We hate to say it but…
The Solicitors Regulation Authority have released their Anti-Money Laundering Report covering the 2021 to 2022 period. You can read the full report here;
https://www.sra.org.uk/sra/research-publications/aml-annual-report-2021-22/
There are lots of takeaways for firms subject to the Money Laundering Regulations, and lots of conclusions and facts that we noted at cpm21 that supports what we have been telling our solicitor firm client base since at least 2020, which links to the title for this article – more on that at the end.
One aspect of the report that caught our eye in particular is the section on Independent Audits. We have highlighted this aspect of AML regulations for some time, based on the requirements of the regulations themselves, but also from “on the ground” support we have provided to firms who have been selected for SRA desktop or on-site audits.
And it does still feel like some solicitor firms are in denial.
Well, there is no denying the SRA figures. Of the 143 firms the Regulator inspected in the period, 51% of them had not undertaken an audit. Of these, the SRA determined that 45% of them should have had one.
One of these firms bravely disagreed with the SRA’s conclusion that they should have had an audit, their cited reasons were that they had relatively few fee earners, so felt they didn’t need to carry out an audit. The SRA of course disagreed, as they concluded that the firm carried out work in higher risk areas, often for high-net-worth individuals, such as cross-border transactions and high value property purchases.
Size of firm therefore doesn’t necessarily matter for this purpose.
Another note that the SRA made in this section of their report concerns external accreditation schemes. What they had to say on the subject was that they were provided with copies of audit reports from external accreditation schemes which firms seemed to be relying upon for AML purposes, but which on examination did not address compliance.
They did not specify which external accreditations they referenced in the report.
The section of the report concludes that this is another area they believe that firms need to improve, and repeated earlier guidance that they believe that most firms will need to carry out an independent audit or justify their reasons to the SRA if they think they do not need to. Reading between the lines it would seem difficult for most firms to justify that they do not need one.
Back to our article heading then.
We hate to say it but…We told you so!
And we’ll continue to tell you so, as well as support all of the solicitors’ firms that ask us to support them with all aspects of their Anti-Money Laundering compliance, as well as behind the scenes with SRA AML audits.
If you’d like to know more, you can contact Wayne Williams, Paul Jones, or any of the cpm21 team.
