Hello again, Cambridge & District, and thank you once more for the opportunity to write for you… | LBLBulletin

MONEY LAUNDERING – WE ALL NEED TO STAY VIGILANT


Hello again, Cambridge & District, and thank you once more for the opportunity to write for you. 

One of my priorities is to make sure that the high standards we all expect from English and Welsh solicitors are maintained. Part of this drive to maintain standards includes working hard to keep money laundering out of law firms.

Money laundering is not a victimless crime - it can facilitate terrorism, people trafficking and drug smuggling. As highlighted in the Government’s recent Flag It Up campaign, we all have to play our part to tackle it. Donald Toon from the National Crime Agency told delegates at one of our conferences that solicitors were on the front line in the war against money laundering. He did not just mean big city, magic circle firms – criminals can and do target smaller and mid-sized firms, and those in rural areas.

One of the key areas of your work that criminals can target is the creation and administration of trusts and companies (TCSPs). This area is attractive to money launderers because individuals can obscure the beneficial ownership and control of assets and wealth, operate across multiple jurisdictions and avoid tax or duties.

In response to this we recently conducted a review involving 60 law firms that carry out TCSP work. As well as reviewing 115 files, we looked at each firm’s compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).

While we found no evidence of actual money laundering, we did find that failing to adhere to the 2017 regulations and poor training was leaving a significant number of firms at risk of unwittingly assisting money launders.

Areas where we had particular concerns included risk assessment – where too ?many firms’ approach was inadequate ?- file risk assessments and the overall adequacy and availability of policies, controls and procedures.

Such were our concerns that nearly half (26) of all the firms we reviewed have been referred through to our disciplinary teams for further investigation.

On the back of our review, we have published a warning notice highlighting our concerns, particularly in relation to firms’ risk assessments.

Where we find non-compliance, we will judge each case on its facts, but if we encounter serious issues or a lack of willingness to resolve issues promptly, we will take strong action. We have also set up a new dedicated AML team in the SRA, with increased resource to monitor and ensure compliance in this area. Anyone who falls short of our expectations should expect to enter our enforcement process.

In the last five years, we have taken more than 60 cases linked to potential improper money movements to the Solicitors Disciplinary Tribunal. These cases have seen more than 40 solicitors being struck off, voluntarily coming off the roll, or suspended from practising.

We currently have a further 190 live investigations into law firms linked to money laundering issues. Approximately three-quarters of these include potential breaches of the money laundering regulations or the Proceeds of Crime Act 2002.

Of course, we all want to work together to stamp out money laundering and to avoid the need for any regulatory action. To help you to do everything possible to prevent your business from becoming a target for money launderers, we have published a package of support on our website designed to help you understand both your obligations and best practice examples of what you could be doing to protect yourself.

Any law firm, anywhere, can potentially be targeted by these criminals, and we all have a part to play in safe guarding society. We are playing our part and I would urge you to make sure you and your firm are playing yours.