Professional Conduct, Money Laundering and Client Care
Conduct and client care
Candidates must know the SRA Principles, the Code of Conduct and the client care obligations: terms of engagement, costs information, complaints handling and the duty of confidentiality and disclosure. Conflicts of interest are heavily examined, particularly acting for both buyer and seller or for lender and borrower. The duty to act in the client's best interests must be balanced against the duty to the court and to third parties.
Money laundering
Anti-money laundering compliance requires customer due diligence, identification and verification of identity, source of funds and source of wealth checks, and ongoing monitoring. Candidates must know when enhanced due diligence applies: politically exposed persons, high-risk jurisdictions, and complex structures. Suspicious activity reports go to the National Crime Agency, and tipping off is a criminal offence.
Traps
Watch the timing of CDD: it must be completed before the retainer is established or the transaction completed, not after. Also note that reliance on a third party's CDD does not remove the firm's responsibility. Conflicts questions often turn on whether the parties' interests are sufficiently aligned.
Rule of thumb
Before acting, confirm identity, funds and any conflict; record the checks; and never disclose a suspicious activity report to the client.
Worked example
A client asks the firm to act for both the buyer and the lender. This is generally permissible only where the firm can act in both parties' best interests and the lender's requirements are met; where a conflict arises, the firm must cease to act for one.