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Much has been written in the legal press lately about the linked issues of Money Laundering and Client Identity Verification, and the role of the practicing solicitor in the identification and reporting of suspicious individuals and financial transactions.  

Whilst legislation (Money Laundering Regulations Act, Proceeds Of Crime ACT) is in place and the Joint Money Laundering Steering Group (JMLSG) have issued several directives on the subject there are still several grey areas and pitfalls that could trap the unwary and innocent solicitor.  

Getting it wrong is no longer an option as several solicitors have found out recently. As ever ignorance of the Regulations is no excuse - as at least two members so the profession have found out to their cost (and liberty).  

The Money Laundering Regulations 2003 stipulates:  

(3) A must maintain identification procedures which -  

(a) Require that as soon as is reasonably practicable after contact is first made between A and B -  

(i) B must produce satisfactory evidence of his identity; or
(ii) Such measures specified in the procedures must be taken in order to produce satisfactory evidence of B's identity; 

For the purposes of the Regulations 'satisfactory evidence of identity’ is evidence which is reasonably capable of establishing (and does in fact establish to the satisfaction of the person who obtains it) that the applicant for business is the person he/she claims to be.  

Solicitors have an obligation to obtain and record ‘satisfactory’ evidence of the identity of the client and to report ‘suspicious circumstances’ but the grey areas arise as neither of these terms is defined accurately and completely within either the legislation or the regulations.  

In response practices appear to be taking one of two approaches:  

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