SRA writes to 6,500 firms over AML assessments

Best: No exceptions

The Solicitors Regulation Authority (SRA) has written to 6,500 law firms asking them to make a declaration that they have a firm-wide risk assessment complying with the anti-money laundering (AML) regulations.

The move follows a sweep of 400 firms that fell under the scope of the regulations by the SRA earlier this year.

They were asked to demonstrate compliance with the 2017 Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations by sending the SRA their firm-wide risk assessments.

More than a fifth (21%) failed to comply with the regulations, either by not addressing all the risk areas, or by sending a client or matter assessment instead of one applying to the whole firm.

The sweep also identified a problem with firms using template risk assessments.

In the letter to compliance officers for legal practice (COLPs) last week, Colette Best, director of AML at the SRA, said many firms had “poor-quality” firm-wide risk assessments, “and in some cases had no assessment at all”.

As well as being a mandatory requirement, she said a firm-wide risk assessment helped create “appropriate policies, procedures and controls” to protect the firm and safeguard against money laundering.

“Therefore, we require all firms who fall within the scope of the regulations to declare they have a compliant firm-wide risk assessment in place.”

Ms Best said the declaration was being requested both under regulation 66 of the AML regulations, and paragraph 3.3 of the SRA’s code of conduct.

“There are no exceptions to the requirement to do this. We may take action against any firm that fails to make the declaration.”

Ms Best said COLPs might want to consult their money laundering compliance officer or money laundering reporting officer before providing the declaration.

She said that even if firms were no longer in scope of the regulations, they needed to complete the declaration.

The letter included a link to a declaration form, which must be sent to the SRA before 31 January 2020.

Ms Best stressed that the SRA was not asking firms to submit their firm-wide assessments, but only to confirm that they had one and it complied with the regulations.

“We take our responsibilities as a supervisor under the regulations extremely seriously. Money laundering, and the crimes it enables, is a serious risk for the UK, and a priority focus for us.”

The 400 firms that were previously contacted have not been sent letters, nor have the 100 big firms that the regulator handles through relationship managers.

Speaking at the SRA’s COLP and COFA conference in October, chief executive Paul Phillip warned firms to “take immediate action now if you are not on top of your money laundering risks” and said “strong action” would be taken where the regulator had “serious concerns”.

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