A law firm review looking at the measures taken to tackle money laundering suggested that a number of firms need to take further action.
Conducted by the Solicitors Regulation Authority (SRA), the review looked at a range of 50 firms and their corresponding level of compliance with the Money Laundering Regulations 2017.
Whilst the review found that the majority of were taking the necessary steps to acknowledge and mitigate the risk of money laundering, it did highlight areas of concern.
As well as revealing that not all firms were keeping records of their decisions, it found that only 69% of files reviewed had written evidence to show that the level of risk was assessed.
Just 17 firms had a firm-wide risk assessment in place or were in the process of doing so, despite this being a requirement.
Whilst firms had limited time to implement the new regulations at the time of the review, the SRA state that they now expect firms to ‘ move towards compliance as a matter of urgency’.
Over the last three years, the regulator stated that they had shut down eight firms following cases linked to potential improper money movements, with a further 14 closing down voluntarily.
49 solicitors and two firms have also been referred to the Solicitors Disciplinary Tribunal.
In light of the review’s findings, a warning was issued by the regulator drawing attention to the potential signposts of money laundering; this included the warnings around vigilance and the need for professionals to remain alert to suspicious activity.
The SRA also issued guidance highlighting the key changes within the regulations.
Commenting on the risk of money laundering and importance for firms to take actions was Paul Philip. The Chief Executive of the SRA stated: “The credibility of law firms makes them an obvious target for criminals wishing to launder money. Tackling it is crucial not only to maintain trust in the profession, but also for the good of society. Money laundering is not a victimless crime – it helps fund terrorism and those involved in drug trafficking and people smuggling.
“We are encouraged that most firms seem to be on top of the issues, but all firms in scope must now comply with the new regulations. It is not enough to want to do the right thing. Weak processes or undertrained staff leave the door open for criminals. If firms do not step up and treat this issue with the seriousness it deserves, we will take action.”
