Belated Happy New Year to you!
We hope 2019 is kind to you. To help you start planning your compliance year we have put together a useful blog on what you should be concentrating on (see “The Dirty Dozen”, below). There’s undeniably a lot going on, but f you tackle just one per month it will make a big dent.
Plenty of stories in the news about AML and financial crime. The recent criminal and SDT prosecutions are worth circulating to your teams – they bring to life what you will have warned them about in AML training sessions. And in positive news it turns out, according to FATF, that the UK isn’t as bad at fighting money laundering as some may have feared.
Enjoy your weekend!
The Dirty Dozen – 12 jobs COLPs must tackle in 2019
Forget about gym-membership subscriptions and new healthy eating regimes. Maybe something a little more palatable would be a constructive look at planning your risk and compliance tasks for the coming year. In this blog, Kathryn Davies looks at what COLPs must tackle in 2019, namely:
- The new SRA Handbook
- Accounts Rules
- Business planning
- Training and SQE
- Breach reporting consultation
- SIF protection coming to an end
- CQS and Lexcel
- Criminal Finance Act
What have we missed?
Firms to prepare for no-deal Brexit
Whilst we have, on the whole, tried to avoid too much emphasis on the ongoing Brexit shenanigans, it does seem increasingly pertinent to plan for the potential implications of no deal being reached.
Why it matters
The ramifications of a no-deal Brexit is not just relevant to those firms employing RELs or RFLs or with international offices. For example, firms will need to consider their contractual agreements with bodies within EU jurisdictions to ensure that they are GDPR-compliant with cross-border data flows. The UK could effectively become a ‘third country’ for the purposes of GDPR.
No-deal will also impact upon the way in which civil litigation involving EU countries is conducted. Family practitioners should also give consideration to ongoing litigation or pending litigation in respect of which the current Maintenance and Brussels II Regulations are relevant as these may not have effect in a no-deal scenario.
The key on this particular topic is to keep your ear very much close to the ground. The only certainty is uncertainty over the coming months.
SRA pays £1m Leigh Day appeal costs
The SRA has confirmed that it has reached an agreement with Leigh Day in relation to the costs order made in respect of the dismissed appeal they brought against the law firm.
The total agreed costs to be paid to Leigh Day will be £995,000 which includes an interim payment made in October of £600,000.
Why it matters
The amount paid by the SRA in settlement of the appeal costs is not the totality of the eye-watering costs incurred by the SRA in pursuing its fruitless prosecution of Leigh Day. The SRA previously revealed that it had already spent £3.1 million on the case which included the initial investigation, SDT prosecution and appeal.
‘Go to’ criminal conveyancing solicitor jailed for AML offences
Conveyancing solicitor, Ross McKay, was found guilty of three money laundering offences and sentenced to 7 years imprisonment.
He was found to have been responsible for 80 property transactions involving members of a criminal gang who themselves were found guilty of fraud, and money laundering offences.
The police stated that McKay proceeded without questioning the true nature of their business, source of the money or any relationships with other parties to the transactions. Mortgage applications were made using nominees instead of the true identities of the purchasers, the source of funds of deposits were not revealed to lenders and income details were inflated.
Why it matters
Whilst an extreme example, this case really does emphasise the grave consequences of breaching professional AML duties. It is apparent in this incident that McKay entered into transactions with his eyes open to the underlying criminality.
Be that as it may, this should surely come as a warning to all of the profession to always remain vigilant and consider anti-money laundering compliance to be of paramount importance in your every day working life.
In another case prompted by the Panama Papers scandal, a Child & Child partner and MLRO was fined £45,000 by the SDT (plus £40,000 costs) for failing to undertake the proper due diligence on high net worth clients.
UK aims to become global leader in the fight against financial crime
The SRA, National Crime Agency (NCA), Home Secretary and Chancellor of the Exchequer have united to form a task force aimed specifically at combating economic crime.
At the first meeting of the Economic Crime Strategy Board (ECSB), the home secretary, Sajid Javed reportedly confirmed that £3.5m in 2019/20 has been committed to support work to reform the suspicious activity reports (SARs) regime.
This announcement came shortly before the recently published 2018 Mutual Evaluation report produced by the Financial Action Task Force (FATF). The UK has been recognised for its robust understanding of the risks posed by money laundering and terrorist financing.
The report looks at the UK’s counter-terrorism and anti-money laundering measures and considers the UK to be a global leader in promoting corporate transparency. It highlights, in particular, the UK’s legal framework used to conduct Customer Due Diligence which it considers to be comprehensive and fully compliant with FATF’s requirements.
Why it matters
It is clearly apparent that we are seeing increased emphasis on combating economic crime, largely driven by government and international policy. This pressure will continue to filter down to SRA policy, enforcement and day-to-day practise.
The FATF report is positive about the legal profession. Will this result in a more balanced view of the legal profession, rather than the villainous one that is often portrayed in the media? Don’t hold your breath. The ‘professional enabler’ tag, so often trotted out by officials doesn’t help.
Guidance and Practice Notes
- Who owns the file? – helpful guidance to firms when requests for files are made including SARs.
- NDAs and confidentiality agreements – timely advice form the Law Society given recent headlines
- Criminal Finance Act 2017 – invaluable updated guidance in relation to corporate offences of failing to prevent the criminal facilitation of tax evasion.
- Stephen Baggott has been fined £2000 and ordered to pay £300 for having driven to a police station in response to a duty call whilst under the influence of alcohol.
- Tim Bennett received a fine of £5000 having calling a complainant a “nutter”
- Bina Mistry has been struck off for having failed to correct a judge who believed her to be counsel