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Lawyers manipulated by crime syndicates

user iconStefanie Garber 04 June 2015 NewLaw
Lawyers manipulated by crime syndicates

Legal practitioners are being used by organised crime groups to launder money, often without the lawyer’s knowledge, the federal government has warned.

According to a new report from the government's currency movement analysis arm, AUSTRAC, titled Money laundering through legal practitioners, lawyers often play a key role in processing funds for criminal groups.

AUSTRAC CEO Paul Jevtovic told Lawyers Weekly organised crime was a “serious challenge” in Australia.

“Organised crime is a pervasive and extremely damaging concept that's hurting our country in many different ways,” Mr Jevtovic said. “There are individuals who are victims of organised crime, it hurts our economy and it undermines the integrity of legitimate infrastructure like the financial sector or corporate sector.”

The report provided no statistics on lawyers’ involvement in money laundering, but offered some possible scenarios – such as lawyers conducting transactions for criminals, offering the use of their trust account, recovering fictitious debts, buying real estate or setting up corporate structures.

According to the report, lawyers are an attractive target because their services can disguise illicit transactions and their involvement conveys legitimacy.

Under the Financial Transactions Reports Act 1988, lawyers are obliged to report significant cash transactions to AUSTRAC, meaning those over $10,000. The report also encourages lawyers to be wary of complex transactions involving multiple properties, unusual cash settlements, deposits for transactions that fall through and several other warning signs.

Mr Jevtovic urged lawyers to be aware of the issue and ask in-depth questions of any new clients or following suspicious requests.

“It might sound like common sense, but the fact we're publicly talking about this is an indicator that sometimes, the most common sense of due diligence questions are not being asked,” he said.

While lawyers implicated in criminal transactions were often not complicit, he warned a few were actively seeking to profit from illegal activities.

“The majority do the right thing, but it is [about] the devastating impact the minority actually has," Mr Jevtovic said. “It doesn't take a lot of professionals – whether they be real estate agents, lawyers or accountants – to compromise the integrity of their organisations and professions.”

Where a lawyer fears they may have unknowingly facilitated a crime, Mr Jevtovic encouraged them to contact authorities.

“I would urge anyone who feels they have unwittingly become involved with, or been manipulated by, organised crime groups to come forward and talk to the relevant authorities. If the mistakes have happened, albeit unwittingly, what you don't want to do is make it worse.”

Mr Jevtovic plans to work with legal bodies to address money laundering and other potential crimes among lawyers.

“Organised crime is not going away,” he said. “We need to continually ensure we are doing as much as we possibly can to safeguard our legitimate sectors, such as our legal fraternity and financial sector.”