SRA Audits & Inspections - Assistance

We are helping an increasing number of SRA regulated firms through their audit or inspection by the SRA. The SRA a very active in carrying out AML Audits. We help firms navigate their way through such an audit and then with any work the SRA ask them to do to comply. In addition we can assist with carrying out an Independent AML audit after a few months to check the actual implementation & operation of those AML policies & procedures. We are also helping forms through their Thematic Reviews (for example in Probate). We expect the SRA to start to do Sanctions Compliance Audits and are set up to assist with this as well.

It is best to contact us as soon as you receive notification from the SRA. They will ask you to answer some preliminary questions and submit your policies for review. How you answer them can help or hinder how the audit or inspection goes.

We charge at £200 + VAT

SRA Guidance for Inspections

Here is a link to view guidance issued by the SRA on how they will carry out inspections. Although it appears to be geared towards AML, we suspect that this guidance will be indicative for inspections or audits in other areas as well.

https://www.hunningsconsultancy.co.uk/wp-content/uploads/2024/04/SRA-Guidance-on-our-firm-inspections-April-2024.pdf

SRA AML Pre-Visit Questionnaire

Please find below a copy of the SRA AML Pre-Visit Questionnaire. We expect that the Sanctions audits will follow a similar format.

"Anti-Money Laundering (AML) Questionnaire

How to complete the questionnaire

The questionnaire should be completed by the money laundering compliance officer (MLCO) and money laundering reporting officer (MLRO). The questionnaire will help us understand the size and nature of your firm. Therefore, please respond comprehensively and openly.

Guidance notes to some of the questions are provided at the end of the document.

Please complete the following questionnaire and return it to us, along with the documents requested within the next 14 days by email to [email protected].

What we will do with your response

The information you provide will feed into our assessment of your compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). 

We will review your response and documents ahead of the scheduled AML inspection and may wish to discuss some of your responses as part of the inspection.

Co-operation

We are requesting this information under our powers set out in the Code of Conduct for Firms. You have a duty to co-operate with us and respond to our requests for information under paragraph 3.2 and 3.3 of the SRA Code of Conduct for Firms.

Part A

Your firm

1. Do you have multiple offices, if so, where are your offices based?

• What percentage of your firm’s work equates to services that fall within the scope of the MLR 2017?

3. How many fee earners at your firm (both qualified and unqualified) are undertaking work within scope of the MLR 2017?

Your Services

• Please explain the types of services you provide that fall within the definition of an independent legal professional (as defined by regulation 12(1) MLR 2017 below). You should include the percentage of your firm’s work that equates to these services. e.g Residential Conveyancing – 20%.

• Please explain the types of services you provide that fall within the definition of a trust or company service provider (as defined by regulation 12(2) MLR 2017). You should include the percentage of your firm’s work that equates to these services.

• Please explain the types of services you provide that fall within the definition of a tax adviser (as defined by regulation 11(d) MLR 2017). You should include the percentage of your firm’s work that equates to these services.

Your AML Regulation 18 Firm Wide Risk Assessment

• When was your regulation 18 MLR 2017 firm wide risk assessment first drafted?
• When was your regulation 18 MLR 2017 firm wide risk assessment last updated?

Your AML Regulation 19 Policies, Controls & Procedures

• When was your firm’s regulation 19 MLR 2017 AML policy first drafted?
• When was your firm’s regulation 19 MLR 2017 AML policy last updated?

Suspicious activity reporting (SARs) – PLEASE DO NOT SEND US YOUR SARS

1. How many Defence Against Money Laundering SARs have you submitted in the last 24 months?
2. How many information SARs have you made to the NCA in the past 24 months? 
3. Have you had consent refused to proceed in the last 24 months following the submission of a Defence Against Money Laundering SAR to the National Crime Agency? If so, how many times

Politically Exposed Persons (PEPs)

1. How many PEPs have you acted for in the last 24 months?

Independent Audits

1.  Have your AML policies, controls, and procedures been audited in accordance with regulation 21 MLR 2017? If so please confirm if they were audited by an internal or external party and the name of the individual or company undertaking the audit?

Training

1. Since the implementation of MLR 2017 when was AML training first carried out
2. When was training last carried out at the firm
3. Do you keep copies of training material?

File reviews

1. Do you carry out file reviews to assess compliance with the MLR 2017?
2. If yes, do you keep records of file reviews. If not, please explain why not
3.  Please provide a list of the files reviews completed within the last 6 months

Financial Sanctions

• Do you have a separate policy on financial sanctions?
  • Yes
  • No
  • Covered within the AML Policy
  • Other, please explain
• Do you have a sanctions risk assessment? 
  • Yes
  • No
  • Covered within the AML Firm wide risk assessment
  • Other. Please explain

Part B

Documents

Please provide the following documents, unless we have reviewed them in the last 12 months, and they have not been updated.

1. your firm’s AML risk assessment required under Regulation 18 MLR 2017

           attached ☐

• your firm’s proliferation financing risk assessment under Regulation 18A MLR 2017

           attached ☐

• your firm’s AML policies and procedures under Regulations 19 MLR 2017

attached ☐

• your firm’s template client/matter AML risk assessment

attached ☐

• copies of any audits on your firm’s policies and procedures carried out under Regulation 21 MLR 2017, to include any recommendations or follow-up action arising from them

attached ☐

• AML-related training records and training material for the last three years

attached ☐

• If applicable, your file review form template and a list of the file reviews carried out  within the last 6 months                                                                                   attached ☐

• List of fee earners undertaking regulated work

attached ☐

• If your case management system or processes allow, a list of any open matters you have identified as high risk.

attached ☐

we do not have any high risk open matters ☐

our systems/processes do not allow us to obtain this data ☐

This questionnaire was completed by:

Anti-Money Laundering Questionnaire Guidance

A2.      In this question you should explain the type of services you provide and the scale of those services.

Regulations 11 and 12 of the MLRs set out the definitions of activity that fall within scope.

Under Regulation 11(d) “tax adviser” means a firm or sole practitioner who by way of business provides [material aid, or assistance or advice, in connection with the tax affairs of other persons, whether provided directly or through a third party], when providing such services

Under Regulation 12(1) “independent legal professional” means a firm or sole practitioner who by way of business provides legal or notarial services to other persons, when participating in financial or real property transactions concerning

(a) the buying and selling of real property or business entities;

(b) the managing of client money, securities or other assets;

(c) the opening or management of bank, savings or securities accounts;

(d) the organisation of contributions necessary for the creation, operation or management of companies; or

(e) the creation, operation or management of trusts, companies, foundations or similar structures, and, for this purpose, a person participates in a transaction by assisting in the planning or execution of the transaction or otherwise acting for or on behalf of a client in the transaction.

Under Regulation 12(2) “trust or company service provider” means a firm or sole practitioner who by way of business provides any of the following services to other persons, when that firm or practitioner is providing such services—

(a) forming companies or other legal persons;

(b) acting, or arranging for another person to act—

(i) as a director or secretary of a company;

(ii) as a partner of a partnership; or

(iii) in a similar capacity in relation to other legal persons;

If you are supervised by another supervisor for TCSP or Tax Adviser work you should let us know in your response.

A4.  In this question we want to understand the nature of your practice, so please be as descriptive as possible. For example if your firm provide both residential and commercial property services please list these separately with an estimate the percentage of your firm’s work in each area.

A5. In this question we want to understand the nature of your practice, so please be as descriptive as possible. Please describe all the relevant departments involved in setting up trusts or companies separately with an estimate the percentage of your firm’s work in each area.

A6. In this question we want to understand the nature of your practice, so please be as descriptive as possible. For example you may provide stand-alone tax advice, or you may provide tax advice ancillary to another service, such as will drafting. Please list each of the services you provide with an estimate the percentage of your firm’s work in each area.

A16. In this question we want to understand what training has been provided by the firm since the implementation of the MLRs 2017. Please provide the date of the first training since June 2017.  You will need to provide training records for the last three years.

            Regulation 24(1)(a) requires that you take appropriate measures to ensure partners, relevant employees and any agents you use receive training.

A19. By file reviews we mean any reviews of matters carried out by the firm to ensure the firms processes are complied with. If you have other measures in place such as a checklist on files or system led controls please provide details of this. 

Documents

B1. A firm wide risk assessment is a requirement under Regulation 18 of the MLRs. You should provide the risk assessment in place at your firm at the date of our request. If you make amendments to the risk assessment since our request, you should explain these in your response. If you do not have a documented risk assessment in place, you will need to let us know, and you must rectify this immediately. 

B2. In September 2022 an amendment to the MLR 2017 introduced the requirement for firms to identify and mitigate the risk of Proliferation Financing (‘PF’).

All firms in scope of the MLR 2017 are asked to take appropriate steps to identify and assess the risks of PF to its business.  

In line with regulation 18A and regulation 19A if you haven’t already, we would advise you to consider your firms risk and exposure to PF and incorporate this into you incorporate this into your existing FWRA and use this to inform your policies, or create a separate risk assessment addressing your firm’s exposure to PF. 

B3. For this question you should provide all the documents you have in place to manage and mitigate the risks of AML and counter terrorist financing. For example, if you have separate source of funds/source of wealth forms and an internal SAR form you should provide these to us.  Please do not send copies of SARs, whether internal (made by staff to the MLRO) or external (made by the MLRO to the National Crime Agency).

B4. If your client matter risk assessment is undertaken on a system you should provide us with a screenshot of the system.

B6. For this question you should provide training records as well as copies of the training material that was used. If you do not have copies of the training content, please provide an explanatory note of the training provided.

B7. You should provide us with your template form used for completing file reviews and a list of the reviews carried out within the last 6 months.  If you do not have details of this, please provide an explanatory note explaining why you are unable to obtain this information.

If there’s any questions that you want to discuss because you don’t fully understand the question or it would be particularly onerous for you to provide a response, please contact me at [email protected] and I will be happy to arrange a time to discuss."

Agenda to Prepare for The SRA Inspection

AML Inspection Day Agenda

Probate Thematic SRA Reviews - link for further info regarding this:

https://www.hunningsconsultancy.co.uk/sra-started-to-do-reviews-of-law-firms-on-how-they-provide-probate-estate-admin-services/

Other Compliance Support from us

https://www.hunningsconsultancy.co.uk/compliance-services/