Solicitors must review their anti-money laundering policies in light of definitive new guidance, the Law Society warned.
But the guidance has attracted criticism for being “forbidding” and failing to be sufficiently simple and user-friendly.
The Legal Sector Affinity Group (LSAG) has just launched new guidance following a “radical overhaul” in light of the complex risks and challenges. It comes in the wake of the fifth money laundering directive (5AMLD) which came into force a year ago.
The new guidance, which has yet to be approved by HM Treasury, takes in changes to client due diligence and enhanced due diligence, and a duty to collect proof of registration for trusts and companies.
Law Society president David Greene said: “The guidance includes fully revised and expanded guidance on risk assessments, expanded guidance on source of funds and source of wealth, an updated training section and a new section on how to effectively use AML-related technology to mitigate risk.”
He said firms and lawyers should review their existing AML governance, policies and procedures and update where appropriate.
The profession was assured that the Society will support members in understanding and applying the guidance, which replaces all previous iterations of the guidance.
John Binns, a partner at BCL Solicitors, described the document as “lengthy, dense and somewhat forbidding” but “much more ambitious” than its predecessor.
But he expressed concern that it is not easy to see at a glance what has changed. He said: “Perhaps this is something the LSAG could consider clarifying.”
“I think it is fair to say that even the larger, most AML-resourced firms will take some time to absorb the detail of this, and the majority of firms will not take the time to review it until a particular issue arises or they update their risk assessments.
“That is a pity, because the challenge of AML is to get to a place where any practitioner who might come across risks or red flags is in a position to know what to do. That means user-friendly, simple guides, not long essays or endless tick-box forms.”
Binns warned that the profession is now facing tougher enforcement, and probably a levy to pay for the privilege of being AML-regulated”.
He said what firms really need is “a properly user-friendly way in to this increasingly difficult world, so that they can play their part in disrupting economic crime, without having to become AML specialists”.
This does not appear to fulfil that need, he observed.