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SRA could be given unlimited fining powers for AML breaches
September 28, 2022

 

 1. Introduction

A new updated Bill set to strengthen current money laundering legislation, could give the Solicitors Regulation Authority (SRA) unlimited fining powers for penalties it can issue to firms involved in facilitating economic crime.

 

2. The Economic Crime and Corporate Transparency Bill

Under current legislation, there is a limit to the fine that the SRA can issue for cases relating to economic crime, such as money laundering, fraud, and breaches of international sanctions. However, a recent update to the Economic Crime and Corporate Transparency Bill seeks to amend the ‘Solicitors Act 1974’ and remove the section which limits the financial penalty a person may have to pay if the misconduct relates to ‘economic crime’.

The Government only recently extended the SRA’s fining powers from £2,000 to £25,000 for a range of offences, but this legislation potentially extends those powers much further. – read our recent article here regarding the those changes here.

Increased fining powers for SRA now in place

 

 3. SRA Fining Powers

The SRA already provides guidance for setting fines which are subject to approval from the oversight regulator, the Legal Services Board. Therefore, changes to the recommendation would be subject to consultation with stakeholders.

However, building on the recently enacted Economic Crime (Transparency and Enforcement) Act 2022, the measures in this new, significant Bill, seeks to set out a path for the SRA that provides a ‘clear basis for monitoring legal professionals and carrying out disciplinary action if they are found to break the rules’. Furthermore, the Government said regulators have a duty to enforce compliance of economic crime rules, and they must have the ‘right tools’, such as the ability to set and amend the levels of financial penalties concerning economic crime.

Explanatory notes added, ‘The purpose of the measure is to put beyond doubt that it is the duty and within the remit of the frontline regulators to exercise the appropriate regulatory actions that are necessary to promote and maintain compliance with economic crime legislation and guidance.’

The SRA has always been stringent in their sanctions against law firms who breach their obligations, with a particular focus on AML failures with several fines handed out to firms and individuals this year. The regulator has made it abundantly clear that it expects firms, and those holding client responsibility, to be alert to their obligations in respect of preventing money laundering. Failing to uphold these obligations is becoming increasingly more severe, especially if suggested updates come into force.

Fulfilling AML Obligations

Increasing numbers of firms are being asked to demonstrate their understanding of the requirements of the regulations and, importantly, evidence their compliance through the provision of documents and submit to files audits and staff interviews. At The Strategic Partner, we have worked with and assisted many firms in this enquiry process and continue to do so.

For many firms, dealing with this in-house without sufficient understanding, resource or time can be highly challenging to supervisors, compliance officers and their business, as compliance with the AML regulations more complex than it may first seem. Expert advice and guidance are often essential to ensure your firm achieves and maintains a compliant status.

 

4.1 Regulation and Compliance Solutions including AML

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

  • 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 rise and ensure the firm is compliant, find out more
  • 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.
    • Practical training for those involved in client onboarding to ensure their ID and AML checks are correctly completed.
  • File Revies/Auditing – At TSP we engage with firms undertaking files reviews where we consider procedure, 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.

4.2 Our Packaged Compliance Solutions

Implementation of robust solutions to ensure the firm achieves compliance and then maintains compliance through the provision of ongoing support and assistance: –

4.2.1  Risk Regulation & compliance Service including AML   – Our Risk, Regulation and Compliance Service (including AML) has been designed to provide law firms of all sizes with a compliant environment. We provide bespoke policies and procedures for how your firm works, whilst drawing your attention to any gaps in your risk and compliance activities, whilst drawing your attention to any gaps in your risk and compliance activities. We work with firms of all sizes and types, from partnerships to ABSs, high street firms, and multinational firms. Each firm is different, and whilst there is a commonality of regulation and expected standards, it is essential to recognise how a firm implements compliance to tailor the solution to each firm’s working practices.

4.2.2 Risk, Compliance, AML Guidance and Register Administration Service – Running a compliant law firm is not just about implementing a set of policies and procedures; the obligations of the Compliance Officers stretch way beyond this, as there is an ongoing responsibility to manage, maintain and monitor the application of the firm’s compliance strategy. The Strategic Partner’s Risk, Compliance, AML Guidance and Register Administration Service is an outsource solution providing all staff with access to an experienced and knowledgeable Compliance Manager for guidance and ensuring the regulatory requirement active management of the firm’s registers is met.

 

 5. Get in touch with our compliance team

We would be pleased to discuss your current approach to regulation and compliance and how our services will assist you in ensuring your firm is protected.

Expert advice and guidance is essential to ensure your firm achieves a compliant status and maintains it.

Contact our team today on 0203 911 9710, email us info@thestrategicpartner.co.uk or make an online enquiry here to request your transparency fee rules review.

 

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