Let’s begin with the fact that the Solicitors Regulation Authority (SRA) has upped its powers for their anti-money laundering supervision and investigation measures. The SRA now has dedicated resources to ensure law firms comply with anti-money laundering (AML) measures to “stop the baddies”, as our expert AML trainer, Amy Bell, says!
The SRA said that it expects most firms to have an independent AML Audit.
As of 5 April 2023, there were just over 6000 law firms that fell within the scope of the SRA’s money laundering regulations, which is approximately 66% of the total of SRA regulated firms.
Whether law firms like it or not, as the SRA is the main legal professional regulator, they have a duty to ensure that firms they supervise comply with their obligations, including having the right controls in place to prevent money laundering. There’s no denying that law firms are seen as enablers of criminals requiring their dirty money to get laundered.
What are the Regulations and Acts that law firms need to adhere to for AML?
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 set out the main AML requirements for law firms. This legislation has been amended significantly by:
- the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 which came into force on 10 January 2020, and
- the Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 made narrow changes mainly to the requirements around trust registration.
The other main pieces of legislation to be aware of are the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 (TACT), which set out the main requirements to report suspicious activity to the National Crime Agency and related offences.
The SRA exercises the Law Society’s supervisory role under the money laundering regulations. It is the largest legal profession anti-money laundering (AML) supervisor with over 23,000 beneficial owners, officers and managers (“BOOMs”) spread across over 6,000 firms.
Employees and Law Firm Owners who are BOOMs
Are you a BOOM in your law firm?
The acronym BOOM stands for beneficial owners, officers and managers (BOOMs) and BOOMs switching firms.
Booms must have proof that they do not have any criminal convictions that would prevent them from becoming a BOOM by providing proof in the form of a basic disclosure and barring service (DBS) check, which is no older than three months on the date of application.
Which firms need to carry out AML Risk Assessments?
The SRA has said every law firm must record a risk assessment for every client as part of due diligence measures and provide a copy to the regulator on request.
The ILFM offers AML Training, and you can keep an eye on the dates HERE. The 3-hour training is online with our expert trainer, with the chance to ask questions and receive answers in real time.
"Great course - a must for all Legal finance professionals. The trainer shoots straight from the hip and has lots of great anecdotes to illustrate their points. Highly recommend this course".
Jan 2023
The Money Laundering Regulations 2017 (MLR 2017) apply to firms that:
- buy and sell real property or business entities
- manage client money, securities or other assets
- open or manage bank, savings or securities accounts
- organise contributions necessary for creating, operating or managing companies
- create, operate or manage trusts, companies, foundations or similar structures
Activities that have a lower risk of exposure to money laundering are not covered, for example:
- paying costs to lawyers
- providing legal advice
- litigation
- will writing
If your firm does a mixture of regulated and unregulated work, the MLR 2017 will apply to the regulated aspects only.
Reminders of WHY we should all be receiving training within our firms
Protection of our integrity, our reputation and of course our clients. Here are some reasons why AML training should be factored into support staff CPD budgets.
- Solicitors Tribunal
- Leading firm fined £101,000 for anti-money laundering failures
- SRA says a significant minority of firms are still falling short on AML
- Law firms fined £12,000 for AML failures
If you have any questions as to how the ILFM can support your firm in this regard, please get in touch with us. Our door is always open: info@ilfm.org.uk
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