Prepare Your Firm for an SRA AML ‘Spot Check’ - Update AML & Risk Assessment
In March, The Solicitors Regulation Authority have reinforced their focus on how firms manage their Anti Money laundering Strategy and control the risk of Money Laundering.
The SRA continue to be concerned about firms approach to AML and will be continuing spot checks on firms through 2020.
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Prepare Your Firm for an SRA AML 'spot check' - Update AML & Risk Assessment
The SRA continue to operate through the COVID 19 crises. They have made it clear in their update that whilst they will take a proportionate approach and take into account mitigating circumstances they will still apply the rules and follow the principles.
The SRA have not made it clear on how or if they will continue with pro active spot checks for AML but firms need to be prepared.
The reality is that firms must operate a robust approach to AML and ensure their policies, procedures, recording and actions are in line with the Money Laundering Regulation. This is a requirement of law firms and the SRA are aware that many firms have not been keeping their AML policies up to date to meet both their expectations and that of the statue.
For a firm to ensure they pass an SRA audit or spot check they must ensure their AML policy and approach is up to date and this is achieved through ensuring the following has occurred and continued to be monitored:
1. Appoint a Money Laundering Compliance and Reporting Officer(s) - which can be the same person and ensure the staff have access to them.
2. Implement an AML policy clearly setting out how the firm approaches AML and the expectation of its staff.
3. Ensure appropriate measures are in place to identify all clients using appropriate resources and thereby ensure client due diligence (CDD) is undertaken on all clients (private and commercial).
4. Apply enhanced CDD where appropriate (high risk matters) and ensure staff are aware of when enhanced due diligence will apply.
5. Keep CDD up to date for all clients - annually.
6. Understand who beneficial owners are and ensure CDD is applied to them.
7. Independently assess the effectiveness and application of the AML policy.
8. Undertake random file and staff audits to evidence compliance with the firm’s policies.
9. Interview staff as part of understanding AML application.
10. Implement file checklists to be completed before opening, during and closing a file.
11. Receive all Suspicious Activity Reports from staff and provide access to the MLRO.
12. Maintain a central register of money laundering issues that are raised by staff.
13. Ensure that reports made to the NCA where necessary and recorded.
14. Ensuring that notifications are made to Companies House where necessary and recorded.
15. Provide training to all staff annually and as policies change.
16. Keep the AML policy up to date and communicate changes as necessary.
17. Review the AML policies annually.
18. Undertake a firm wide risk assessment annually and revisit this through the year as the firm or regulation changes.
19. Review and report on AML and prepare information for staff and partners.
Failure to do any of these expose the firm to criticism and puts the firm at risk of failing an SRA spot check
The SRA have made it very clear and continue to make it clear that they will not tolerate ineffective or sub-standard AML policies and processes and will take action against firms who do not comply.
Firms must have a robust policy and maintain this, or they risk negative consequences of failing to do so.
Firms really only have 2 options:
Internal - Look to the Compliance officers in the firm and the MLCO to ensure all AML policies are up to date and the firm is taking the expected approach to AML management and enforcement.
The reality of running and managing a law firm is that is most firms, the compliance officers are fee earners and hold a responsible position in the firm which diverts their attention.
As understandable as this may be, failing to monitor, maintain and evidence compliance with the AML regulations and regulation generally, will expose the firm to risk.
If the compliance officers are uncomfortable with their approach to AML then outsource may need to be considered and choosing cost effective solutions that managed or contributed to your maintenance of a successful AML strategy.
Outsource – For firms that do not have the internal resource to manage their regulation and compliance including AML their only option is to look for external assistance. An outsource partner such as The Strategic Partner, will be focussed on ensuring you maintain an AML policy that works for your firm. They will do this as it is their job to do it! The election of outsourcing compliance and AML is a step some firms may be reluctant to take in view of cost but it has to be recognised that if you are aware that your policies and approach fall short of the requirement this has to be a serious consideration.
At The Strategic Partner, we provide competitive outsource options to firms which cover the 19 points listed above, in addition to other compliance and risk areas which are essential for a firm to manage and maintain a risk and compliance structure that protects the firm, its staff and clients.
Our approach is to work with firms to deliver a compliance strategy that is bespoke to the firm, has policies that are adapted to what the firms does in practice, are proportionate and importantly are compliant. We will then work with firms, through training and auditing and where needed, control the administration, to deliver a robust and compliant structure that achieves the requirements of the SRA.
The Strategic Partner has two core services, details of which can be viewed in our brochures
Compliance Service - https://www.thestrategicpartner.co.uk/Our-Services/Law-Firm-Regulation-and-Compliance
Compliance Administration - https://www.thestrategicpartner.co.uk/Our-Services/Compliance-Administration
With pricing starting from £200 per month our product delivers to firms a cost-effective approach to compliance management including compliance with the Anti Money Laundering Regulations.
Get in Touch
To find out more about the TSP services and how we can assist your firm you can call us on 0203 911 9710, email us email@example.com or visit our website and make an online enquiry https://www.thestrategicpartner.co.uk/Contact-Us