The OPBAS report also comments that a much higher proportion of DAML (consent) Suspicious Activity Reports (SARs) submitted by the legal sector require a request for further information before a decision can be reached, compared with DAMLs submitted by all sectors. While that might imply this is down to poor reporting, we can but speculate from our own experience of advising firms on SARS and DAML issues whether it may in part be because they are more complex.
We have been advising law firms and other professional practices on anti-money laundering since the start of the compliance regime in 2004 and have throughout cautioned against proceeding with a transaction in reliance on DAMLs (as they have since be-come known) when they only provide a defence under sections 327-329 of the Proceeds of Crime Act 2002. In particular, having reported knowledge and suspicion in a SAR, firms may be exposed to accessory liability for knowing receipt or even dishonest assistance in a breach of trust.
The decision in Tradition Financial Services Ltd v Bilta (UK) Ltd [2023] EWCA Civ 112 may add to that exposure. The Court of Appeal held that liquidators can claim against third parties who were party to a fraud even where they were not involved in the management or control of the insolvent company under section 213 of the Insolvency Act 1986. (A similar provision in section 246ZA applies in the case of an administration.) Crucially, this does not require proof of dishonesty, and it may effectively bypass the six year limitation period for a dishonest assistance claim.
Links to documents referred to above are on www.legalrisk.co.uk/News.
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