SRA review shows firms falling short on anti-money laundering
A review by the Solicitors Regulation Authority (SRA) has shown that a significant minority of law firms are not doing enough to prevent money laundering, with some falling seriously short.
The SRA’s review focused on 59 law firms providing trust and company services – an area which has been highlighted by the government as one of the legal service areas at highest risk of exploitation by criminals to launder money.
Whilst the review did not find evidence of actual money laundering or intention of becoming involved in criminal activities it did find a range of breaches of the 2017 Money Laundering Regulations, as well as poor training and processes.
One of the biggest areas of concern was firms’ risk assessments. A firm risk assessment is required in legislation and should be the backbone of a firm’s anti-money laundering approach. The SRA found that more than a third (24) of firms reviewed fell short in this area, including four that had no risk assessment at all.
There were also issues around appropriate customer due diligence including inadequate processes in almost a quarter (14) of firms to manage risks around Politically Exposed Persons.
As a result of the review the SRA has put 26 firms into its disciplinary processes.
For more information about the review go to the SRA website at https://bit.ly/2Mc7RMne
To support their findings, the SRA have also published a warning notice reminding the profession of their obligations, particularly in relation to firm risk assessments. The warning notice can be found at https://bit.ly/2Wfs7kZ
The SRA have now begun a further review of 400 other law firms to check compliance with the Governments 2017 Money Laundering Regulations. This review will be led by a new dedicated anti-money laundering unit, being set up to bolster resources to prevent and detect money laundering.