The Solicitors Regulatory Authority (SRA) is set to write to 400 firms reminding them of their obligations to remain compliant with the 2017 changes to money laundering regulations. Following this, non-compliant firms could face significant sanctions in the future.
Approximately 7,000 law firms are required to adhere to money laundering regulations and should have an up to date risk assessment and procedures in place to deal with suspected money launderers or suspicious persons.
As more than 40 solicitors have already been struck off or voluntarily left the roll amidst suspicions of money laundering, the SRA are set to enforce regulations and place greater pressure on firms to comply.
The recently published ‘Economic Crime – Anti-Money Laundering Supervision and Sanctions Implementation’ report found that legal service providers were particularly poor at completing Suspicious Activity Reports (SAR) that form part of a solicitors’ regulatory requirements when it comes to money laundering compliance. Of the 634,113 reports submitted between October 2015 and March 2017, 525,361 (82.85%) SARs were completed by credit institutions and banks.
In stark contrast, reports made by estate agents were a mere 0.12% (766) of the total, with independent legal professionals deeming it necessary to make 4,878 (0.77%) SARs reports. Overall, this means that the property sector completed less than 1% of all SARs reports.
Whilst estate agents market share of SARs completions increased between April 2017 and March 2018 to 0.15%, it is clear that estate agents are failing to ensure property purchasers are not contributing to economic crime and money laundering. Similarly, in the past year, the 2,660 reports made by the legal sector represent only 0.57% of the total and a considerable decrease when compared to previous years.
Paul Phillip, chief executive of the SRA, commented: “‘The stakes are too high for solicitors to be anything but fully committed to preventing money laundering and the crimes it supports. That means taking every opportunity to alert the National Crime Agency of suspicious activity – it is a professional duty.
‘Many are already stepping up to that challenge, but many is not enough. Compliance is not optional.’
Donald Toon, director of the National Crime Agency (NCA), said: “‘From our perspective there is more reporting than necessary from the banks and a real dearth of reporting from some of the professional services sectors,’ Toon said. He referred to situations where SARs from banks, which then lead to enforcement action, often show that professionals ‘usually lawyers and accountants’ are involved but that they are not reporting. ’It’s unusual for us to get a report from them.”
Whilst many solicitors have found the regulations ambiguous and confusing, citing a lack of uniformity in approaches, what is clear is the fact that the SRA are prioritising the widespread conformity of AML regulations from its regulated firms.
How difficult do conveyancers find the 2017 AML regulations? What frameworks or scaffolds would conveyancers like to see to make compliance easier?