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The Economic Crime Bill – Ensure You Are Meeting Requirements
March 28, 2023

 1. Introduction

The Economic Crime Bill, currently going through Parliament, will likely increase regulatory expectations and greater scrutiny, with the Solicitors Regulation Authority confirming ‘there will be no let-up in the requirements made of law firms to prevent money laundering’. Furthermore, the government is preparing additional provisions that would introduce a criminal corporate offence targeting commercial organisations for ‘failure to prevent fraud, money laundering and false accounting’. Updated legislation is also being proposed to give the SRA unlimited fining powers for firms that have facilitated economic crime.

 

 2. Economic Crime and Corporate Transparency Bill

The U.K.’s Economic Crime and Corporate Transparency Bill 2022-2023 (Bill 154) , which is entering its final review stages in Parliament and is expected to come into force this spring, will make further provisions about economic crime and corporate transparency; to make further provision about companies, limited partnerships and other kinds of corporate entity; and to make provision about the registration of overseas entities.

 

The government has released guidance on the legislation which will deliver:

  • reforms to Companies House
  • reforms to prevent the abuse of limited partnerships
  • additional powers to seize and recover suspected criminal cryptoassets
  • reforms to give businesses more confidence to share information in order to tackle money laundering and other economic crime
  • new intelligence gathering powers for law enforcement and removal of nugatory burdens on business

 

The bill will also strengthen anti-money laundering powers, enabling better information sharing on suspected money laundering, fraud, and other economic crimes. As the factsheet highlights on the government website, the reforms will:

  • enable businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime by disapplying civil liability for breaches of confidentiality for firms who share information to combat economic crime
  • enable proactive intelligence gathering by law enforcement and strengthening the National Crime Agency’s Financial Intelligence Unit’s (FIU) ability to obtain information from businesses relating to money laundering and terrorist financing by removing the requirement for a pre-existing Suspicious Activity Report (SAR) to have been submitted before an Information Order (IO) can be made
  • focus private sector and law enforcement resources on high value activity, reducing the reporting burden on businesses and enabling greater prioritisation of law enforcement resource by expanding the types of case in which businesses can deal with clients’ property without having to first submit a Defence Against Money Laundering (DAML) SAR

 

Read the full guidance here:

Economic Crime and Corporate Transparency Bill overarching

 

 4. How Confident Are You About Compliance

Considering the upcoming changes, firms are urged to take their responsibilities seriously, dedicating adequate resources to ensuring they meet their regulatory obligations. Key areas firms should be reviewing include:

  • Conduct expected risk assessments
  • Ensure you are meeting regulatory requirements to carry out a Regulation 21 Independent Audit – Anti Money Laundering Regulations (MLR) 2017
  • Ensure all policies, controls and procedures (PCPs) are up to date
  • Ensure all PCPs are tailored to match how the firm operates
  • Establish robust file review programmes
  • Establish robust training programmes

 

Firms are already required to produce risk assessments to prevent money laundering, and several firms have been fined in the past year for failing to carry these out properly. The SRA has also prosecuted firms that wrongly declared they had a compliant risk assessment.

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 solutions at The Strategic Partner, including:

  • 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 file reviews where we consider your 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.

 

Our packaged risk and compliance solutions provide guidance and support to firms on a range of topics and include: –

  • Our Risk, Regulation and Compliance Service (including AML), provides firms with the necessary Policies Control and Procedures (PCP’s) – that are in line with CQS requirements and the standard of the relevant quality mark – alongside training, supervision structure, an annual independent assessment and reporting. This solution ensures that firms and their staff are compliant and remain so. It also clarifies what to do in the event of a mistake and/or a breach occurs.
  • Our extended service, Risk, Compliance, AML Guidance and Register Administration, provides an outsource solution for firms where The Strategic Partner not only manages and maintains the risk registers and provides guidance to all staff (inc. Partners), we also produce monthly risk and compliance reports.

 

The combination of these two solutions provides a law firm with a robust and cost-effective risk and compliance strategy that ensures staff have access to expert guidance as it is needed.

 

 5. About The Strategic Partner

The Strategic Partner is a law firm knowledge hub. We work with law firms and professional indemnity insurers, advising and guiding on compliance and risk management techniques to assist and reduce instances of claims or regulatory breaches.

We offer a range of services and consultancy tailored to the Legal sector. We have gained a wealth of knowledge and experience in the overall management of law firms and work with them to achieve profitability, stability, and efficiency. Our goal is to become a valued and respected partner to our member law firms, consistently providing high-quality services and solutions.

For more information about The Strategic Partner, you can call us on 0203 911 9710, email us info@thestrategicpartner.co.uk or visit our website to make an online enquiry.

 

You can view and download the PDF of this article here. 

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