Anti -money laundering work continues
05 March 2020Our anti-money laundering work is a priority, as we all work together to make sure that criminals and terrorist groups cannot use law firms to launder their money.
A key part in a law firm’s armoury against money laundering is to have an effective risk assessment in place. It’s so important, the 2017 regulations made a compliant, firm-wide risk assessment a requirement by law.
Our initial reviews showed that a large number of firms do not have a compliant risk assessment in place, if they have one at all. We therefore wrote to all 6,749 firms we supervise under the money laundering regulations asking them to confirm they had an assessment in place that meet the requirements of the AML regulations.
Now the deadline for responses has passed, we will start to ask a sample of firms to provide us with their assessment to make sure they are compliant. We will also follow-up with firms that said they did not have an assessment in place, or any that failed to respond to us.
Fifth AML directive
You will remember that on 10 January, the fifth Anti-money Laundering Directive came into force via UK legislation. It introduced a number of changes aimed at tightening defences against money laundering, with some practical impacts on law firms and their processes.
This includes further strengthening customer due diligence and checking on relevant registries. The legislation also includes changes around the definition of tax advice.
The Legal Services Affinity Group, which includes both us and the Law Society, is drawing up guidance on the new directive, for publication in due course. Interim guidance has been produced and further information is available.
The new legislation has also meant that we have had to make changes to how we approve certain positions under the regulations. From 10 January we must see a clean disclosure and barring service (DBS) check for any beneficial owners, officers and managers before we can approve them.
This applies to newcomers to those positions and those moving firms. Also see our details on who needs approval.