Money laundering

Why this risk matters

Trends

  • The number of Suspicious Activity Reports (SARs) submitted by the legal sector has risen for the first time in seven years, but is still disproportionately low.
  • Reports to us relating to money laundering have increased over recent years, with around a third connected to residential conveyancing.
  • HM Treasury have recently expanded their enforcement powers under sanctions legislation. These reinforce the obligation on law firms to report to the Treasury if they act for anyone subject to financial sanctions. Significant financial penalties can be applied for serious breaches.
  • The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 are now in force. The new obligations cover a range of areas including:
    • client due diligence
    • policies, controls and procedures
    • a central register of beneficial ownership
    • politically exposed persons
    • registration of trust and company service providers
    • criminality testing.

Actions

  • We have updated our guidance on the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and good practice information on complying with the money laundering and counter-terrorist obligations. We are working with other regulators across the UK to give a consistent approach.
  • The Government’s ‘Flag it up’ campaign is aimed at helping solicitors and accountants identify potential money laundering signs. We also published a warning notice describing the signs that firms should be aware of, and where they may need to take action to avoid committing a criminal offence or breaching professional obligations.
  • The Office of Financial Sanctions Implementation updated their guidance, and released a quick guide.
  • Our recent in-depth review of 50 firms found that most law firms are doing what is needed to prevent and tackle money laundering, but some need to do more.
  • We published our money laundering risk assessment, which we will refresh regularly. Firms should refer to this, and any updates, when creating and maintaining their own written risk assessment. We may ask to see a firm's risk assessment as part of routine monitoring visits, or in response to information received.
  • Any action we take in relation to breaches of the new regulations will be proportionate and in accordance with our enforcement strategy.

Further information

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