10/06/20

UK: SRA to make monthly spot checks in money laundering fight.

As published on lawgazette.co.uk, Wednesday 10 June, 2020.

The Solicitors Regulation Authority will test a sample of firms’ anti-money laundering policies every month as it ramps up efforts to combat misconduct in the profession.

The regulator will also expand visits to every high-risk firm on a three-year rolling basis, along with visiting a sample of lower risk firms. The stepping-up of monitoring is revealed in a draft business plan for 2020/21, published this week.

Lessons learned from reviews of firms’ procedures and controls will be published, with further reports to the Treasury and the Office of Professional Body Anti-Money Laundering Supervisors (OPBAS). The SRA currently spends around 2.5% of its overall budget on AML activities, which is expected to rise in 2020/21 to 3% of the budget.

The regulator has identified money laundering as a priority risk amid concerns that solicitors, even unknowingly, are supporting organised crime such as terrorism and drug trafficking. A review in 2019 found that more than a third of firms had not made a full risk assessment, and half of the reports received by the SRA about money laundering involve a firm not having carried out proper due diligence on a client or their funds. The Financial Action Task Force has said in the past it is concerned about a relatively low number of suspicious activity reports filed by solicitors and other legal professionals.

Elsewhere in the plan, the SRA says it will carry out a one-year evaluation of the standards and regulations introduced in November 2019. In its disciplinary work, the regulator will review its publication policy for misconduct findings, and look again at the fining bandings for disciplinary decisions made in-house.

The SRA also plans to open a new office in Wales, as part of increased engagement with the profession in the country. This will mean it can work more closely with different groups, including the Cardiff office of the Law Society, on the key issues for Welsh consumers and the profession.

Currently around 2.6% of practising solicitors and 4% of firms regulated by the SRA are based in Wales.

Consultation on the business plan runs until 26 August.