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Hot topic: SRA revisits firms in anti-money laundering work

At the SRA’s 2015 Risk & Compliance Conference, Paul Philip said that one in 10 of firms audited for anti-money laundering compliance need a second…

At the SRA’s 2015 Risk & Compliance Conference, Paul Philip said that “the SRA is conducting a programme of AML visits to 500 firms” and, worryingly, “one in 10 of those firms needs a second visit.”

We discussed these comments with Martina Hogg, lead compliance consultant, as part of the '60 seconds with...' feature for this week's Compli newsletter:

Martina, should the profession be worried by Paul Philip's comments?

Since the profession has had a number of years to get to grips with the steps required to guard against money laundering, the SRA is right to be worried that 10% of those firms assessed require a second visit.  That said, instead of just throwing figures at us, it would be helpful if the SRA explained to us what issues were causing the most problems. For example, is it the case that firms are failing to produce evidence that they provide up to date AML training or is it that there is evidence of solicitors being involved in suspicious transactions? Whilst these are both areas of non-compliance, one is obviously a greater immediate risk than the other.

The Financial Action Task Force (FATF) is due to visit the UK to look at the issue of money laundering and the legal profession. Last year, the NCA stated it is concerned about the role of ‘professional enablers’. Do they know something we don’t know?

The FATF is visiting the UK and Northern Ireland as part of its ongoing commitment to evaluate all its member nations to see how they are doing when it comes to complying with its recommendations. There is nothing sinister in the visit, although all hell will break loose as we try and implement the 4th EU Money Laundering directive in advance of the visit. When it comes to professional enablers - this isn’t really a new risk. In 1988, a solicitor called Michael Relton was jailed for 12 years for his part in laundering proceeds from the Brink Matt robbery. What is new is that the government is tightening up the legislation to make it easier for lawyers who dabble in organised crime to be prosecuted. Everything that is happening with FATF, Europe and Parliament is all part and parcel of bringing major worldwide financial centres up to the next level when it comes to combating money laundering.

So what advice do you have for firms who are concerned about AML issues?

Most importantly, if you are worried you might have material gaps in your firm’s AML armour, address this as a matter of priority. The 4th EU Directive will be implemented into domestic legislation soon so this is not the time to bury your head in the sand. We can help you with the full range of AML support and undertake independents reviews and audits of your systems to look for points of failure."