A trio of fines for money laundering breaches handed down by the SRA at the end of April 2024 have highlighted the dangers of non-compliance by smaller and medium sized law firms. The fines total over £45,000 and in each of the three cases, basic money laundering due diligence was not done, or the correct policies and procedures were not put in place.

The decisions come as the SRA flexes its new fining powers, with at least ten decisions on AML breaches in the first quarter of 2024 alone. These cases saw fines of almost £170,000. With the trio of fines in April, the average AML fine for a small or medium size d law firm falls between £10,000 to £25,000.

The cases revolved around a failure to property conduct due diligence on clients and third parties, and failing to properly assess matter risks. Due diligence wasn’t done on funds coming from other jurisdictions and enhanced due diligence wasn’t done, nor was due diligence completed before accepting funds, and firm AML policies controls and procedures were not fully in place. 

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Compliance Office highlights an increasingly demanding approach by the SRA

Recently, there has been a sharp rise in law firms having their websites audited by the Solicitors Regulation Authority (SRA), according to Compliance Office. That’s enough to make law firms start getting nervous. But what should be of real concern to law firms is that so many of these firms are being cited for wrongdoing by the agency. 

In fact, reports Compliance Office, the SRA is adopting an increasingly fault finding approach – specifically to law firms’ pricing information. Indications point to a zero tolerance approach. The SRA does not appear to be open to a site inviting the client to contact the firm for more complex matters or for points of detail. They want the complete picture available clearly on the website. 

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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 SRA have raised concerns of persistent non-compliance of law firms when it comes to client and matter risk assessments. The SRA feels this is a strong area for improvement for firms. In 2019/20, nearly a third of client files had no written matter risk assessment, while in the last reporting period of 2022/23, over half of the client or matter risk assessments were found to be ineffective. 

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Presenters at this year’s Law Society conference think law firms need to be ready for increased regulation

In a law firm regulatory update at The Law Society’s Anti-Money Laundering and Financial Crime Conference 2023, the presenters pointed out how regulation has increased in the past 15 years. They believe it is a trend that will continue and law firms should be prepared. 

The panel, which included representatives from a number of leading firms, were uniform in their belief that more regulations were coming down the pike.

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Solicitors Regulation Authority’s FY 2022/23 audit to be released shortly

At the Law Society’s Anti-Money Laundering and Financial Crime Conference 2023, Collette Best, the SRA’s director of anti-money laundering, provided a sneak peek into the regulator’s upcoming annual report. The conclusion: Many UK law firms are non-compliant. The implications for these firms are important as Best noted that the SRA will likely be entitled to provide higher fines going forward.

Best’s numbers are sobering. Out of 225 firms that were audited, less than 20% were fully compliant. Only half the firms had compliant firm-wide risk assessments (FWRAs). Significantly, the SRA took enforcement actions on 47 firms this past year.

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Andy Donovan from Compliance Office takes you through the latest updates from the Solicitors Regulation Authority

New rules and guidance from SRA

📰 The SRA’s has just published new guidance on the Proceeds of Crime Act and it does feel a little like a further attempt to push AML regulated sector obligations out to all areas of legal practice despite the absence of mandatory legal or regulatory requirements duties. So boutique litigation firms for example should pay particular attention. Here’s the key information:

🔍 You have to really concentrate to realise that it is largely recommended best practice going above and beyond clear mandatory duties rather than more typical SRA guidance, similar to what we saw with the sanctions guidance. Pay close attention to the ‘key’ at the start of the guidance which distinguishes between ‘must’ (hardly used!) ‘should’ (which means it is recommended best practice) and ‘may’.

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Wednesday 5th July, 12:00 pm (BST)

The Solicitors Regulation Authority (SRA) has announced that its biannual mandatory diversity survey will be due on 23rd July 2023.

All SRA regulated law firms, regardless of size, must collect, report and publish their workforce diversity data every two years.

In this webinar, VinciWorks’ Director of Best Practice, Gary Yantin, will be joined by Siân Hughes, Head of EDI at the SRA, and Andrew Donovan, Managing Director, at The Compliance Office. Gary, Siân and Andrew will discuss the importance of reporting and publishing SRA diversity data.

The webinar will cover: 

  • How to report and organise the diversity data
  • How to carry out the survey and meet the SRA’s deadline
  • Current data on diversity and inclusion in law firms and what firms can do to improve
  • How we can help

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They want to know how your law firm handles financial sanctions  

Last month, the Solicitors Regulation Authority (SRA) released a questionnaire compelling law firms to report on their firm’s approach to financial sanctions. The survey is due on May 31.

A few of your key questions about this survey are answered here.

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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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