As predicted in previous issues of Risk Update, the Solicitors Regulation Authority (SRA) is ramping up its action with a press release announcing that it ‘will be carrying out rigorous checks on law firms to make sure they are meeting their anti-money laundering obligations’ and ‘will shortly be writing to an initial sample of 400 firms asking them to demonstrate compliance with the Government’s 2017 Money Laundering Regulations’. We understand that the SRA is also asking larger firms whether they have had an independent audit under Regulation 21 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).
Note the link into the next topic, data protection, as Regulation 24 requires training in the data protection aspects of AML and record keeping. Regulation 41 prescribes information to be provided to clients before engagement.
Terms of business need to cover the possibility that banks providing pooled client accounts may require information on clients, including those for whom the firm’s services are outside the regulated sector. Although we are not aware of any banks yet asking for such information, the issue of pooled accounts is currently part of a wider review of guidance by the Joint Money Laundering Steering Group.
Estate agents have been hit with unannounced inspections by HMRC as part of a crackdown on money laundering in the property industry, and HMRC have published details of several businesses for failing to comply with the MLR 2017. Countrywide Estate Agents was fined £215,000 for failing to ensure policies, controls and procedures at group level; and for failures in conducting due diligence; timing of verification and proper record keeping. Another company was fined £68,595 for failures in carrying out risk assessments; having the correct policies, controls and procedures and customer due diligence.
There have been several publications since our last issue, including the Treasury Select Committee Inquiry report on Anti-money laundering supervision and sanctions implementations and a FATF consultation on Draft Risk-Based Approach Guidance for Legal Professionals, Accountants and Trust and Company Service Providers.
We have advised many leading law firms and property professionals on risk assessments, policies, controls and procedures, and independent audit. Links to the above documents are on www.legalrisk.co.uk/news.