Money Laundering Crackdown on UK Law Firms
The regulators at Solicitor Regulators Authority (SRA) asked 400 law firms earlier this year to prove they are compliant with the current money laundering regulations by sending their firm risk assessment. Although all the firms reported, their statistics were alarming. 21% (83) of the firms were not compliant. They either didn’t approach all risk areas required (43) or they sent back something different than a firm risk assessment (40).
According to the report, the majority of firms, about 64%, were using risk assessment templates which were of lower quality generally. Although these lower quality templates were helpful, the report said that too many firms adopted a “copy and paste” method without taking the specific risks and issues faced by their firm into consideration.
The regulators also mentioned that over a third of the risk assessments (135) was recently recorded. This could mean that some firms may not have an actual risk assessment program and they only created one in response to the request of the SRA.
Paul Philip, the Chief Executive of SRA mentioned the implications of money laundering saying that money laundering endorses criminal activity such as terrorism, human trafficking, drug smuggling, etc. Money laundering does incomprehensible damage to society and every solicitor should be entirely committed against its prevention.
He continued, “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.”
In light of these findings, the SRA said it would shortly be asking the 7000 firms that come under the reach of the Money Laundering Regulations to verify they have a robust risk assessment in place.
Subsequently, figures published in the SRA’s annual Risk Outlook, published on October 29, 2019, show that 172 investigations have been launched all related to anti-money laundering compliance so far this year. Over the past five years, SRA has taken more than 60 cases of anti-money laundering compliance, to the Solicitors Disciplinary Tribunal (SDT). This resulted in the suspension or disbarment of more than 40 solicitors.
The regulator has warned that stricter actions will be taken if the law firms do not take proper actions for anti-money laundering compliance.