The SRA (Solicitors Regulation Authority) will be testing a sample of firms’ anti-money laundering compliance every month as it increases efforts to combat misconduct in the profession.
The solicitors regulator will also expand visits to every high-risk firm on a three-year rolling basis, along with visiting a sample of lower risk firms. The stepping-up of monitoring is revealed in a draft business plan for 2020/21, published this week.
Findings from the reviews of firms’ procedures and controls will be published, with further reports to the Treasury and the Office of Professional Body Anti-Money Laundering Supervisors (OPBAS). The SRA currently spends around 2.5% of its overall budget on AML activities, which is expected to rise in 2020/21 to 3% of the budget.
The regulator has rightly identified money laundering as a priority risk amid concerns that solicitors, even oftentimes unknowingly, are supporting organised crime such as terrorism and drug trafficking. A previous review in 2019 found that over a third of firms had not made a full risk assessment, and half of the reports received by the SRA about money laundering involve not having carried out correct and proper due diligence on a client or their funds. To add to this, the Financial Action Task Force (FATF) has said in the past it was concerned about the relatively low number of suspicious activity reports filed by solicitors and other legal professionals in the UK.
The SRA also plans to open a new office in Wales, as part of increased engagement with the profession in the country. This will mean it can work more closely with different groups, including the Cardiff office of the Law Society, on the key issues for Welsh consumers and the profession.