Are the professionals hanging us out to dry?
By Desmond High
Is it only me (that’s the usual way to start a rant) who finds the blind application of Money Laundering Regulations a dismal reflection on the intelligence of the professional fraternity?
The other day it proved necessary for a client company to commission a well regarded firm of lawyers to provide help with the preparation of a commercial contract. Total cost about £1,200.
The firm in question advised that it needed to carry out MLR checks on the company, which was a new client, including the passport and driving licence of one of the instructing directors. They also carried out a company search and billed an over-inflated amount for the disbursement. The introduction came from me, and both the company director and myself are personally known to several partners in that firm.
The MLRs provide the steps to be taken by various bodies to detect and prevent money laundering and terrorist financing. Specifically they refer to financial or real property transactions, such as buying and selling of property, management of client money and assets, opening of bank accounts and organisation of contributions for creation or management of businesses.
That’s understandable. But this was simply a straight supply of their services in exchange for a fee. They were not being asked to hold money in a client account or acquire assets. So why should a busy person need to dig out this paperwork and present themselves at the lawyer’s offices?
The bill will be paid by cheque from an account at a High Street bank that has also carried out MLR checks. Comet doesn’t ask for all this evidence of identity when you go in to buy a new TV. What is the difference? Where does this end? Should clients demand evidence that the lawyers have properly accounted for the VAT on the fee?
I haven’t spoken to a professional – lawyer, banker or accountant – who does not privately believe that the processes they are being required to carry out are a complete waste of time, and cause client frustration.
Of course, no-one is against the objectives of the legislation; of course, you don’t do it every day of the week; and of course, “if you have nothing to hide you have nothing to be worried about”. But why is there no intelligent application of the law?
The lawyers say it is imposed on them by the Law Society. What happened to these firms telling their trade body and the State that these are pointless procedures and/or, at the very least, applying them only when the value of work is above a practical de minimis level?
Meantime the honest business person will keep producing passports and utility bills simply to allow the professionals to tick another box and file some more paper! And the real money launderers will carry on substantially ignored.
March 2008