality to the borrower and duty of disclosure to the lender.
Asked about the impact of the recession, some 80% reported that they have seen fewer conveyancing clients and two in five firms reported a reduction in income from conveyancing, resulting in cost-cutting and redundancies.
- Read the full results.