In a review of 50 UK firms, most were found to be “doing what is needed to tackle money laundering, but some need to do more”.
The review of firms was triggered by the stringent demands of the Anti-Money Laundering (AML) Regulations 2017, introduced last June.
Measures introduced include an obligation on firms to establish the source of a client’s funds and wealth. High-risk clients might include foreign business people from blacklisted jurisdictions and politically exposed persons from undemocratic countries.
The regulations are expected to work hand in hand with the unexplained wealth orders aimed at the super rich criminal elite.
However, the SRA’s review uncovered lapses such as missing decision records. Only 69% of the files reviewed had written evidence that the level of risk was assessed and only 17 firms had a firm-wide risk assessment in place or were in the process of implementing one.
Serious concerns were uncovered at six firms it reviewed, which are now facing a disciplinary investigations.
“The credibility of law firms makes them an obvious target for criminals wishing to launder money,” said Paul Philip, SRA chief executive.
“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 under-trained 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.”
In the last three years the SRA has closed-down eight firms, with another 14 closing down voluntarily, and has referred 49 solicitors and two other firms to the Solicitors Disciplinary Tribunal as a result of improper money movements.
This has resulted in 12 strike offs, 13 suspensions and fines of more than £800,000 ($1.1m, €897,023).
