SRA to check firms’ money laundering compliance
The SRA has announced that it will be undertaking a sweep of 400 firms to check whether they are fully complying with the Anti-money Laundering,Terrorist Financing and Transfer of Funds (Information of the payer) Regulations 2017 (MLR 2017).
The intention is that the chosen law firms will be written to directly by the SRA to evidence that they are compliant. There will be little leniency, it would seem. The Chief Executive, Paul Phillip, has warned that there will be enforcement repercussions for non-compliance.
Why it matters
There has been a marked increase in SDT prosecutions in relation to non-compliance with AML requirements resulting in 40 solicitors being struck off in the past 5 years.
Even where firms have policies and procedures in place it is futile if they are not being adhered to in practice. The message really does need to be hammered home to everyone concerned that this isn’t just another checklist and complacency is not an option.
We think that the key things you should have in place to demonstrate compliance are:
- A firm-wide risk assessment
- A comprehensive and up to date AML policy
- Training records
- Evidence of client and matter-specific risk assessments
The MLR 2017 do not necessarily affect all law firms. However, where the Regs to apply, you are expected to comply in full.
We have prepared a Compliance Checklist to help you quickly idenmtify what you should have in place.
New SRA handbook and compulsory digital badge delayed
The implementation date for the new SRA handbook (‘Standards and Regulations’) and compulsory use of the digital badge has been pushed back to 25 November 2019.
The regulator says the intention is to allow firms more time to make the necessary adjustments in readiness for the new rules being rolled out.
Why it matters
Until this announcement there has been no compulsory date for the digital badge so it is helpful to have some clarity moving forward.
The delay in implementing the new handbook will allow firms to ensure internal training for its staff members is in place. It is however undoubtedly frustrating, for those with business plans looking to explore and take advantage of the innovative aspect of the rule changes which will enable solicitors to undertake reserved work in non-authorised businesses.
Crispin Passmore, former SRA Director, has pointed out that:
“This isn’t a compliance issue for your COLP, this is an issue that your competitors are already grappling with so don’t wait until November to engage”
What to do when you have a data breach
We have put together a quick one-sheet guide to what to do when you discover a potential data breach.
As soon as you discover the breach, the clock starts ticking, so swift action is required.
Transparency rules may be extended profession warned
The SRA rolled out its new Transparency Rules on 6th December 2018 requiring the publication of prices and service information in relation to services covering conveyancing (residential), probate (uncontested), motoring offences (summary offences), immigration (excluding asylum), employment tribunals (unfair or wrongful dismissal), debt recovery and licensing applications.
Iain Miller, regulatory partner at Kingsley Napley, is reported as warning solicitors to expect this to be extended to over more legal service areas and greater detail in what information is provided.
Why it matters
The SRA has already announced that it will be undertaking a sweep of 500 law firms to ensure compliance and we now have a date for the compulsory use of the digital badge.
It’s likely that the regulator will get tougher with solicitors if its initial sweep indicates that firms are either not complying, or doing the bare minimum required, without embracing the spirit of the Transparency Rules.
Practice Notes and Guidance
Anti-money laundering – Reporting your concerns – very helpful Law Society guidance
No-deal Brexit – Consumer Law – highlighting changes to consumer law
No-deal Brexit – Criminal Justice and security co-operation – advice in relation to potential implications post no-deal Brexit.
- Findmyclaims.com Ltd have been fined £124,000 for numerous breaches including sending misleading and unsolicited letters. It’s worth noting that the firm is an ABS and as such the SRA can fine up to £50million without having to necessary refer to tribunal unlike traditional law firms which must be referred if the fine exceeds £2000.
- Richard Barca, solicitor, has been fined £20,000 and ordered to pay £29,000 costs after having lent money to a client to stave of their mortgage lender and then charged them interest at 60% per annum. He was found to have acted without integrity and had acted in breach of his position of trust.
- Gary Aikinclose, consultant solicitor, has been struck off after having provided his own bank details to clients and channelled four payments totalling £2,700 into his own account. Mr Aitkinclose denied doing so deliberately but in error. He submitted in mitigation that he was overworked and tired which was not accepted by the SDT as a legitimate excuse for providing his own bank details. He was also found to have amended an invoice and acted dishonestly in doing so.