Don't get mugged - SRA announce that they are to target hundreds of firms in new anti-money laundering assault
In our article last March, http://cpm21.co.uk/Latest-News-from-CPM21-:-Professional-Management-by-Lawyers-for-Lawyers-in-the-UK/money-laundering-regulations-2017--disciplinary-action-by-sra we noted that the SRA had been visiting a number of firms to review compliance with the new 2017 Regulations. At that point 6 firms had been referred into the SRA disciplinary process.
This March, the SRA have announced that they plan to write to an initial 400 firms asking them to demonstrate compliance with the government’s 2017 regulations.
There is a suspicion that firms falling short of the requirements can expect to follow the 60 or so recent cases that have ended up before the Solicitors Disciplinary Tribunal linked to potential improper money movements.
More than 40 solicitors have been struck off, suspended, or voluntarily come off the roll in the last five years, following allegations relating to money laundering regulations.
If you have not carried out the required documented practice-wide risk assessment of your AML Policies and Procedures and implemented the other requirements of the new Regulations then you should do so without further delay. For further information please read the Law Society’s guidance: legal-sector-affinity-group-anti-money-laundering-guidance
Suspicious Activity Reporting (SAR)
Lawyers are failing in their duty to combat suspected money laundering and have ignored repeated warnings to increase their reporting of suspicious activity by clients.
Donald Toon, the director of economic and cybercrime at the National Crime Agency (NCA), said “the number of reports it had received from lawyers had fallen by 10% this year”.
Donald Toon questioned whether lawyers were taking their obligations seriously enough, given that failure to report suspected money laundering and terrorist financing is a criminal offence punishable by up to five years in prison.
He said “the NCA was working closely with the Solicitors Regulation Authority to identify legal professionals who were not following the rules”.
Solicitors have a legal duty to file what is known as a suspicious activity report (SAR) when they have grounds to suspect they are being asked to handle the proceeds of crime or transactions connected to terrorist finance.
The fall in alerts from lawyers comes as the overall number of reports is rising. The total increased by 9.6% to 464,000 in the year to March 2018, according to the NCA. A full breakdown by profession will be released this year, but a look at previous periods shows lawyers trail those working in finance.
The increase is being fuelled by banks, which flagged up almost 350,000 transactions in the year to March 2017, while law firms, including those specialising in property conveyancing, filed just 3,020 alerts.
Concerns about the failure to control money laundering led to the creation in January of a new regulator, the Office for Professional Body Anti Money Laundering Supervision. The watchdog is charged with overseeing 22 organisations, from the Law Society to the Association of Tax Technicians.
The NCA is carrying out seven investigations into professional enablers, one of which relates to the legal profession. It has intelligence on a further 19 cases, 11 of which involve lawyers.
Toon said a number of cases had been referred to him by the SRA. “We have a number of cases we are now investigating criminally in relation to legal professionals. We are doing this on a coordinated basis working with the police to tackle the professional enablers.”
The NCA director warned lawyers that close involvement in their client’s affairs meant they faced a stark choice. “It’s about taking on the responsibility of serving the public or, if you don’t want to take it on, benefiting the criminal,” he said. “We’re not asking people to go out and tackle gangsters, only to report something where they have a suspicion.”
If anyone reading this is worried about the Anti-Money Laundering Regulations 2017 and their firm’s obligations or Suspicious Activity Reporting, we can help, just email us for more information at firstname.lastname@example.org or, if you already work with one of our consultants, contact them to see how we can help.