London, 1 June 2023 – In a shocking turn of events, a solicitor’s inadequate AML checks have led to two fraudulent property transactions, highlighting the pressing need for law firms to adopt advanced AML risk and compliance technology such as Verify 365.

The Solicitors Disciplinary Tribunal (SDT) has suspended Nirosha Jayawardena, the owner of Tremont Midwest Solicitors, after her “failings” allowed fraudsters to carry out these criminal acts. The severity of this incident emphasises the critical role that robust AML measures play in protecting the legal industry from financial crimes.

Tremont Midwest Solicitors, a central London-based firm specialising in immigration and conveyancing work, was solely owned by Ms. Jayawardena, who had been admitted to the bar in 2007. Employing only one qualified lawyer, the firm’s vulnerabilities became evident as it fell victim to fraudulent schemes.

In the first fraudulent transaction, the imposter claimed to be Mr. A, the owner of a property in London. Unbeknownst to Ms. Jayawardena, the real Mr. A had passed away, and his sister was residing in a care home. Although the law firm’s AML policy required electronic AML checks, they were not conducted. Ms. Jayawardena failed to notice a spelling anomaly in the wife’s passport, which should have raised red flags during the due diligence process. Despite the oversight, the law firm proceeded with the transaction, resulting in the sale proceeds, exceeding £293,000, being transferred to a company called Hermes of Mayfair. Fortunately, Ms. Jayawardena managed to recover the funds after being alerted to the fraud by Westminster Council.

In the second case, Ms. Jayawardena acted on behalf of clients pretending to be Mr. and Ms. B in the sale of a property in Kent. These individuals were believed to be connected to the same fraudsters involved in the first transaction. Although AML checks were performed, Ms. Jayawardena failed to verify the ID documents as required. Additionally, warnings were issued during the AML searches. She claimed to have obtained the client’s driving licence as secondary identification, but no copy of it was found in the law firm’s records. Ignoring these warning signs, the sale proceeded, and £164,900 was transferred to an account held by Infinity Jewels. The Land Registry later confirmed that the passports provided by the sellers were forged. Both examples show how inadequate AML checks can lead to fraud and negative impact on society.

Due to Ms. Jayawardena’s numerous failures, fraudulent property transactions were successfully carried out. While she argued that her firm had been a victim of fraud, she admitted to not conducting adequate due diligence or AML checks, as well as paying sale proceeds to unrelated third parties, a clear violation of the accounts rules. Moreover, she neglected to obtain accountants’ reports and perform reconciliations for three years. As a result, the SRA expressed concerns about the firm’s ability to satisfy client liabilities, given the closure of Tremont Midwest in January 2021.

“Law firms urgently need AML Risk & Compliance Technology like Verify 365 to combat financial crimes.”

Rudi Kesic, CEO of Verify 365, a leading provider of AML risk and compliance technology, commented on the importance of leveraging advanced solutions to combat financial crimes in the legal sector: “The case of Tremont Midwest Solicitors underscores the critical need for law firms to invest in robust AML technology like Verify 365. Our cutting-edge platform empowers legal professionals to effectively identify and mitigate money laundering risks, ensuring compliance with regulatory obligations. By incorporating advanced algorithms and real-time monitoring, Verify 365 enables law firms to protect their clients and maintain the integrity of the legal system.”

In response to this alarming incident, legal professionals and regulatory bodies have issued urgent calls for law firms to prioritise the implementation of AML risk and compliance technology. Verify 365, a leading provider in this field, offers a comprehensive solution that addresses the specific needs of the legal industry.

Verify 365’s technology is designed to assist law firms in enhancing their AML processes and compliance measures. The platform utilises advanced ID verification technology, DynamicID, combined with real-time AML monitoring capabilities and source of funds checks to identify suspicious activities and potential money laundering risks. By integrating with existing practice management systems, Verify 365 streamlines the due diligence process, automates compliance checks, and provides comprehensive risk assessments.

Rudi emphasised the significance of leveraging advanced technology to tackle financial crimes within the legal sector. He stated, “Law firms play a crucial role in maintaining the integrity of financial transactions and preventing illicit activities. With the increasing sophistication of financial criminals, it is imperative for legal professionals to adopt robust AML technology. Verify 365 offers a cutting-edge solution that empowers law firms to stay ahead of evolving threats, ensuring compliance and safeguarding their clients’ interests.”

The Verify 365 platform provides a range of features tailored to the needs of law firms. These include identity verification, enhanced due diligence, transaction monitoring, and compliance reporting. By utilising artificial intelligence and machine learning algorithms, the system can identify patterns and anomalies, flagging potentially suspicious transactions for further investigation.

The urgency for law firms to adopt AML risk and compliance technology like Verify 365 cannot be overstated. The case of Tremont Midwest Solicitors serves as a stark reminder of the devastating consequences that can arise from inadequate AML measures. The financial losses, reputational damage, and potential legal ramifications that result from involvement in fraudulent activities are significant.

Regulatory bodies are also taking notice of the critical role that technology plays in combating financial crimes. The Solicitors Regulation Authority (SRA) and other governing bodies are expected to implement stricter regulations and enforcement measures to ensure that law firms maintain the highest standards of AML compliance. Failure to comply with these regulations can lead to severe penalties, including fines, suspension, or even disbarment.

In light of these developments, legal professionals and industry experts are urging law firms to take proactive measures and invest in advanced AML risk and compliance technology. By implementing platforms like Verify 365, law firms can significantly enhance their ability to detect and prevent financial crimes, protecting their clients, their reputation, and their business.

The importance of AML technology goes beyond individual law firms- it is crucial for safeguarding the integrity of the entire legal system. By adopting robust AML risk and compliance technology, law firms contribute to the overall trust and confidence in the legal profession, ensuring that it remains a bastion of integrity and ethics.

Improving Inadequate AML Checks with AML Technology

As the legal landscape continues to evolve, law firms must prioritise the adoption of AML risk and compliance technology to meet the growing challenges of financial crime. Verify 365 stands at the forefront of this technological advancement, offering comprehensive solutions that enable law firms to navigate the complex landscape of AML compliance with confidence and effectiveness. With the stakes higher than ever, law firms must act urgently to protect themselves, their clients, and the integrity of the legal profession as a whole.