AML Supervision Change: The FCA to Replace SRA As AML Supervisor for Law Firms

It has been announced that the Solicitors Regulation Authority (SRA) will no longer be the regulator for anti-money laundering (AML) supervision responsibilities, with overall responsibility moving to the Financial Conduct Authority (FCA), which will be the single professional services supervisor.

The Government has taken this action as it reviews reforming the approach to anti-money laundering (AML) and counter-terrorism financing (CTF) supervision regime.

SRA to Step Down as AML Supervisor for Law Firms

It has always been the case that the Law Society holds responsibility for the statutory obligations under Schedule 1 of the MLRs 2017, but has delegated the regulatory and enforcement powers to the SRA. The Law Society reports that it will continue with a non-essential supervisory role, which will include:

• Providing information, guidance and education on AML and economic crime compliance.
• Supporting best practice within the legal profession.
• Contributing to policy development, sector engagement, and strategic reform.

Although the Law Society has expressed concern that the Government has chosen to create a single professional services supervisor, it has pledged its full support to the FCA. The Law Society President, Mr Mark Evens, has stated:

"Whilst we see significant challenges and would not have chosen this route, we stand ready to work with the government and the FCA as it implements the SPSS model"

The next stage is for HM Treasury to hold a consultation on the powers the supervisor should have. There is currently no confirmed timeframe for the change to occur, and until that point, the SRA will remain as the supervisor.

Read the full announcement here: Government strips SRA of anti-money laundering powers.

Over the coming weeks and months, we will learn more and watch, with interest, if the SRA changes its approach to regulation and enforcement.

Until the change, firms are highly recommended and expected to follow the guidance of the SRA, and to continue to ensure they meet all the obligations and guidance provided.

There is clearly a lot of work still to be done to affect the new arrangements, and any changes are unlikely to happen soon.

Compliance and Regulation Support UK

All firms must demonstrate and uphold high standards in their AML systems and processes, as well as in their management and supervision. This also involves outlining how the firm operates, including the conduct of staff in accordance with established policies, controls, and procedures.

If you have any concerns about anything raised in this article or you are concerned about your firm’s compliance with the MLRs 2017, you can contact us via the details below.

Further reading - https://handbook.fca.org.uk/handbook/FCG.pdf

PIB Client Academy

The PIB Professions Team is holding two Client Academies in November.

Held in Derby on Thursday 20th November and London on Wednesday 26th November, the sessions will provide you with insight and advice on a range of areas of risk, guiding you through the different measures that can be taken to help mitigate risk and safeguard your business.