The Solicitors Regulation Authority is to step up its enforcement of money laundering compliance amid concerns that firms are still not getting the message about their obligations, its chief executive has revealed.
The most recent fines for non-compliance with money laundering regulations suggested that risk assessments and policies were not in place at firms as recently as last November. This was after the SRA’s blitz on AML breaches had begun and came in the wake of several warnings about the importance of meeting requirements.
Asked at the SRA media briefing this week about the comparatively recent rule breaches, chief executive Paul Philip said: ‘We are concerned we are still finding fairly basic deficiencies in AML arrangements within firms. Fines have been continually going up. [Non-compliance] is probably not deliberate as firms may not have the capacity or may not have paid attention.
‘The fact is that not having a risk assessment in place does increase the risk of money laundering. We will continue to ratchet up the consequences if people don’t comply.’
Newly-published board papers reveal a sweeping poll of the profession will be carried out in the coming weeks. The SRA is planning a data-gathering exercise collecting information from the whole profession about AML, sanctions and suspicious activity reports. This will start at the end of June and run for six weeks and will help to prioritise firms that require proactive inspections and desk-based reviews.
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The regulator set itself the target to carry out 700 inspections in 2024/25 (which began last November). In the first quarter of the year, from November to February, the SRA made 297 inspections – beating its target by 128%.
The SRA said it achieved this positive performance as a result of streamlined processes, making full use of desk-based reviews alongside onsite inspections; and the retention and development of AML colleagues, whose skills and knowledge have led to quicker and more effective inspections.
While some solicitors may balk at the level of scrutiny and sanctions they are being placed under, the latest SRA board papers give an indication of the pressure also being exerted on the regulator to act.
A full inspection of the SRA by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) was completed this month. The watchdog interviewed staff from all units of the solicitors’ regulator and will report back on how well it is supervising AML.
One of OPBAS’ objectives is to improve the quality of Suspicious Activity Reports (SARs), which alerts law enforcement of suspicious activity that might indicate money laundering or terrorist financing. OPBAS reviewed a sample of SARs in February but has yet to feed back its opinion. The SRA is also having to wait on the outcomes of two HM Treasury consultations on the ‘Future of AML Supervision’ and ‘Improving the Effectiveness of the Money Laundering Regulations’.
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