Regulators went to an average of seven law firms a month in the past year following up concerns about a lack of anti-money laundering policies.
In its first report as a professional supervisor, the Solicitors Regulation Authority said it made a total of 85 visits in the period and carried out a further 168 desk-based reviews.
The most common reason for non-compliance with anti-money laundering regulations was not having a proper risk assessment in place, poor client due diligence and insufficient checks on the source of funds. Other reasons for rule breaches were a failure of staff to follow procedures, inadequate training or supervision, and poor AML policies.
In total 273 reports of potential AML breaches were made to the SRA, with 29 enforcement actions resulting in fines of £160,000 being issued. The regulator also made 39 suspicious activity reports to the National Crime Agency.
SRA board chair Anna Bradley said: ‘I know from our discussions with local law societies that meeting their obligations is something that matters a lot to the profession. The overwhelming majority want to do the right thing, but there is still a small but nonetheless significant proportion of firms which are just not doing enough to prevent money laundering.
‘As well as allowing criminals to profit from their actions, they undermine the trust consumers place in the profession, damaging confidence in the rule of law and the administration of justice.’
The supervisor report is a requirement placed on all relevant regulators by the money laundering regulations and guidance by the Office for Professional Body Anti-money laundering Supervision (OPBAS) and HM Treasury.
The SRA says that more than 6,500 firms are captured by the scope of the AML regulations – particularly those working in conveyancing.
The regulator fined more than a dozen firms in rapid succession over the summer for providing their AML declaration – a firm-wide risk assessment – more than a year past the deadline for doing so.
Source: The Law Society Gazette, 14th October 2021