The SRA has today published a thematic review focused on anti-money laundering training in law firms. The report sets out the SRA’s findings on AML training in the legal sector – where firms are strong, where they need to improve, and advises on best practice that all firms can follow.
AML training is one of the most effective controls to prevent fee earners and firms becoming inadvertently involved in money laundering. Staff awareness has long been recognised as a key AML and counter terrorist funding (CTF) control.
Under regulation 24(1) of the MLRs, firms must make sure fee earners who undertake work within scope of the MLR:
- Are made aware of the law relating to money laundering, terrorist financing and the requirements of data protection which are relevant to the MLRs
- Are regularly provided with training in how to recognise and deal with transactions and other activities which may be related to money laundering or terrorist financing
- Can identify and report suspicions of money laundering or terrorist financing.
Under regulation 24(1)(b), firms must keep a comprehensive written record of all training undertaken including:
- Documentation (presentations, notes, hand-outs, copies of online content etc)
- Attendance records
- Dates of training
- The results of any assessments carried out.
The MLRs require training to be provided to all relevant employees, as well as any third parties firms use to deliver their services. Support staff also play an important part in identifying AML red flags. Sole practitioners must also ensure they are adequately trained to protect their practice from money laundering risks.
With the SRA further expanding its AML supervision efforts, future inspections and desk based monitoring are more than likely going to focus on training. It is therefore important for firms to understand the SRA’s expectations when preparing their training programmes.
To identify examples of good and poor practice, the SRA looked at both content and delivery methods of the AML training practices of selected firms, taking information from nearly 400 onsite AML inspections and speaking with 65 of the largest firms as well as meeting with a group of sole practitioners and asking training providers across the sector how they developed their packages and discussing training issues with other AML supervisors in the UK.
What should firms do?
The format and content of AML training should be relevant
The SRA expects firms to put in place a comprehensive AML training programme which is relevant to the legal sector and specific to their firm’s circumstances, practice areas, client profiles and geography. Training should cover the latest legislative changes, risk indicators, and practical guidance on identifying and reporting suspicious activity. The content and format of the training should be informed by the firm’s firm-wide risk assessment.
The frequency of AML training should be adequate
The SRA’s review stresses the importance of ongoing training. For those working in high risk areas, annual or even semi-annual training may be necessary to ensure fee earners are able to recognise emerging risks.
Comprehension assessments should be undertaken
There is an emphasis in the SRA’s review on ensuring that comprehension assessments of training are carried out. The SRA expects firms to evaluate that the objectives of the training have been met by way of quizzes, case studies or scenario-based discussions.
Training should be documented
It is important to maintain accurate training records which should reflect each employee’s training history including clear dates and topics covered. This will be vital evidence to demonstrate compliance during an inspection.
The SRA have developed a downloadable checklist (PDF 6 pages, 370KB) for firms to use, either as it is or developed to suit their needs. The checklist provides an overview of the areas the SRA considers will contribute to an effective training programme, as well as other useful tips to help comply with the regulations.
