Examination Timing: 00H01M37S
Sarah Thompson, a solicitor, is instructed by her client, Mr. Johnson, regarding a debt recovery action against Mrs. Edwards for £5,000. Before sending a letter of claim, Mrs. Edwards unexpectedly sends a cheque for £5,000 in full and final settlement to Sarah’s firm. This raises concerns for Sarah as she has not yet made any contact with Mrs. Edwards. Mr. Johnson requests that Sarah pay the money to him.
What should Sarah do?
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This scenario suggests possible sham litigation, a common money laundering tactic where litigation is fabricated to launder criminal property. Proceeding with Mr. Johnson’s request without making a disclosure would constitute an "arranging" offence under section 328 of the Proceeds of Crime Act 2002. Since proceedings have not been issued, the litigation exemption from Bowman v Fels does not apply. Sarah should disclose the matter to her firm's MLRO and await consent from the NCA before taking any further action.
Key Point: This question assesses the ability to recognise and respond to potential sham litigation under the Proceeds of Crime Act 2002. It highlights the importance of making disclosures to the MLRO and obtaining consent from the NCA before proceeding in suspicious circumstances.
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