Money laundering and proceeds of crime — SQE1 Legal services question
A worked single-best-answer question on money laundering and proceeds of crime, with why each wrong option is wrong — the way SQE1 traps candidates.
Leon, a conveyancing solicitor, became suspicious that the funds his client Mr Vance is using to buy a flat derive from crime. Leon reported his suspicion to the firm's nominated officer, who made an authorised disclosure to the National Crime Agency seeking a defence against money laundering. While the notice period runs, Leon cannot proceed to exchange. Mr Vance telephones, angry about the delay, and demands to know exactly why the transaction has been held up.
Which of the following best describes what Leon may tell Mr Vance?
- AHe must tell Mr Vance about the disclosure, because a solicitor must inform the client of all material information.
- BHe may tell Mr Vance that a report has been made, provided he does not name the National Crime Agency.
- CHe must stop acting immediately and explain to Mr Vance that it is because of the report.
- DHe may tell Mr Vance about the disclosure, because the information is covered by legal professional privilege.
- EHe must not reveal that a disclosure has been made, because doing so where it is likely to prejudice an investigation is the offence of tipping off.
Show answer and reasoning
Rule: In the regulated sector, disclosing that a suspicious activity report has been made, where likely to prejudice an investigation, is the offence of tipping off.
- A Paragraph 6.4(a) disapplies the duty of disclosure where the law prohibits disclosure, as section 333A does here. (wrong rule)
- B Revealing that a report has been made is tipping off whichever agency is named. (wrong rule)
- C Explaining that he is stopping because of the report would itself be tipping off. (wrong rule)
- D Privilege does not authorise disclosure to the client of the fact that a suspicious activity report has been made. (wrong rule)
Source: Proceeds of Crime Act 2002, s 333A; SRA Code of Conduct for Solicitors, RELs and RFLs, para 6.4(a)