SRA AML Audits
The Solicitors Regulation Authority (SRA) has been conducting a significant number of remote Anti Money Laundering (AML) audits over the last year. For 2022-2023 they have now moved to onsite AML audits in Solicitors offices.
There is an increasing probability that your firm may see an SRA auditor in 2023. The SRA are training additional auditors.
You don’t want the outcome of such an audit to be a referral to their Investigation Team.
Fines for breaches Increase
The fines and sanctions for AML breaches are increasing with fairly onerous financial sanctions being imposed on firms that are found not have implemented any or inadequate Policies Controls and Procedures.
City A.M. reports that
“The total value of fines issued against law firms more than tripled in five years, from £87,000 in 2017/18 to £299,925 last year.”
Number of law firms fined by SRA increases following anti-money laundering compliance crackdown
Independent AML Audit Function
One of the issues identified by the SRA is a lack of an “independent audit function” from the 2017 Money Laundering Regulations, Regulation 21(1) (c), where firms must “establish an independent audit function to review and make recommendations about your firm’s AML policies, controls and procedures, and its compliance with them.”
Cpm21 has now seen a number of SRA AML audit reports and has been assisting firms as follows in the light of such audits:
- Helping firms complete the corrective action from the SRA
- Helping firms prepare for the SRA audit
- Providing an AML independent audit function
- Training the MLCO and MLRO and all relevant staff
- Helping the MLCO draft or update their Practice Wide Risk Assessment (PWRA) aka Firm-Wide Risk Assessment (FWRA)
- Updating the firm’s AML PCPs (Policies Controls and Procedures to comply with the latest Money Laundering Regulations and implement the LSAG AML Guidance
https://www.lawsociety.org.uk/topics/anti-money-laundering/lsag-aml-guidance-approved-by-hmt
Audit Readiness
Your firm is increasingly likely to have an SRA visit over the next 12 months particularly if you have a Conveyancing or Private Client department. To reduce your risk of being referred to the SRA’s AML investigation Department contact us now.
Make sure your AML Practice-Wide Risk Assessment is up to date.
Make sure all your files have proper and detailed records of Source of Funds and Source of Wealth.
With forged ID’s being readily available should you not be relying on EID&V systems such as Thirdfort
