The Solicitor Regulation Authority: One in five UK law firms fails to comply with money laundering rules
Following the discovery of law firms not complying with anti-money laundering regulations, the Solicitor Regulation Authority (SRA) is planning to launch money laundering investigations into 7,000 law firms. Solicitor firms that fail to comply will potentially face enforcement action.
In March 2019, the SRA wrote to 400 firms asking them to demonstrate compliance with the 2017 Money Laundering Regulations by providing evidence of their firm’s risk assessment. Ofthe 400 responses received
- 21% (83) were not compliant
- 43 firms did not address all the risk groups required
- 40 firms submitted something other than the firm’s risk assessment (e.g. a client risk assessment).
- 64% (256) were using inappropriate templates
- These firms adopted more of a ‘copy and paste’ approach to conduct the risk assessment as a result, the risk assessment did not reflect the nature, size and complexity of their business.
- 38% (152) were dated very recently
- This could suggest some firms may have created their assessments only as a response to the SRA request.
“Money laundering supports criminal activity such as people trafficking, drug smuggling and terrorism. The damage money laundering does to society means that every solicitor must be fully committed to preventing it. The vast majority would never intend to get involved in criminal activities, but poor processes open the door to money launderers,” said Paul Philip, SRA chief executive.
“A call from us should not be the prompt for a firm to get their act together. You need to take immediate action now if you are not on top of your money laundering risks. Where we have serious concerns, we will take strong action.”
Announced in the SRA annual Risk Outlook 2019, there are 172 investigations linked to AML compliance. In the last five years, SAR has taken more than 60 such cases to the Solicitors Disciplinary Tribunal, resulting in more than 40 solicitors being struck-off or suspended.