It’s time to look at how your firm handles designated persons

The Government’s financial sanctions regime is continually changing. It was created with national security objectives in mind and law firms play a critical role in its implementation. So much so that the sanctions regime applies to all firms that provide legal services, a broader bucket than just those that are covered by the anti-money laundering (AML) regulations.

The Solicitors Regulation Authority (SRA) just released a new questionnaire compelling law firms to report on their firm’s approach to financial sanctions.

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SRA Diversity reporting tool

The Solicitors Regulation Authority (SRA) has announced that its mandatory diversity survey will be due sometime in the summer of 2023. The SRA has said that it will provide four weeks’ notification prior to the actual deadline. VinciWorks is proud to offer all law firms in England and Wales a simple, free and secure way to anonymously collect and aggregate diversity data via our compliance management software, Omnitrack.

After registering, you will be provided with a unique link to send to your staff. We will send you all data collected, together with aggregated data in the format required by the SRA, in advance of the reporting deadline. Click here to preview the questionnaire.

Sign up for the free service

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The Solicitors Regulation Authority (SRA) has announced that its mandatory diversity survey will be due sometime in the summer of 2023. In 2021 the survey was due 2 August and it is likely that the timeline will be similar this time.

The SRA has said that it will provide four weeks notification prior to the actual deadline.

Which size firms are required to report diversity data?

All firms, of any size, even sole practitioners will have to collect and report the data to the SRA. However, in-house lawyers will not need to report.

How do firms collect the SRA’s diversity data?

In order to make this mandatory report to the SRA, firms will need to collect diversity data, based on a questionnaire, from all staff. The firms will then have to collate the data and organise it by specific job roles before submitting it to the SRA.

You can use the SRA’s Word version of the questionnaire or VinciWork’s SRA diversity survey data collection tool.

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Firms and practitioners outside of the MLRs can be examined by the regulator

Despite controversial proposals in the Economic Crime and Corporate Transparency Act to weaken the long-discussed failure to prevent fraud offence, the Bill also contains new powers for the Solicitors Regulation Authority to become an economic crime enforcer.

Currently, the SRA’s powers to tackle economic crime in the legal sector are limited to being able to require firms to provide documents ahead of inspections it carries out in relation to money laundering.

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Andy Donovan, Managing Director and Founder of Compliance Office
Andy Donovan, Managing Director and Founder of Compliance Office

The SRA have released further guidance and rules over the last few months. In this blog, Compliance Office’s Andrew Donovan shares the key points.

Understanding SLAPPs (Strategic Lawsuits Against Public Participation)

With increasing public concern that some solicitors are using SLAPPs on behalf of their clients, the SRA has issued a warning notice that tells law firms not to act for clients in this way and outlines some of the activities they would consider to be abusive litigation. A ‘SLAPP’ typically refers to some sort of legal threat or action intended to stifle public commentary or publication. The concern is solicitors being hired to inappropriately threaten and scare people from speaking up. 

Solicitors should only be labelling correspondence as ‘not for publication’, ‘strictly private and confidential’ and/or ‘without prejudice’ when the conditions for using those terms are fulfilled. The new guidance and warnings make clear that confidential markings cannot unilaterally impose a duty of privacy or confidentiality where one does not already exist. Similarly, making excessive or meritless claims or aggressive or intimidating threats will result in regulatory action. The SRA could not be much clearer that firms should not be hired simply to scare people off if there are no legitimate legal grounds to make any relevant claims or threats. The Bar Standards Board (BSB) is actually considering following the Solicitors Regulation Authority (SRA) in issuing guidance on strategic lawsuits against public participation (SLAPPs).

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As regulations are tightening and the risk landscape is continually evolving, firms are facing increasing pressure to make sure that their Anti Money Laundering (AML) compliance programme is effective. Beyond the implications of fines or damage to reputation is the very real danger of disruptions to operations and in particular criminal liability. 

It’s critical for firms to assess if their AML framework is strong and robust enough to prevent and detect instances where the business can be manipulated to clean money or to finance terrorism. 

An independent audit provides this assurance and enables the firm to address issues before they become a problem or are detected by the authorities.

Guide to AML audits

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The Solicitors Regulation Authority (SRA) has fined the conveyancing firm, Ferguson Bricknell Solicitors, £20,000 ($24,400) for falling short of its anti-money laundering (AML) obligations. The firm also had to pay £1,350 for the cost of the SRA probe. The fine was issued under a regulatory settlement agreement following an investigation by the SRA.

The investigation found that the firm did not have a compliant, practice-wide, anti-money laundering (AML) risk assessment in place until July 29, 2022, and also failed to fully assess its product/services risks, specifically those associated with conveyancing and controlling client money, which accounted for 75% of its fee income. The risks associated with conveyancing should have been addressed in the assessment provided when the investigation began.

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From new ESG regulations to a crackdown on bribery, rapid fluctuations in crypto currency, changes to the regulated sector and the ongoing conflict in Europe demanding a laser-like focus on the supply chain, 2023 looks set to demand even more from compliance professionals.

We have created an in-depth guide to everything compliance in 2023. The guide covers the top ten items you can expect to see in your regulatory inbox, with tips on next steps.

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What are SLAPPs (Strategic Lawsuits Against Public Participation)?

SLAPPs (Strategic Lawsuits Against Public Participation) are lawsuits that are filed with the intention of silencing, intimidating, or punishing individuals or organisations for exercising their right to free speech on matters of public concern. These lawsuits are often brought by private parties, such as corporations or individuals, against individuals or organisations that have spoken out against them or their activities.

Sometimes, the goal of bringing a SLAPP is not necessarily to win the case, but to burden the defendant with the cost of litigation and the stress of defending themselves, ultimately discouraging them from speaking out.

SLAPPs are often used by corporations, politicians, or other powerful entities against individuals, activists, or grassroots organisations who are speaking out on issues such as environmental protection, civil rights, or consumer advocacy. SLAPPs can take many forms, including defamation lawsuits, harassment suits, and even lawsuits filed under the guise of intellectual property infringement.

The SRAs new warning notice on SLAPPs

Recently, the SRA issued a new warning notice on SLAPPs, in response to reports that solicitors are bringing allegations without merit at the behest of wealthy clients to stifle freedom of expression and prevent the media from reporting on issues of public interest such as academic research, whistleblowing, campaigning or investigative journalism.

The warning notice makes clear that acting in this way would constitute a breach of a number of SRA Principles and Rules in its Code of Conduct for Individuals and Firms. 

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