Wake-up! – I.D. Fraud costs Mishcon de Reya £1m, it’s time to take Cyber Crime seriously!

Mishcon’s was recently found liable to its client Dreamvar (purchaser) for breach of trust having failed to seek an undertaking from the seller’s solicitors that reasonable steps to establish their client’s identity was carried out. A claim for negligence against both Mishcon and the seller’s solicitors failed.

Permission to appeal has been granted, and the decision stayed pending appeal. Meanwhile, conveyancing solicitors across the country are watching nervously.

Fraudsters targeting the squeezed overworked conveyancer

With private business stepping in and scooping solicitors onto their ‘so-called’ panels, conveyancing services are being offered at all-time bargain rates. In some cases, for as little as £350.00 plus vat and disbursements.

Conveyancers are more than ever having to work longer hours to turnover more files or otherwise firms are being forced to employ less experienced conveyancers. Money Laundering and I.D. Fraud is a key concern of any conveyancing practice as a simple mistake can cause serious financial difficulty for the cash flow of a small to medium size firm.

Even with the best firewalls and spam filters it is almost every other day that a phishing email targeting a conveyancer seeking to obtain their email credentials by deception gets through. The fraudster simply sets up a new domain and email with a different address every time, how can firewalls and spam filters catch up? Once credentials are obtained a not so sophisticated fraudster can search the email account for transactions and transfers of money that are about to occur and spoof the conveyancer with an email headed with the client’s name requesting funds be transferred to the fraudsters bank account. In some situations, fraudsters have then gone on to target the particular client to if possible gain access to their email account.

Large firms of solicitors, such as Trowers & Hamlins, Freeths and Bircham Dyson Bell now confirm banking details by telephone before transferring funds. Clearly, technology is failing us, perhaps we are moving too fast with cloud services and all the various enhancements in client portals, online marketing, domain, website and email services.

How can the situation be helped?

The future is bright, and more importantly it is ‘transparency’ that will help both the profession and client’s. Technology is offering consumers efficiency, convenience, relevance and most importantly transparency.   The profession needs to wake-up and take a stand for it’s squeezed, overworked and pressured members by providing a service that the next generation demands.

The fact is that clients ‘if they can help it’ do not want to come into the office with a passport, driving license and Council tax bill to identify themselves. At the touch of a finger scanner or a look into a retina scanner they can be identified with records that can be held by the Land Registry and other national agencies.

Our Iphone and Android phones now carry biometric finger print readers, as such clients could be identified by that biometric data through apps or a single government / Land Registry App. The Land Registry must evolve further to take biometric information of land owners on registration in order to bring an end to this current messy state of affairs.

The Law Society needs to intervene with the backing of the Government to really put an end to fraudsters being able to target and manipulate conveyancers by making biometric identification for conveyancing transactions mandatory.

We already have passports with electronic chips that contain facial biometric data to identify us in border control matters, why can we not move forward with this much needed security? As technology develops, financial and legal services become more accessible making biometric identification essential.

I will of course continue to access my online banking via my finger print. I hope one-day I can open a bank account, engage a solicitor, take out a loan or go on holiday at the touch of a finger. Life is short, we shouldn’t over complicate things with paper documents but make our lives as smart, comfortable, stress free and happy as can be.

By Arman Khosravi, Partner, 7th February 2017.

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