AML makes the news – again!
There has been, and we anticipate will continue to be, much speculation as to what the effect will be on law firms within scope of MLR when the FCA becomes the Single Professional Services Supervisor (SPSS) for AML.
Areas discussed and debated include the potential for increased costs, duplication, legal professional privilege, confidentiality, potential conflict, whether the SRA will retain its wider responsibilities in relation to prevention of economic crime etc. What is known is that the FCA is hands on, direct, evidence focused and known for robust enforcement.
While we don’t know when the change will take place, other than it’s expected to be by 2029, our advice is that you should ensure you are complying with all the existing requirements; you are prepared if the SRA contacts you; and you are in as good a position as you can be when the FCA takes over. This includes:
keeping your firm wide risk assessment (FWRA) and AML policies, controls, and procedures (PCPs) up to date and followed ‘on the ground’,
ensuring client and matter risk assessments (CMRA) are completed and ongoing monitoring is taking place and being recorded,
providing regular training, and
ensuring you have carried out independent AML audits.
The next thematic review the SRA will be carrying out in early 2026 will be on MLR Regulation 19 – PCPs, including monitoring and management of compliance with PCPs, and the disconnect between polices and what’s happening on the ground.
The SRA AML report 2024-25, to be published shortly, will indicate an increase in AML oversight (visits, desk reviews etc) from 545 firms in 2023-24, to 864 ‘pro-active engagements’ in 2024-25, including 317 inspections and 516 desk based reviews, and inspections of independent AML audits. 30% of firms were not compliant and 451 were only partially compliant. Common non-compliant areas were client and matter risk assessments (CMRA), source of funds, PCPs and FWRA.
How Compli can help…
The Compli Solicitor Regulatory and Professional Discipline Team can provide expertise and advice on risk and compliance, AML, disciplinary assistance etc. If we can help in any way, please get in touch at [email protected]