There is a lot of information in this guidance. It is pretty comprehensive. We do not seek to reproduce it all here but just to highlight the main principles and offer some assistance. There is a link at the end to the full guidance. They state quite openly that following this guidance will not be a defence to prosecution, but it is our view that if you can demonstrate that you are following it is firstly likely to reduce dramatically the likelihood of something going wrong and secondly it is likely to sound loudly in mitigation.
Published by the Law Society on 20th January 2021. Designed to support legal professionals and firms in complying with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended) and reviewed and redrafted after the EU's 5 Anti-Money Laundering Directive. It is currently with the Treasury for approval, but we cannot imagine that the Treasury will water it down.
Practices must have:
- Practice-Wide Risk Assessment: Practices must have a written, up-to-date practice-level risk assessment in place, in line with R18 requirements. (Link to R18: https://www.legislation.gov.uk/uksi/2017/692/regulation/18)
- Client/matter level risk assessment: Practices must have
- a) Client and matter level ML/TF risk assessment procedures that include a requirement to undertake a written risk assessment on each new client and matter/retainer particularly where the matter is non-repetitive and
- b) A documented procedure for the application of client/matter level risk assessment outcomes to the due diligence undertaken on any particular client/matter
- Policies, Controls & Procedures (PCPs) : The practice must have clearly documented PCPs based on their practice-wide risk assessment which include the AML governance arrangements of the practice.
- Client Due Diligence: The practice must have clearly documented PCPs based on their practice-wide risk assessment which include Client Due Diligence on which it then gives particularised guidance.
- Suspicious Activity Reporting: the practice must have procedures setting out how, and in what circumstances an internal disclosure should be submitted to the nominated officer (MLRO).
- Technology: the practice must have clearly documented PCPs based on their practice-wide risk assessment which include:
- a) Measures taken when new technology is adopted to protect against Money Laundering (ML) or Terrorist Financing (TF) risks
- b) Where practices use electronic identification and verification (EID&V) tools they should document the role of the tool, the data sources it uses, and in what circumstances (clients/matters) it is appropriate to use the solution.
- Training: The practice must have clearly documented PCPs based on their practice-wide risk assessment which include:
- a) Measures deployed to ensure AML relevant training of partners, staff and agents, including the maintenance of records relating to such training. This training must include awareness of MLR, Proceeds of Crime Act Part 7 and Terrorism Act Part 3 reporting requirements, legal professional privilege and data protection requirements. Training should also cover recognition of red flags/risk indicators as relevant to their duties and responsibilities, along with other relevant laws and
- b) Procedures for the communication of PCPs to partners and staff.
- Internal Controls: Where appropriate to the size and nature of the practice:
- a) The practice must conduct an independent audit of the adequacy and effectiveness of its AML policies, controls and procedures and
- b) The practice must undertake screening of relevant employees – both at pre-employment stage and on an ongoing basis.
- Record keeping: The practice must have procedures relating to records keeping and related data protection matters.
Here is a link for the full guidance: https://www.lawsociety.org.uk/topics/anti-money-laundering/anti-money-laundering-guidance
How We Can Help
- Assistance with drafting your Practice-Wide Risk Assessment
- AML Training
- External, independent AML Audit
- A template for record-keeping
- An Up-to-date Office Procedures Manual with an updating service
Contact us: Ingemar Hunnings 07887 524507 or [email protected]