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Firm Fined for Compliance Failures: Importance of Risk Assessments and Appointing a Money Laundering Compliance Officer
July 13, 2023

Firm Fined for Compliance Failures

Introduction

In a recent ruling, the Solicitors Regulation Authority (SRA) published its decision to impose a financial penalty on a firm for failing to adhere to key compliance requirements.

The firm was directed to pay a financial penalty of £4,000 and ordered to pay costs of £1,350.

Specifically, the disciplinary measures were imposed due to the absence of a documented and compliant firm-wide risk assessment, lack of compliant policies, controls, and procedures (PCPs), and the non-appointment of a money laundering compliance officer (MLCO). These oversights were found to be in direct violation of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017).

The situation was further exacerbated by the firm’s failure to obtain an accountant’s report for the year of 2020/2021. This requirement is mandatory under rule 12.1 of the SRA Accounts Rules. Read the full decision details here:

https://www.sra.org.uk/consumers/solicitor-check/420847/

With the regulator’s new fining powers and an updated approach to the way they issue financial penalties for proven misconduct, this case is another stark reminder of the importance of stringent adherence to compliance regulations. Such oversights can result in severe sanctions and financial penalties for firms and their staff. Not meeting necessary regulatory standards can also harm a firm’s reputation.

Compliance with SRA Principles and Codes of Conduct

At The Strategic Partner, we recognise that law firms that can demonstrate effective and proactive risk management and compliance structures have improved presentation to the Regulator, Insurers, Clients, and Staff.

Through our longstanding industry knowledge and expertise, we can aid in establishing robust and compliant risk assessments across the entirety of your firm. We can also provide guidance and training in setting up and maintaining compliant policies, controls, and procedures (PCPs) that meet regulatory requirements.

Moreover, firms can benefit from our assistance in completing and maintaining relevant money laundering authorisation forms (FA10) and appointing a money laundering compliance officer and reporting officer (MLCO and MLRO), roles pivotal in preventing money laundering activities.

Equally important, The Strategic Partner can guide firms through the intricacies of procuring an accountant’s report in accordance with the SRA Accounts Rules. This vital service can prove indispensable in avoiding regulatory failures such as those highlighted in this recent decision. – Read our previous article for further guidance – Codes of Conduct and SRA Accounts Rules.

Regulatory Guidance and Support from Industry Experts

At The Strategic Partner, we work with firms, their MLROs and MLCOs, and their COLPs and COFAs to assist them with managing risk, compliance, and regulation through various bespoke training and outsourced support solutions. Our goal is to ensure the firms we work with have and retain a compliant structure enabling the firms, their managers, and owners to focus on running their businesses and servicing their clients.

If you believe your firm may be at risk or wish to confirm your firm is achieving the required standard, we offer a range of compliance solutions at The Strategic Partner, including:

  1. Risk Assessment Service and Independent AML Audit – A review of the firm’s approach to regulation and compliance to include all regulatory requirements and AML procedures. The output of this provides the firm with a written gap analysis and solutions to remedy any issues.
  2. Regulation 21 AML 2017 Independent Audit– A review of the firm’s approach to regulation and compliance to include AML procedures with the audit meeting the requirements of Regulation 21 of the AML 2017. The output of which provides the firm with a written gap analysis and solutions to remedy any issues that arise and ensure the firm is compliant.
  3. Training– Our Typical AML Training Includes
    • AML Training for ALL staff to meet the firm’s obligation to provide annual training.
    • 1-2-1 training for the MLRO and MLCO on their obligations and requirements.
  4. Auditing– Procedural staff, systems, and files to ensure the procedures are up to the required standard and being implemented at case level with a report of the outcome.
  5. Packaged Solutions– Implementation of robust solutions to ensure the firm achieves compliance and then maintains compliance through the provision of ongoing support and assistance:

Get in touch with The Strategic Partner

For more information on The Strategic Partner and to discuss how we may be able to assist in accelerating your risk management or compliance and regulation or simply to keep this up to date you can call us on 020 3911 9710 or email us info@thestrategicpartner.co.uk.

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