More than 30 leading law firms joined VinciWorks’ recent AML Core Group Meeting. The mission of the Core Group is to share best practice in the field of AML compliance to improve policies and procedures for all and to actively manage AML risk. 

VinciWorks’ Director of Best Practice Gary Yantin gave an AML news update focussing on the recent announcements from the Scottish Law Society and the SRA. Both regulators have pointed out that the level of AML compliance in law firms under their purview is lower than they would like. The SRA reported that less than a third of firms are compliant with 51% only partially compliant. Issues include deficient Source of Funds checks, poor training records and below-standard Risk Assessments. The SRA recently released their standard templates for client and matter risk assessments.

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The recently released annual report also emphasises the agency’s efforts to engage with issues around AML

The Law Society of Scotland just released its annual anti-money laundering (AML) report and the agency notes that it is an indicator of the “breadth and depth of its AML work undertaken in the public interest.”

The agency acknowledges that its goal is to build a Scottish legal sector effectively engaged with the issues around AML and which understands its risks and obligations. The hope is that this will compel its members to implement compliant policies, controls and procedures (PCPs) which will lead to a reduction in financial crime in Scotland.

Among the report’s key findings are areas that require improvement in understanding and underlying compliance.

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The former CEO has been jailed for three years

In a landmark ruling, Lycamobile’s French companies have been fined a total of €10m by a Paris court for their involvement in money laundering and VAT fraud. The case also saw the group’s former CEO, Christopher Tooley, receiving a prison sentence and a substantial fine for his role in the VAT fraud scheme.

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Panama removed and UAE makes progress

On 27 October 2023, the Financial Action Task Force (FATF) met in Paris and added EU member state Bulgaria to the grey list. This has been described as a shock to many, but the country has been mired in political corruption scandals in recent years. The UAE was also commended for its progress in improving its AML deficiencies, and seems set to be removed from the grey list at the next plenary in February 2024.

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Template available in Omnitrack 

In a session on anticipated increased AML regulations at the Law Society’s recent Anti-Money Laundering and Financial Crime Conference 2023, the Solicitors Regulation Authority’s (SRA) representative made an announcement: The agency would be releasing a client and matter risk assessment template.

Anyone attending the conference could hear the sighs of relief from the participants, many of whom are in charge of compliance for their firms.

The template is now available and it could make a huge difference in how law firms manage their client and matter risk. 

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Data from the SRA shows less than a third of law firms are fully compliant

The SRA’s annual report highlighted a sobering statistic that less than a third of law firms inspected, 30%, are fully compliant with the anti-money laundering regime, with just over half, 51% partially compliant. Nearly a fifth, 19%, were actually found to be non-compliant.

The compliance failures at firms which fell foul range from a lack of proper policies and procedures, failing to undertake robust risk assessments on the client or matter, and deficiencies with source of funds checks.

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The criminal trial of Sam Bankman-Fried, founder of failed cryptocurrency FTX, opens and it could determine the fate of crypto

In what is likely to become a referendum on the cryptocurrency industry, Sam Bankman-Fried’s criminal trial got underway in federal court in New York City. Bankman-Fried, the founder of FTX, the cryptocurrency that collapsed spectacularly last year, is charged by the Department of Justice with 13 felonies including using $10 billion in FTX’s customers’ funds for his personal use – investments, political donations and luxury real estate purchases.

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How the establishment of a new AML super agency could change the game for AML compliance

Once considered a haven for money launderers, the Federal Republic of Germany has taken some significant steps to potentially revolutionise the fight against money laundering.

FATF had previously criticised Germany for the prevalent use of cash payments – anyone who has been to Germany since COVID might be astounded at the continuing use of paper money – along with sufficient cooperation between national AML supervisors. Up to 75% of transactions in Germany take place in cash, and it does not require any reporting from obligated entities of cash transactions. German financial institutions like Deutsche Bank have faced multi-million dollar fines across the world for their money laundering failings. Unsurprisingly, the FATF gave Germany poor marks in its 2022 evaluation report.

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Lack of annual review and regular monitoring for AML system, along with ESG policy inconsistency 

A Deutsche Bank subsidiary, DWS Investment Management Americas, settled with the SEC to the tune of $25 million for making misleading ESG disclosures and running an ineffective anti-money laundering system.

Both failures stem from a lack of systems to review and maintain policies. DWS had implemented an ESG Integration Policy in 2018 which it trumpeted to third parties and investors, but did not do enough to embed or ‘integrate’ this policy internally. 

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