Why Am I Struggling to Find a Solicitor in England and Wales? FAQs for South African Clients

13 Oct

Many South African businesses and individuals have dealings in England. They own properties, conclude (and later litigate over) contracts in English law and do business with companies and individuals based in this jurisdiction.

One issue that is increasingly relevant for South Africans seeking to access legal (and other) services in England is that solicitors (as well as other professionals such as accountants) in England are required to carry out Enhanced Due Diligence (EDD) on persons (including legal persons) established in South Africa in order to comply with their anti-money laundering (AML) obligations. Some solicitors are taking the view that in the circumstances they prefer not to act for South African clients, thus making it increasingly difficult for those clients to access legal services in England.

Not so at Carter Lemon Camerons LLP. CLC enjoys deep connections with South Africa: we have a large South African client base; Seamus Smyth, head of Litigation at CLC, is a former South African Attorney and graduate of Wits University; and Julian Smith, the author of this article, is a South African and graduate of the University of Cape Town. We remain eager to act for South African clients where their goals match our experience, subject to our own EDD checks being satisfied.

To that end we have produced this helpful guide for prospective South African clients looking to instruct us in their English matters.

Enhanced Due Diligence for South African clients – FAQs

What is EDD? EDD is a higher level of due diligence required of solicitors which must be applied when establishing a business relationship with a client who meets certain criteria under the UK’s AML and counter-terrorism financing legislation, or which otherwise present an increased risk that their matter will be used to conduct money-laundering or terrorist financing.
What does it mean to be “established” in South Africa? In the case of an individual, being “established in” a country means being resident there. Having been born in South Africa is not, on its own, an issue.
In the case of a legal person such as a company, “established in” means incorporated in or having its principal place of business in South Africa, and in the case of a credit institution such as a bank it means having its principal regulatory authority in there.
Why is EDD required for me as a South African client? Under the relevant legislation, solicitors must conduct EDD on any person established in a high-risk third country. That list is prescribed by the Financial Action Task Force and includes countries identified as having “strategic deficiencies in their national AML and counter-funding of terrorism regimes”. As of December 2023, South Africa is one such country.
What EDD will CLC have to do? There is no definitive “list” of actions that CLC must take; we are required to take a risk-based approach and must, at a minimum, examine the background and purpose of the transaction and increase our monitoring of the business relationship. The degree of EDD undertaken will be commensurate with the subject matter of the retainer and any other risk factors present. As a starting point we will electronically verify your ID. If needs be we may have to see you face-to-face to verify that the instructions are coming from the person purporting to give those instructions.
As part of our EDD measures, we may ask you for one or more of the following:
- Sight of several months’ bank statements;
- A detailed explanation of how you accumulated the funds involved in your transaction;
- Evidence of how you acquired the wealth underpinning those funds.
What if I cannot see you face-to-face in London? Seamus makes regular trips to South Africa to meet clients and attorneys. He can meet prospective clients face-to-face in South Africa where that will assist CLC to comply with its AML obligations. That Seamus can insist on meeting South African clients soon after they complete their EDD checks also helps to ensure that we are able to comply with our ongoing monitoring obligations which are themselves enhanced in cases of EDD.
In time sensitive cases we are also able to meet via video conference where appropriate.
How long will it take? As CLC will take a risk-based approach and apply those EDD measures which are appropriate on a case-by-case basis, it is not possible to guarantee that EDD will be completed within a set timeframe. However, with your cooperation the EDD process should be smooth, and delays related to EDD will be kept to a minimum.
My matter is urgent, can you start work immediately? CLC cannot receive funds from clients (for court fees, purchase funds, our costs or otherwise) without first completing our Client Due Diligence. It is therefore important to assist us to comply with our AML obligations promptly at the outset of any new instructions. This is true for all clients, not just those subject to EDD.