AML developments continue apace, including updated Tax Adviser guidance from the Solicitors Regulation Authority (SRA), Part 2 of the Legal Sector Affinity Group (LSAG) Guidance (in three parts – for barristers and advocates, Trust and Company Service Providers, and notarial services), The Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021, and Financial Services Act 2021 extending the application of the Proceeds of Crime Act 2002to electronic money, and to overseas trustees.
On a practical level, there can be no doubt that the SRA will be extending its programme of re- viewing firms. Those firms which have concluded that they are not required to have an independent audit under Regulation 21 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 should keep a written record to justify to the SRA how and why they do not meet this requirement, considering how the firm will not benefit from the extra protections that these measures might provide. (See 9.1.)
The audit can be conducted internally if the firm has the requisite expertise outside its AML compliance and client and matter engagement team(s). Benefits of external audit may potentially include legally privileged advice on good practice in your peer group firms, benchmarking, identifying weaknesses before they become too embedded, and helping to keep up to date with the pace of change.
Financial sanctions have also been subject to numerous updates since our March 2021 issue, as the UK Government establishes a separate regime from independent of the European Union, including updated guidance from the Office of Financial Sanctions Implementation (OFSI) on monetary penalties for breaches of financial sanctions (effective 1 April 2021), OFSI Introduction to licensing, and The Global Anti-Corruption Sanctions Regulations 2021.
Note that there are differences between UK and EU sanctions, such as the application to parents and subsidiaries.