There are several reasons why it is vital to check your client's identity and carry out 'due diligence' checks at the outset before any substantive steps are taken.
First, the money laundering compliance regime covers the work of conveyancers.
Second, it is a requirement of lenders under their standing instructions in the CML Handbook and BSA Mortgage Conditions that ID is checked in every case where a mortgaged is involved.
Last, but not least, it is a specific requirement (m) under Overriding Principle 1 of CLC Code of Conduct that conveyancers regulated by CLC 'comply with anti-money laundering and prevention of financing terrorism legislation'.
The CLC Anti-Money Laundering & Combating Terrorist Financing Code & Guidance sets out, in the Guidance section, the type of policy and procedure for AML which is likely to satisfy their regulatory requirements.
The Money Laundering Regulations 2017 require principals of firms to put in place systems and controls to prevent money laundering and the financing of terrorism through property transactions, provide training for their staff and implement procedures for internal and external reporting of actual knowledge or suspicion of money laundering or terrorist financing to the National Crime Agency (NCA).
Suspicion is assessed on an objective basis.
Accordingly, conveyancers need to check the identity of their clients at the outset of the transaction and undertake other 'due diligence' checks to ensure that the transaction will not be used to launder the proceeds of crime.
A breach of AML Regulations could lead to a criminal prosecution being brought against the conveyancer or senior members of his firm.
Part 7 of the Proceeds of Crime Act 2002 created various offences of assisting or facilitating the laundering of proceeds of crime.
The CML Handbook gives separate instructions to solicitors' practices regulated by the Solicitors Regulation Authority at paragraph 3.1.1. and to Licensed Conveyancers practices under paragraph 3.2.1.
Firms are advised to follow their professional bodies requirement as to anti-money laundering but basically they are both required to examine client's photographic evidence, in the form of passport or driving license, and examine a utility bill or other suitable document as set out in the CML to satisfy 'due diligence'.
It is also a requirement to ensure that the other firm involved in the transaction, are a firm of solicitors, or licensed Conveyancers
Enquire as to the whereabouts of the title deeds of you do not hold these.
Since dematerialisation, deeds have become less important but there are frequently cases where deeds or documents other than the Official copy of the Register entries might be required. For example, where the property is leasehold, the original Lease, management company share certificate, etc. would be required. It will also normally be the case that Planning Permissions, Building Regulation Consents and Guarantees will be required for the property.
These might be held by a mortgage lender, by the client or by some third party on behalf of the client ( eg deeds may be held in safe custody by another lawyer).
When instructed by the Seller client, you will need to ask him if the property is mortgaged. If it is, obtain details of the lender and the client's mortgage account number and check whether you are on the lender's panel to establish if you can deal with the repayment of the mortgage on completion.
The lender may be a Bank, Building Society or other financial institution.
If you are not on the panel, explain to your client that there may be an additional charge to cover the costs of the lender's lawyer. If that is likely to be the case, ensure that you include this item or a best estimate of the likely figure in your estimate of costs and disbursements or update any estimate that you may have given already.
However, a majority of lenders are prepared to deal with most solicitors or licensed conveyancers on a sale only basis, although some may not be prepared to instruct sole practitioners.