Tackling money laundering – making sure firms are doing their job
26 March 2019
Those of you that could not make it to last year’s conference should watch the talk by the West Midlands Counter Terrorism Unit about money laundering, if you have not already done so.
It was a powerful presentation, and delegates heard details of how extremists were trying to fund their activities to help plan attacks on UK soil. There were telling examples of how lax processes can be exploited by terrorists to help launder their money. Beyond terrorism, money laundering also supports serious crimes ranging from people trafficking to drug smuggling.
The type of work law firms do, and the credibility of solicitors, makes them an attractive target for terrorists and criminals who want to process their ‘dirty money’. We regulate around 7,000 law firms who fall under the Government’s 2017 Money Laundering Regulations. From targeted reviews to using AI to identify firms who are high risk, we are doing a range of work to make sure firms are doing what they need to do.
What we have found is a very mixed picture. There is excellent practice out there but, despite lots of information and support, we are seeing that firms are still struggling to get to grips with the 2017 regulations. For instance, a risk assessment is required in legislation and should be the backbone of a firm’s anti-money-laundering approach. Firms which do not have one or are not implementing it properly, may be committing a criminal offence and are leaving the door open for criminals to launder money.
They could also be damaging the reputation of the profession and of the UK, when actually the overwhelming majority of solicitors want to do the right thing. We have produced a package of support for solicitors to highlight good practice and understand what is needed. The onus is on firms to do what they are being asked to do.
As part of our work, we will be writing to a sample of 400 firms in the coming weeks asking to see evidence that you are complying with Money Laundering Regulations. Those who fall short should expect to enter our enforcement process. We will judge each case on its facts, but where we find serious issues or a lack of willingness to resolve issues promptly, we will take strong action.
In the last five years, we have referred more than 60 cases linked to potential improper money movements to the Solicitors Disciplinary Tribunal. Those who do not treat the Regulations seriously should expect similar treatment.
Further information is here:
It’s not just us at the SRA who are concerned. The National Crime Agency are concerned by the low number of suspicious activity reports (SARs) from the legal profession, with numbers falling a further 12 per cent last year. Numbers only tell part of the picture - the quality of the reports is important.
The NCA have concerns there as well. There is a wealth of tips and information available from the NCA on what to look out for and when to report a SAR.
Further information is available here:
You can watch the West Midlands Terrorism Unit presentation by accessing the resources from the last conference here: