Thursday, October 29, 2020

UK: ‘Significant minority’ of law firms failing on anti-money laundering

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A significant minority of law firms are not doing enough to prevent money laundering, with some falling seriously short, the Solicitors Regulation Authority said today following a review of 59 practices providing trust and company services.

While the SRA conceded that its review found no evidence of actual money laundering or any intention of becoming involved in criminal activities, it did identify breaches of the 2017 Money Laundering Regulations, as well as poor training and processes. Firms committing such breaches could be unwittingly assisting money launderers, the SRA said.

One of the biggest areas of concern was firms’ risk assessments: more than a third (24) of firms reviewed fell short in this area, including four that had no risk assessment at all.

Customer due diligence also raised concerns, the SRA said. It found inadequate processes in almost a quarter (14) of firms to manage risks around politically exposed persons. However, it found that 15 firms had turned down work following effective customer due diligence.

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As a result of the review, the SRA put 26 firms into its disciplinary processes. It has begun a further review of 400 other firms to check compliance with the 2017 Money Laundering Regulations. This review will be led by a new dedicated anti-money laundering unit, being set up to bolster resources to prevent and detect money laundering.

Around 7,000 SRA-regulated firms fall under the scope of the regulations.

Paul Philip, SRA chief executive, said: ‘Most solicitors take their responsibilities seriously, but too many firms are falling short. Those firms should be on notice that compliance is not optional. They need to improve swiftly. Where we have serious concerns that a firm could be enabling money laundering, we will take strong action.’

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