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Review Your SQE 1 Practice Records

Examination Timing: 00H00M12S

Alex, a solicitor, is contacted by Mr. Green, who is interested in buying several properties. Mr. Green avoids answering questions about the intended purpose of these purchases. Alex becomes suspicious when Mr. Green sells all the properties quickly and transfers the money to several offshore accounts. Which of the following statements best describes Alex's obligations as set out in the Law Society's April 2009 Warning Card on Property Fraud?

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According to the Law Society's April 2009 Warning Card on Property Fraud, the Money Laundering Regulations 2007 require solicitors to diligently take steps to identify and verify their clients by independent means. They must also identify and, using a risk-sensitive approach, verify any beneficial owners, and obtain detailed information on the purpose and intended nature of the business relationship. This requirement goes beyond merely confirming that the client wishes to sell a property; it involves assessing whether the information in the retainer is consistent with a lawful transaction. This may include verifying the client's ownership of the property. Solicitors do not need to act for the lender to be implicated in money laundering. It is insufficient to have administrative staff simply photocopy a passport without further scrutiny. Assuming that a transaction is legitimate simply because it does not appear to make an obvious profit is also incorrect, as the proceeds of crime could still be involved. 


Key Point: The SRA Accounts Rules and Money Laundering Regulations 2007 require solicitors to conduct thorough due diligence to verify the client's identity, the nature of the transaction, and the legitimacy of the funds. This ensures compliance and helps prevent involvement in fraudulent activities.

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