Law firms engaged in conveyancing are now more vulnerable than ever to fraud and money laundering, it has emerged. This is due to a combination of factors. Covid-19, shutdowns and other unprecedented business disruptions have seen many lawyers reassess their life choices and leave the profession, with the result that there are now fewer qualified and experienced practitioners to do the job.
Lawyers who chose to stay the course, on the other hand, found themselves embroiled in a newly revived housing market, with unsustainable hours and a relentless stream of new instructions flowing through their offices.
Inevitably, some of these last notaries burned out, others resigned before it was too late. The result, again, is that there are now too few practitioners, already tired and stressed, to adequately manage the workload. It’s a recipe for chaos. Mistakes have crept in and the temptation to take shortcuts is ever-present, which can cost law firms dearly in terms of reputation and revenue.
The Law Society introduced the Conveyancing Quality Scheme (CQS) in conjunction with mortgage lenders in 2010. Its aim was and remains to help businesses achieve 100% compliance with all current anti-fraud and money laundering rules money and thus avoid this year and other sorry scenarios. The accreditation criteria have been revised twice since then, most recently in May 2022. The CQS is centered on the Core Practice Management Standards (CPMS), which is a comprehensive list of requirements necessary for a a company achieves and maintains compliance with the rules.
For example, everyone involved in every ownership transfer transaction undertaken by the company should be trained in best practice CQS principles. Has everyone in the company undergone an identity check? (There are documented cases of organized crime infiltrating companies with their own employees.) Has the company incorporated Lexcel’s requirement to have a record of plans and policies? And has he also started to organize integration programs?
Peter Rodd, CQS Chief Assessor and consultant to East Kent Boys & Maughan, explains how transfer of ownership has become vulnerable. “CQS has helped companies that are overwhelmed with work,” he says, “but Covid has sabotaged our best efforts to start more site visits to identify issues.” We had 200 such visits planned for 2020, but they had to be postponed. We can only really begin to make substantial changes based on what we learn from future site visits. And so exhausted lawyers continue to leave the profession in droves.
It’s not just the carriers who are suffering. The legal profession is the second most stressed profession in Britain, with 63% of respondents telling a survey by an insurance company that they suffer from stress every day at work. (The most in-demand profession, according to the same survey, is human resources.) Law Society Credentials Officer Eleanor O’Reilly-Joe, working with Rodd and Law Society Change Officer Ola Daniel, offers a solution. “We spent two years upgrading our technology to transform the credential application process from paper to digital,” says O’Reilly-Joe. “So much paperwork was required for the paper-based process that often a document was missing, whereas the online process is transparent about what data is required. It will even ask you if something necessary has been omitted.
“CQS has helped companies that are overwhelmed with work, but Covid has sabotaged our best efforts to start more site visits to identify issues”
It’s also much faster. The online form is shorter than the paper version, with fewer questions and boxes to check. The program will also automatically pre-fill the sections where we already have the information we need; this means that it is no longer necessary to search at the last moment to find documents that you have deposited in a safe place. It’s also easier to see where you are in the application process and what information you still need to submit to complete your application. In summary, it would take up to 75 days to process the documents, while the online system only takes about five days.
Despite the skepticism of some practitioners in 2010, who saw CQS as merely a way for the Law Society to milk its members, few people today claim that CQS – scrupulously implemented – radically reduces the risk of fraud and money laundering. silver. It is certainly time something was done to tackle fraud, which is described as the most common crime in the UK, costing our already creaky economy some £137billion every year.
Of course, not all frauds are related to conveyancing, but Rodd draws our attention to a few cases where property was at the center of the crime. “There was the case of a woman,” says Rodd, “who owns a four-bedroom house in south London worth £850,000. She returned from a three-week trip to find her mailbox taped and a metal mailbox secured in its place. Curious, she thought. And then two weeks later, she received a letter from the Land Registry titled “Completion of Registration”. Her house had been registered in someone else’s name and was about to be robbed.
“And then there was the case of the pastor from Luton who in August 2021 reported his house being stolen. Proceeds from the sale were estimated at £131,000. What diabolically ingenious scam did the scammers employ? Rodd replies, “They just ordered a replacement driver’s license and changed the photo!”
The new platform will be launched in November, to a few companies by invitation, and released to all companies in due course.