On 26 June 2015, the Solicitors Regulation Authority (SRA) announced that it had completed its audit of anti-money laundering procedures at law firms. Early findings suggest that only a small proportion of firms require a follow-up visit.
Since September 2014, the SRA visited over 500 firms that it had identified as being at risk from money laundering attempts. It examined whether or not they had effective checks and balances in place to detect any suspicious activity, and that staff were aware of these systems and knew how to use them. This campaign was in line with the SRA’s 2014-2015 risk outlook, which identified money laundering as a key risk to the industry.
As part of this process, the SRA published a “warning note on appropriate anti money laundering processes,” “guidance on how to complete suspicious activity reports,” and a “warning notice emphasising that firms should not allow their client account to be used as a bank account.”
During this process, we heard from a number of clients who presented the SRA with AML training reports from the Learning Management System. The SRA was satisfied with the reports and the level of training all staff received from the new VinciWorks Anti-Money Laundering training.
However, it is important to note, that a Financial Action Task Force (FATF) audit is expected soon.
FATF identified 42 red flags for law firms in its 2013 report Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals. These red flags focus on due diligence around clients, source of funds, choice of lawyer and the nature of the retainer. The previous FATF audit was in 2007.
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