Fraudster sells property after presenting genuine ID

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The Solicitors Regulation Authority has reproached a firm of solicitors in Bradford, Yorkshire, for failing to carry out proper checks on the prospective seller of a property who turned out to be a fraudster.

On 5th June 2018, Schofield Sweeney agreed to act on behalf of a fraudster, who posed as the owner of the property. However, nobody from the firm met the ‘seller’ in person in order to satisfy the due diligence required to confirm his identify.

Copies of the seller’s identity documents were sent to the firm and these had been certificated by a genuine third party. The SRA said that the procedure undertaken to identify the client was inadequate and was not compliant with money laundering regulations as, although the documents were true copies of the required original documents, the client’s true identity had not been confirmed.

A month later, on 4th July 2018, the property was sold and the proceeds of the sale were sent to the firm’s client. However, the Metropolitan Police contacted the firm on 14th August 2018 to confirm it suspected that the seller was a fraudster and that the sale was indeed fraudulent. While the firm notified its indemnity insurers immediately, it did not notify the SRA until nearly a year later, on 25th June 2019.

The SRA accepted that steps had been taken to ensure there was no repeat of the failing, but accused the firm of breaching its statutory obligations and failing to carry out adequate due diligence.

Schofield Sweeney has since taken action to mitigate the harm suffered by the buyers and the rightful owner of the property that was sold by the fraudster.

This was the first incident of its kind at the firm and there appeared to be no pattern of misconduct. The SRA said that, ‘in the interests of transparency in the regulatory and disciplinary process’, a rebuke was necessary in the form of a public sanction. The firm was also ordered to pay the costs of the investigation of £600.