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Review Your SQE 1 Practice Records

Examination Timing: 00H00M49S

Rebecca Lee, a solicitor, is acting for her client, Mr. Taylor, who has just won a default judgment for the recovery of £20,000. The debtor sends a cheque for this amount to Rebecca's firm. Due to the conduct of the parties after the issue of proceedings, Rebecca strongly suspects money laundering and that the litigation was fabricated. Rebecca consults informally with her firm's MLRO, who strongly advises her not to pay in the money.

What should Rebecca do?

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Under the Bowman v Fels litigation exemption, actions taken during the course of litigation, including the receipt and payment of settlement funds, are exempt from offences under the Proceeds of Crime Act 2002 up until the execution of the judgment or completion of the settlement. Therefore, Rebecca would be protected by this exemption while paying in the cheque and subsequently paying the money to Mr. Taylor. This exemption applies until the execution of a judgment or the completion of a settlement, after which money laundering offences can occur. 

Key Point: This question evaluates the understanding of the Bowman v Fels litigation exemption and its application to ongoing litigation. Solicitors must be aware of their obligations and protections under the Proceeds of Crime Act 2002 to ensure compliance while performing their duties.

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