We are advising many firms on their firmwide risk assessments, policies, controls and procedures, and audit.
We commented in recent issues on the SRA’s enhanced focus on AML compliance and in particular on both firmwide and matter risk assessments.(See the Warning Notice dated 7 May 2019: http://bit.ly/SRAfra) Firms need to be cautious of simply buying a template and filling it in as each firm’s particular blend of clients and work will be different and the risk assessment should show that that has been properly considered. The SRA’s TCSP Thematic review ( http://bit.ly/SRAthematic) made clear that that risk assessment is ‘the cornerstone of any successful risk-based AML regime’. SRA visits can be expected.
Where files are reviewed by the SRA, they will expect to see matter risk assessments on the files selected.Firms which have not yet completed their firmwide risk assessments or have a working system of matter risk profiling should be addressing this urgently as they may be asked to provide them and it is less than ideal if the ink is still wet.
Particular areas to address are Politically Exposed Persons (PEPs) and financial sanctions –it is easy to assume that the firm will not encounter these issues, but we know from experience that they can catch even high street firms unawares.
We believe that we can expect to see more Unexplained Wealth Orders.The corollary of this is likely to be closer scrutiny of firms which have acted on property transactions for those concerned.
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