SRA warns Solicitors against Charging Clients for Money Laundering Checks

In a report published on 12th May the Solicitors Regulation Authority has warned firms against charging clients for the anti money laundering checks that they are in some cases required to carry out, and that by doing so they may be breaking the rules. Because the work is done to comply with a legal requirement rather than for the direct benefit of the client it should not be passed on to the client and should ordinarily be treated as part of the firm's overheads.

A full extract from the report follows -

"On a number of our visits we noted that some firms were charging their clients the cost of undertaking CDD [client due diligence]. In relation to regulated activity and in accordance with the MLRs [Money Laundering Regulations], law firms are legally required to undertake CDD. It is our view that the cost of undertaking CDD cannot therefore be treated as a disbursement, since it is not a cost incurred on behalf of the client. Firms will be at risk under Outcome (8.1) [of the Solicitors Code of Conduct] if CDD payments are described in their bills to clients as disbursements. As a general rule, we would expect such charges to form part of a firm's overheads. There may on occasion be circumstances in which the cost of the CDD is particularly high (for example, when you have to carry out an overseas company search) and firms may wish to seek agreement with their client that the cost will be payable by the client." 

"In order to comply with Outcomes (1.12) and (1.13) firms should explain the likely cost with their client and obtain their client's informed consent at the outset of the retainer. If the client agrees to meet the cost of the CDD then firms should record it in their bill as part of profit costs. Some firms undertake CDD for all clients as a matter of course, irrespective of the nature of the retainer and whether it is a requirement of the MLRs. Whilst there may be good reasons for doing this, it is questionable as to whether there would ever be justification for passing the cost on to the client where such checks are not a requirement, even if the client agrees"

‘it is also telling’ that over a quarter of all co...
"This is a Court of Justice Not a Casino" judge te...

Related Posts

News Search

News Tag Cloud

Administrators Assessment ATE premium Bill Brethertons LLP BT-2 Solicitors Camps Solicitors Carpenters Cash Account Children Claims Management Companies Client Care Letters Closure Cold Callers Collier Law Commercial Comparison Compensation Conditional Fee Agreement Coops Law Cordell & Co Costs Estimates costs law Court CPR 46.9(3) Damages debts Deduction Delivery Up Disclosure Divorce Emerald Law Solicitors Employment Tribunal cases Equitas Solicitors Estates Exempt Fairwoods Solicitors Family Fees Final Bills Fixed Costs Fletchers Solicitors Forster Dean Garvins Law Gowing Law HCC Solicitors Holiday Holiday Sickness Claim Inheritance Act Insolvency Interim Statute Bills Irwin Mitchell LLP JC&A Solicitors Keith Smart & Co Lance Mason landmark case Lawyers Legal challenges Legal Ombudsman Legend Legal LIP's Litigants in person Litigation Litigation Friend Matrix Solicitors Michael Lewin Solicitors Michael Rose & Baylis Solicitors Money Laundering Regulations Motorbike Accident No Win No Fee Overcharging partners Personal Injury Pilkington Shaw Solicitors Price Probate Progressive Solicitors Proportionality Protected Party Reasonable Notice rebuttable presumption Refund Representation Retainer Richard Slade & Company Right to conduct litigation in respect of costs Rights of Audience Road Traffic Accident Rotherham s.68 Solicitors Act s.74(3) Solicitors Act 1974 Scott Rees & Co Senior Courts Costs Office Seth Lovis & Co Simpson Millar LLP six minute units solicitor solicitors SRA Statute Bills Success Fee success fees Supreme Court tax tax management Termination Terms of Business Thorneycrofts Time limits trades Union Unison Transparency True Solicitors Turner & White Solicitors Unusual Items Viceroy Law

About Us

We are a team of legal costs experts with over 60 years' experience.

We have dealt with costs arising from almost every legal specialism.

We have conducted cases challenging solicitor's costs at all levels up to and including the Court of Appeal.

We are not part of a firm of solicitors and are therefore entirely independent.

Latest News