AML: A report from the SRA with lots us useful stuff

At the end of November 2021 the SRA produced a useful report with a summary of what it expects from the firm it regulates and conclusions from the firms it had reviewed that year.

Here is a link to it. Below we have summarised the main points. If you have questions about AML please contact us by filling in the form below. We have a number of AML services to help firms which you will find in the Compliance services accessed from the top of this screen (menu on the mobile view) or just ask us. We will bespoke to your needs.

The main pints of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the regulations) are summarised by the SRA as:

• To produce a firm-wide risk assessment, which underpins the firm’s AML regime.
• Flowing from the risk assessment, to produce AML policies, controls and procedures and to monitor compliance with them.
• To carry out appropriate due diligence on clients and matters, based on their level of AML risk.
• To train all relevant fee earners in their AML obligations, and to repeat this regularly.
• To arrange an AML audit to check, subject to the firm’s size and nature
• to appoint a Money Laundering Reporting Officer (MLRO) and, where appropriate, a Money Laundering Compliance Officer (MLCO).

The SRA have produced guidance on some of these areas :

• SRA 2019 firm-wide risk assessment guidance
• SRA Sectoral Risk Assessment, which is regularly updated
• our 2020 review, drawn from a series of 74 visits to firms
• guidance for firms who provide tax advice.

The principal people responsible for compliance are:

• Money Laundering Compliance Officer (MLCO)
• Money Laundering Reporting Officer (MLRO).

The Three pillars of success

Every person in a firm has a responsibility to make sure that it is not used for money laundering, and that relevant reports are made of any suspicious activity. MLCOs and MLROs form the keystone of the firm’s efforts. The success of the firm’s AML regime as a whole is likely to depend on suitably knowledgeable, skilled and authoritative people holding these roles.

Below, the SRA set out what they consider to be the three main attributes a successful MLCO or MLRO should have:

• Authority: The ability to command respect, to make decisions and to follow them to completion, and the ability to access and use all information held by the firm.
• Independence: A focus on the firm’s legal obligations rather than short-term gain, the ability to make decisions without being influenced by other fee earners or by clients.
• Resources: To be given the time and space to consider what the best course of action should be, to have provision, where possible, for a deputy to cover for them, and supportive colleagues.

The MLRO & MLCO should ask themselves if they have the authority, independence & resources to properly carry out their roles.

Between April & September 2021 the SRA reviewed 50 firms. It found that largely the MLRO & MLCO had sufficient authority & Independence. However with regard to adequate resources the picture was more patchy:

"Resources

• The majority of MLCOs and MLROs said that having enough time to carry out their duties was the most important resource.
• Of the 54 MLCOs and MLROs we spoke to, the majority did not have any reduction in their fee-earning targets to take account of their extra responsibilities.
• Only 48% of MLCOs and MLROs had a deputy to share the work and provide cover for them."

The SRA recommend that a deputy be appointed. This makes a lot of sense as it adds resilience - no single point of failure.

Our own findings

We carry our reviews of firm's compliance documentation (Compliance Stress Test, AML Review etc). We find that:

• people often have not updated their AML policies
• have not carried out an Independent AML Audit to check implementation of their AML Policies & procedures
• have not appointed an MLCO
• do not carry our regular training of staff on AML

Contact Us for Assistance

Fill in the form below or contact our lead consultant: Ingemar Hunnings: on 07887 524507 or [email protected]