SRA AML gloves are off as it fines small law firm £20,000 for AML conveyancing work breaches
23/01/2023
A small firm has been fined £20,000 by the Solicitors Regulation Authority (SRA) for anti-money laundering (AML) compliance breaches. Find out what happened and how to avoid making the same mistakes
The SRA outcome
A firm was fined after the SRA found it failed to put in place a practice-wide risk assessment compliant with regulation 18 of the Money Laundering Regulations (MLRs) 2017.
By omitting the risk from its conveyancing work – which amounted to 75% of fee income – the firm was held by the SRA to not have fully assessed its product/services risks.
This omission was despite conveyancing being one of the high-risk practice areas identified in HM Treasury's national risk assessment of money laundering and terrorist financing.
The firm had previously declared to the SRA in January 2020 that its risk assessment was compliant with the MLRs 2017.
A compliant risk assessment was finally put in place after the SRA's on-site investigation. It had previously issued warning notices on the need for a compliant risk assessment.
Other issues identified by the SRA included:
- The lack of an independent audit function
- Failure to provide AML training to a partner
- Failures to check the source of funds from third parties
- Weak ongoing monitoring of transactions
The SRA said that the firm's conduct "showed a disregard for statutory and regulatory obligations and had the potential to cause harm".
The harm identified "could have been avoided had the firm established an adequate practice-wide risk assessment".
The sizeable fine is the largest issued since the SRA's fining powers increased from £2,000 to £25,000 in July 2022.
The scale of the fine was chosen to create a "credible deterrent" to other firms and signify the risk to the public and legal sector.
Explore the full story in the Law Society Gazette -https://www.lawgazette.co.uk/news/sra-imposes-record-20000-fine-for-aml-failings/5114831.article
Common causes of AML compliance breaches
Inadequate risk assessments were one of the common compliance issues flagged by the SRA in its November 2022 AML report.
Other common breaches include failures to:
- Carry out or complete initial customer due diligence
- Carry out a source of funds check
- Identify a client
- Have proper AML policies, controls and procedures
Explore the SRA's AML findings in full https://www.lawsociety.org.uk/topics/anti-money-laundering/lack-of-customer-due-diligence-identified-by-sra-as-main-cause-of-aml-breaches
SOURCE
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As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.