Much has already been written elsewhere about Economic Crime and Corporate Transparency Act 2023, which received the Royal As-sent on 26 October 2023, and which we will not repeat. In brief, partnerships and LLPs will be criminally liable for the acts of senior managers committing specified economic crime offences, and a new failure to prevent fraud offence applies to large organisations, so firms will need to review their systems and controls and will no doubt do so as part of a wider economic crime prevention plan. We can assist in this.
The Act will also require verification of identity of directors and persons of significant control by authorised corporate service providers, who must be supervised businesses in the regulated sector for AML purposes, or their officers or employees. As many large law firm employees are employed by service companies this raises a question whether they will be able to fulfil this role: we understand that this is being addressed.
The first commencement regulations have been made bringing certain provisions into force on 15 November 2023 and 15 January 2024.
The SRA has published guidance on Firmwide Risk Assessments and on Client and Matter Risk Assessments with a revised template, now addressing proliferation financing, and its Anti-Money Laundering annual report 2022-23.
The National Crime Agency published guidance on the new SAR portal.
On 16 November 2023 the Financial Action Task Force (FATF) released amendments to the FATF Recommendations to strengthen global asset recovery.
While we know that many firms rely heavily on Transparency International’s Corruption Perceptions Index when assessing country risk, it should not be relied upon on its own. The Basel AML Index has been updated for 2023 and the Financial Action Task Force greylist of Jurisdictions under Increased Monitoring was revised on 27 October 2023. (We use a weighted matrix drawing on these and a variety of other sources including the Know Your Country ratings table and the European and UK lists of high risk third countries.)
An article, A Boundless Threat? The Rise of Organised Crime in the UK, the first in a series of ten, has been published by the Royal United Services Institute (RUSI).
RUSI has also published Anti-Money Laundering Supervision of the Professions in the UK: Four Key Challenges and How to Address Them. One of their four recommendations is that the FCA’s skilled person reviews may prove a useful model to follow. We identified this in our May 2017 Risk Update in which we pointed out that fines do not in themselves raise standards of compliance. The SRA could require a skilled person review as part of a Regulatory Settlement Agreement compromising disciplinary action.
We continue to provide legally privileged advice to firms ranging from the largest global firms to smaller practices with difficult problems on client due diligence, source of funds and source of wealth checks, reporting issues, and audits under regulation 21 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. We also provide independent expert reports to assist in defending regulatory investigations and advice on such investigations.
Finally, on sanctions, the Office for Financial Sanctions Implementation updated the Legal Services General Licence on 29 October 2023, doubling the expenses cap in respect of professional legal fees and counsel’s fees and setting out reporting requirements.
Links to articles above not otherwise linked can be found on www.legalrisk.co.uk/News.