All UK law firms subject to the Money Laundering Regulations are required to establish an independent audit function to examine, evaluate and make recommendations regarding the adequacy and effectiveness of their practice’s anti-money laundering and counter-terrorist financing policies, controls, and procedures. This can be carried out via an internal or an external auditor.
According to the Money Laundering Regulations, an AML audit for law firms does not need to be conducted by an external auditor; however, over 50% of firms do choose this method. When one additionally considers LSAG guidance, conducting an external audit makes a lot of sense. LSAG guidance stresses:
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