Editor's letter

As the summer holidays come to an end, there is always that feeling of returning to a new school year. Hopefully, a little more refreshed (unless, of course, you’ve been looking after bored kids for six weeks), you may be full of plans for this autumn term, getting yourself and your firm ready for the next year – yes, before you know it, the shops will be full of Christmas decorations too...

But for finance professionals, there are plenty of major developments in the pipeline to warrant some serious end-of-year planning. It may seem like you have been inundated in recent months with information about the Money Laundering Regulations 2007. And yet, for some firms, the threat of non-compliance may not yet have hit home. Looking at some of the cases in recent times, it is perhaps that of Brian Dougan that should most prick the ears of law-firm finance teams. Dougan was sentenced to three months’ imprisonment on 24 July 2006 for allowing £66,500 to pass through his business accounts on behalf of convicted fuel fraudster Thomas McCague. Dougan defended his actions saying that he understood McCague had a profitable car-wash business and was therefore not surprised or suspicious to see large amount of cash coming in. The money, used to buy property in Northern Ireland, was, in fact, the proceeds of crime.

As in the later case of solicitor Philip Griffiths (who was sentenced to six months’ imprisonment for his part in a house sale involving drug traffickers), the judge said Dougan was likely ignorant of the crime he was committing, and was instead ‘the naive victim of a sophisticated criminal’. This was not sufficient excuse, however, to save him from a prison term. Nor could it save his career in law, which was shattered by his conviction.

For accounts and finance teams, however, the lessons are clear. Money passing through client accounts needs to be managed and assessed carefully – anything suspicious needs to be addressed, sooner rather than later, or firms will face the consequences. This will be even more the case as the Money Laundering Regulations 2007 come into force on 15 December 2007. With additional requirements for client identification and ongoing due-diligence measures, as well as the need for thorough record-keeping throughout and beyond a firm’s dealing with clients, the responsibilities are onerous. One solicitor, risk partner or money laundering reporting officer will be unable to manage all clients and compliance effectively. The requirements will differ between clients and practice areas, and types of work will demand a different response from the legal team. Solicitors and support functions, particularly finance, will have to work together to ensure that the new regulations are fully understood and to ensure their firm’s ongoing compliance. Complacency, the oft-favoured strategy of solicitors towards regulatory change, will no longer be an option.

Caroline Poynton
Editor