Law Firms rapped by regulator for “cut and paste” approach to Anti-Money Laundering risk assessments

The London Times today reports that more than 20% of Solicitors Firms do not comply with Anti-Money Laundering Rules and take a “cut and paste” approach to the Anti-Money Laundering risk assessments. This comes as no surprise. I have been assisting a number of law firms in crafting and updating their annual risk assessments and advising on consequent updates to their anti-money laundering policies and procedures.

Anti-Money Laundering regulations, requires regulated businesses to undertake an annual anti-money laundering business risk assessment. Any law firm that thinks this is a 2 minute job on a side of A4 is mistaken.

Even the smallest law firm risk assessment runs to at least 7 pages and takes many hours to produce, at least for the first time. FATF, the UK Government and the Solicitors Regulation Authority all produce detailed guidance for risk assessments. These assessments must analyse the risks to the firm posed by clients, countries and geographical focus, services offered, types of transactions and delivery channels. The risk assessment is also required to review the firm’s systems and risk mitigation controls. This then leads to a low, medium or high risk rating which governs the policies and procedures to be followed, and consequent risk mitigation measures.

As we reported earlier in the year, the Solicitors Regulation Authority has been undertaking spot checks and demanding firms to produce their risk assessments in short order. It still amazes me how many firms think that the SRA are an irritation that can be ignored. They need to get their act together and take Money Laundering compliance seriously.

Published on October 29, 2019