Fifth of law firms fail on money laundering compliance

Fifth of law firms fail on money laundering compliance

The Solicitors Regulation Authority (SRA) have revealed that a fifth of firms recently reviewed did not have required firm risk assessment in place. They have indicated that are to increase checks on law firms having found that too many were not complying with anti-money laundering regulations, and warned of strong action against those who continue to fall short.

The SRA wrote to 400 firms in March asking them to demonstrate their compliance with the 2017 Money Laundering Regulations by sending their firm risk assessments. Of the 400 responses received by the SRA, 21 percent (83) were not compliant in so far that they either did not address all the risk areas required or sent over something other than a firm risk assessment – for example a client or matter risk assessment.

The majority of firms (64%) were using templates with the result that their risk assessments were generally of lower quality. The SRA have said that whilst it can be helpful to use a template, adopting a ‘copy and paste’ approach, without thinking through the specific risks and issues faced by their firm, was not acceptable.

The SRA have also said that they were concerned that many of the risk assessments (38 per cent) were dated recently suggesting that some firms may have only created one in response to the SRA’s request.

The concerns of the SRA have been highlighted in an updated warning notice, while also providing additional support, including guidance, checklists and a suggested template that reflects the learning from firms’ template submissions to the review exercise.

The SRA have indicated that they will shortly be writing to the 7,000 firms that fall under the scope of the Money Laundering Regulations to ask them to confirm they have a firm risk assessment in place. They will also be carrying out an extensive programme of targeted, in-depth visits to firms and calling in more firms’ risk assessments.

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