With law firms amongst the highest at risk of exposure to Money Laundering, Terrorist Financing and wider financial crime, there is constant pressure on the profession to do more and be more vigilant. The Money Laundering Regulations 2017 brought in a number of key changes requiring firms to update and upgrade their systems, policies and procedures.
Key elements of the Money Laundering Regulations are the specific requirement to undertake and maintain a documented firm-wide risk assessment along with the need for ongoing independent auditing (including regular file reviews) and regular training for the MLRO and all relevant staff. We find that many firm-wide risks assessments have not been properly carried out or updated and policies and procedures not reviewed or ever put to the test. Not all fee earners complete client/matter risk assessments and many lack the necessary understanding of how to apply CDD, enhanced CDD, identify and deal with PEPs, establish source of funds and wealth and carry out ongoing monitoring requirements under the sanctions regime.
The SRA is undertaking a wide-ranging investigation into law firms’ AML compliance in practice, including an extensive programme of targeted, in-depth visits to firms, with those found to be non-compliant likely to enter the SRA’s enforcement process. The SRA’s chief executive, Paul Philip, has warned that law firms not properly implementing their firm-wide risk assessment in practice, may be committing a criminal offence “and leaving the door open for criminals to launder money”.
Among the changes brought in by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 are explicit requirements for firms to take reasonable measures to understand the ownership and control structure of their clients, and to verify the identity of senior managing officials when the beneficial owner of a corporate body cannot be identified. The challenges of AML compliance are by no means insurmountable. We offer a complete service to help you meet the requirements of the regulations, including:
- a comprehensive risk assessment to identify risk faced by your firm;
- review of your current systems, policies and procedures;
- independent auditing (including file reviews) to test effectiveness of your systems and controls;
- assistance with client engagement and due diligence procedures;
- training for your MLRO and relevant staff at all levels;
- support and advice on suspicious activity reporting