New AML rules: Button pressed today
The Solicitors Regulation Authority (SRA) will take into account the short period of time law firms have had to comply if they fall foul of today’s new anti-money laundering rules [1], it has said.
The regulations implementing the Fifth Money Laundering Directive were only laid in Parliament on 20 December, but they require firms to be compliant from today.
In a statement, the SRA said it would take “the limited time that firms have had to prepare for the new requirements” into account in its enforcement work.
But it stressed that the 7,000 firms affected by the regulations “will need to re-assess their processes – making any necessary changes immediately”. The changes have been in the works for a considerable period of time.
The Legal Sector Affinity Group – which includes the SRA and all of the legal sector supervisors named in the regulations – is publishing a summary of the changes to help firms comply, but updated guidance is still being drafted and will only be made available “in the coming months” after Treasury approval.
The new rules include a duty to collect proof of registration for entities such as trusts and companies, a duty to inform the registry of any discrepancies in their information, and changes to client due diligence and enhanced due diligence.
Among the changes to due diligence are explicit requirements for regulated persons to take reasonable measures to understand the ownership and control structure of their customers, and to verify the identity of senior managing officials when the beneficial owner of a corporate body cannot be identified.
SRA chief executive Paul Philip said: “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 the reality is that poor processes can open the door to money launderers.
“This new legislation aims to further reduce the risk of law firms being used to launder money. Working with the Legal Sector Affinity Group, we will be providing a range of support to firms to help them comply.”
The legislation also means the SRA is changing some of its processes. For example, new applications for beneficial owners, officers and managers will now need to provide a basic Disclosure and Barring Service check to show applicants do not have any of the criminal convictions that would prevent approval.