Examination Timing: 00H02M50S
John Edwards, a solicitor at a law firm, is handling a property purchase for his new client, Mr. Anderson. This is the first time the firm has acted for Mr. Anderson, so John conducts the necessary due diligence checks. Mr. Anderson sends a cheque to cover the deposit and some money on account for legal fees, which is deposited into the client account. A few weeks later, Mr. Anderson informs John via email that the deal has fallen through and requests a refund of the cheque, less legal costs. Nothing about this situation seems suspicious to John.
What should John do?
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A property deal falling through on its own is not necessarily evidence of money laundering. The client has passed all customer due diligence checks, and there is no specific reason to suspect money laundering based on this single transaction. The subjective test for suspicion, as confirmed in Shah v HSBC, requires more than a vague feeling of unease; it requires a possibility that is more than fanciful. Given the client’s due diligence checks were satisfactory and there is no other suspicious activity, John is justified in proceeding with the client’s request.
Key Point: This question assesses understanding of due diligence and the threshold for suspicion under money laundering regulations. Solicitors must balance their obligations under anti-money laundering laws with their duty to act in the best interests of their clients.
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