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You may now charge for AML searches

In unexpected announcement in late November 2020 the SRA’s AML Practice Supervision Manager, Zoe Allen-Robinson, announced, in answer to a question from the audience at the annual SRA Compliance Conference, that it is now perfectly acceptable to charge for CDD / AML as long as the client is clear about the charge and it is the firms T’s & C’s. Up until less than a month ago SRA Professional Ethics written guidance on this issue was that the: “ordinary costs [of CDD /AML] should indeed form part of a firms overheads”.

We wrote to the SRA for clarification and they have confirmed this. Below is the text of their letter.

“Dear Mr Hunnings

Charging for electronic client due diligence checks.

Thank you for your email of 27 November 2020.

Passing on the cost.

At the COLP/COFA conference last month our director of AML, Colette Best announced that the SRA are now agreeable to firms passing the on the cost of electronic client due diligence “CDD”. Historically we have viewed the costs of client due diligence as an overhead that should be borne by the firm. The cost will need to be clearly stated in the firm’s terms and conditions. This change in policy is on the condition that firms are completely transparent with clients about how much they will be charged before undertaking the due diligence. The cost should not appear on the client’s bill as a disbursement. It is important that clients are in the position that they are informed of and understand the cost in advance. (Paragraph 8.6 and 8.7 in the SRA Code for Solicitors, RELs and RFLs). This will enable them to instruct an alternative firm if they are not agreeable to the cost.

Electronic checks generally.

All firms carrying out work in the regulated sector must comply with Regulation 27 of the Money Laundering Directive and undertake client due diligence. On-line checks can be a very helpful support to firms. When deciding what provider to go with it is very important that the firm and all those using the system understand what it achieves and how it must be used. Some systems are quite complex and unless used properly will not be effective. All staff using the system must be fully and adequately trained in order to prevent inaccurate results. It is important that firms do not rely solely on external systems to undertake CDD and other more appropriate CDD identification checks are ignored. Any system chosen to support a firm must be appropriate for the client concerned. Paragraphs 4.3.2 and 4.3.3 of The Legal Sector Affinity Group Anti Money Laundering guidance sets out what you are required to do by way of CDD and some factors to look into when considering an electronic provider.

I hope you have found the above helpful. If you would like to discuss your query further
please do not hesitate to contact me on the number below.
Yours sincerely

Jane Allan (Solicitor)
Ethics Team Manager
Professional Ethics

Should you want assistance with any compliance questions please do not hesitate to contact us: 07887 524507 or ingemar@hunningsconsultancy.co.uk.

We can

We have a full suite of compliance support for solicitors ranging from OPM, to assistance with Lexcel & CQS, SQM applications, to bespoke compliance support or COFA support hotline retainer. We even provide a DPO service where you may buy what you need, which says you having to employ someone. Please have a look at our services in the drop down at the top of the pages in our website: https://www.hunningsconsultancy.co.uk/

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