We commented in our May 2019 Risk Update on the thematic review by the Solicitors Regulation Authority (SRA), 26 of the 59 firms reviewed having already been referred for disciplinary action. We have advised many firms on disciplinary action arising from AML breaches, as well as on compliance, including policies, controls and procedures, risk assessments and audits.
Money laundering is a priority risk for the SRA which has now launched its #staySHARP campaign. Not every firm has to have an inde-pendent audit under Regulation 21 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. However, with another 400 firms now under SRA review, even firms which are not required by law to have this may want peace of mind and assurance which an independent audit can provide, rather than rely on an internal review which may be tan-tamount to ‘marking their own homework’. As we are practising solicitors, our advice will generally attract legal professional privilege, in contrast to non-practising solicitors, accountants and consultants.
There have been two important publications since our May Risk Update –
- Anti-money laundering: the SARs regime –Law Commission report;
- Financial Action Task Force (FATF) Guidance for a Risk-Based Approach for Legal Professionals.
Links are on www.legalrisk.co.uk/News.
The Law Commission report recommended retaining the SARs regime, creation of an advisory board and provision of advice to theprofessions, a prescribed reporting form using technology, and limiting the scope of the reporting obligation to exclude reportson ‘technical’ breaches. Legal Risk partner Sue Mawdsley participated in the symposium held by the Law Commission in July 2018.
The FATF guidance contained little in the way of surprises following the consultation paper of February 2019. It should however be one of the documents to be considered when preparing the firm’s risk assessment.