By Legal Futures Associate DG Legal
The SRA is conducting another data collection exercise in respect of the Money Laundering Regulations and the Sanctions regime which commences on 7 July 2025 and closes on 15 August 2025.
All regulated firms have an obligation to respond to this questionnaire, regardless of whether their work falls within scope of the Money Laundering Regulations 2017 and/or involves the UK sanctions regime. Failure to do so may result in enforcement action.
From our own work, we have seen some worrying trends. In particular, we have identified that a large proportion of clients who operate in the regulated sector:
- have not conducted an independent AML Regulation 21 audit recently or at all
- have not recently reviewed their firm wide risk assessment
- are not routinely conducting client and matter risk assessments
- have not ensured all relevant staff have attended regular and appropriate AML training
If these matters are not addressed as soon as possible then the firm will not be able to provide the relevant details in the data collection exercise and will not be able to provide information that demonstrates that they are working in compliance with the AML regulations.
How DG Legal Can Help
Independent AML Regulation 21 Audit
The requirement for an independent audit is set out within the LSAG AML Guidance. The purpose of the independent audit “is to examine, evaluate and make recommendations regarding the adequacy and effectiveness of the practice’s anti-money laundering and counter-terrorist financing policies, controls and procedures”.
Therefore, the individual undertaking the audit must:
- be independent of the work being audited (e.g. not the MLRO/MLCO)
- have the requisite skills and knowledge of AML/CFT to conduct the audit
- be able to make recommendations about the policies, controls and procedures and file remediation.
There are no prescribed timescales for how frequently an independent audit should be conducted, – this should be on a risk-based approach – however it is recommended this is conducted regularly e.g. annually. More frequent independent audits may be required where the firm’s risk profile, structure or services have changed since the last independent audit.
As a number of DG Legal’s consultants are experts in the field we are able to conduct an external independent audit for firms to assess the effectiveness of policies, controls and procedures in place and to identify any areas requiring attention and improvement.
Firm Wide Risk Assessment
Any firms undertaking work in the regulated sector should have a detailed AML risk assessment. This has been a legal requirement since 26 June 2017.
The requirement to produce a firm risk assessment is set out at Regulation 18 of the money laundering regulations.
The risk assessment must:
- take into account information the SRA publishes
- address the risk factors set out in the money laundering regulations, namely:
- your firm’s customers
- the countries or geographic areas in which you operate
- the products or services which your firm provides
- your firm’s transactions
- how your firm’s products and services are delivered
Although it is not explicit, we always recommend that this document is reviewed annually in any case as part of your compliance reviews and as part of your assessment of the ongoing effectiveness of your AML policies and procedures.
Our team of expert AML consultants can assist firms in drafting and implementing or updating their detailed AML risk assessment.
AML Policies, Procedures and Templates
SRA regulated firms are required to maintain AML policies and procedures. As part of our Retainer Service, we work with our clients to draft and maintain a suite of documents which comply with SRA, LAA, Lexcel, SQM and other legal and regulatory obligations.
Our suite of documents includes a Financial Crime Prevention Manual. This manual provides, amongst others, an Anti-Money Laundering, Countering Terrorist Financing and Countering Proliferation Financing Policy, Financial Sanctions Policy, Anti-Bribery Policy and Anti-Tax Evasion Policy.
Retainer clients can also access our numerous templates which include checklists, risk assessments, suspicious activities reports, etc.
Retainer clients also receive a discounted rate on our adhoc services, including AML audits, assistance with drafting and maintaining their firm wide risk assessment and on all of our premier training courses.
Upcoming AML and Sanctions Premier Training Courses
As explained within the LSAG AML Guidance, the MLR 2017 require that firms provide regular training to their staff and consultants on how to recognise and deal with transactions and other activities which may be related to money laundering or terrorist financing.
This training should be effective in enabling staff to identify and report suspicions of money laundering and terrorist financing.
The frequency of training is not prescribed within the MLR 2017 or the LSAG AML Guidance, however the following guidelines are outlined:
- new employees and consultants should be trained as soon as possible after joining your firm, ideally as part of their induction and before undertaking any regulated work
- all employees and consultants should receive training at regular and appropriate intervals to update on new developments and to refresh existing knowledge
- role-based AML training should be scheduled on a risk-based approach, although basic AML awareness/refresher training should be completed annually for employees and consultants
- additional in-depth training should be undertaken based on:
- any changes in legislation, regulation or professional guidance
- changes in your practice’s policies, controls and procedures, and
- changes in your practice’s risk profile and potential red flags.
Details of DG Legal’s upcoming AML and Sanctions courses are provided below.
AML Training For Law Firms Not In Scope Course
Wednesday 18 June 2025 from 10:00am to 12:00pm
In an ever-evolving legal landscape, being a firm outside of the mandatory AML scope doesn’t mean being out of the compliance conversation. This course is your guide to proactively managing risks, staying compliant and ensuring your firm’s resilience.
Registration:
AML Training For Fee Earners Course
Thursday 26 June 2025 from 10:00am to 12:30pm
Many AML breaches identified by the SRA have resulted in enforcement action. These have involved failures by the fee earners to conduct appropriate due diligence, adequately check the source of funds and/or wealth or recognise and report red flags. This course will assist fee earners in the application of AML in their casework.
Registration:
https://dglegal.co.uk/training/upcoming-premier-training-courses/aml-training-for-fee-earners/
AML Training For MLROs, MLCOs And Law Firm Management Course
Friday 20 June 2025 & Thursday 24 July 2025 from 10:00am to 1:00pm
As a manager of a law firm or, more crucially, an MLRO or MLCO, the ultimate responsibility for the firm’s AML compliance, including with the MLR 2017, lies with you. This course will assist law firms MLROs, MLCOs and Management with fulfilling their AML management responsibilities.
Registration:
AML Training For Support Staff Course
Wednesday 25 June 2025 from 10:00am to 12:30pm
Enforcement action has not only been taken against solicitors, but also other individuals who are not regulated by the SRA, whose breaches were so serious that the SRA felt compelled to take action. This course will assist support staff in understanding the fundamental aspects of AML.
Registration:
https://dglegal.co.uk/training/upcoming-premier-training-courses/aml-training-for-support-staff/
Navigating The UK Sanctions Compliance As A Law Firm Course
Wednesday 2 July 2025 & 23 July 2025 from 10:00am to 11:30am
In the intricate landscape of legal practice, understanding and adhering to the UK’s sanctions regime is not just a recommendation; it is mandatory and it is imperative. This course aims to set clear expectations and offer practical support to firms, guiding them away from the pitfalls of breaching the UK’s sanctions regime.
Registration:
To discuss how we can assist your firm with your AML obligations, please send us an email to consultants@dglegal.co.uk or complete our free enquiry form: https://dglegal.co.uk/contact-us/.
