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SRA investigates 26 firms in AML crackdown

8 May 2019

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The Solicitors Regulatory Authority (SRA) has entered 26 firms into a disciplinary process for falling short of anti-money laundering (AML) standards.

The SRA launched a review of AML practices last year, looking at 59 firms in England and Wales that identified as carrying out trust and company service provider (TCSP) work. 

The regulator met with firms, money laundering reporting officers, money laundering compliance officers and fee earners and reviewed 115 TCSP files. 

This report builds on our two previous money laundering reviews in 2016 and 2017, which looked more generally at how law firms were tackling money laundering. 

The review did not find evidence of actual money laundering or that firms had any intention of becoming involved in criminal activities.

However, it did identify instances in which firms had breached the 2017 Money Laundering Regulations, as well as poor training and processes. 

Risk assessments were raised as a particular concern with more than a third (24) of firms falling short in this area, including four that had no risk assessment at all. 

Moreover, almost a quarter (14) of firms were found to have inadequate processes for managing risks around politically exposed persons (PEPs). However, effective customer due diligence did result in 15 firms turning down work. 

As well as 26 firms being entered into a disciplinary process, the SRA has published a warning notice reminding the profession of their obligations, particularly in relation to risk assessments. 

A further review of 400 firms to check compliance with the 2017 Money Laundering Regulations has also begun. 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.

SRA chief executive Paul Philip said: "Money laundering damages society, supporting terrorists, drug dealers and people traffickers. The stakes are too high for solicitors to be anything but fully committed to preventing money laundering and the crime its supports.

"Most solicitors take their responsibilities seriously, but too many firms are falling short. Those firms should be on notice that compliance is not optional. They need to improve swiftly. Where we have serious concerns that a firm could be enabling money laundering, we will take strong action."

 

For more on AML compliance read our February cover feature: In a spin

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