Solicitors - Be ready for an SRA AML audit
The Solicitors Regulation Authority is to ramp up its enforcement of money laundering compliance
Don’t get caught out
SRA Chief Executive Paul Philip has revealed that the Solicitors Regulation Authority is to ramp up its enforcement of money laundering compliance severely following its continual frustration with non-compliant firms.
Therefore, it is important to prepare yourselves and your firm for what the Law Gazette is referring to as the SRA’s “blitz on AML breaches” as the regulator makes preparations to increase its crusade against firms failing to meet the expected standards.
Chief executive Paul Philip stated: “We are still finding fairly basic deficiencies in AML arrangements within firms. Fines have been continually going up. Not having a risk assessment in place does increase the risk of money laundering. We will continue to ratchet up the consequences if people don’t comply.”
The SRA is also planning a data-gathering exercise from the whole profession which is scheduled to start at the end of June. This will collect information about:
- AML
- Sanctions
- Suspicious activity reports
It will run for six weeks and help to prioritise firms that require inspections and desk-based reviews. Recently published board papers revealed that a sweeping poll of the profession will be carried out in the coming weeks too.
Did you know?
Last November, the regulator set itself the target to carry out 700 inspections in 2024/2025. From November to February, the SRA made 297 inspections and beat its target by 128%.
SRA outcomes
There are typically three outcomes to an AML Audit:
- The SRA AML Audit team accepts you have been compliant, and no action is taken.
- The SRA AML Audit team considers there to be some corrective actions required and will provide guidance to do so, but again, no action is taken.
- The SRA AML Audit team considers there to be more serious issues, and they provide a compliance plan to rectify breaches, but they refer the firm to the investigation team for further action.
If you consider that your firm may not be compliant, it is essential that you ensure you are ready before the SRA arrives. You may not be able to fix the past, but ensuring you stop any breaches by achieving compliance will assist in mitigation and reduce a fine.
Recommended actions
Identification of documents you need in place to demonstrate compliance (Policies, Controls and Procedures).
- A review of your Regulation 19 Policies Controls and Procedures. - Regulation 18 firm wide risk assessment.
- AML training including: - AML training for ALL staff to meet the firm’s obligation to provide annual training.
- Risk management assessment
- Guidance on any shortcomings and areas of improvement.
- Corrective action sheet that explains any concerns and how to fix them.
- Produce a written report for discussion between the MLRO and Partners to run through each of the corrective actions.
- Identification of any issue you may confront with an audit and a strategy on how to address the SRA requirements.
- Training materials.
- Client and matter risk assessment forms.
- MLR 2017 compliance
- One-to-one training for the MLRO and MLCO on their obligations and requirements.
Don’t get caught out!
In conjunction with the Regulation and Compliance Office, we are here to help.