Compliance issues for solicitors to look out for in 2021
We were thrilled to be asked to write a compliance blog by our friends at The Cashroom.
The six burning issues for 2021 are:
- Covid and financial stability – many firms are being pushed to the edge. How do you deal with the fallout?
- AML supervision – the SRA is being much more proactive. Be prepared for a ‘knock at the door’.
- Transparency Rules enforcement – it’s unpopular, but there’s no excuse to get this wrong.
- SRA reporting – COLPs are grappling with the enhanced reporting duties under the ‘new’ Codes of Conduct.
- Brexit, practising rights and data flows – for those practising across EU borders, it’s a big deal.
- Professional indemnity insurance – the market will continue to create uncertainty for the foreseeable. Make yourself attractive to insurers.
When is tax advice not tax advice? The implications for solicitors are no joke
MLROs take note
Most solicitors specifically exclude tax advice in their retainers, unless they have a dedicated tax department. This does not mean they are shielded from the Money Laundering Regulations.
Yes, there are many areas of legal advice that skirt around tax (e.g. property, commercial, employment, pensions, family, wills and trusts). But the lawyer – unless they are a tax specialist – does not typically provide a full advice on the tax element.
Until recently, that was the accepted position.
The 5th Money Laundering Directive has turned that on its head. There is a real danger that firms could wrongly assume that certain areas of practice are not subject to the Money Laundering Regulations.
This could be an offence.
In this blog we look at what additional areas of practice might be caught by the Money Laundering Regulations, and what to do about it.
- Improving comparison information for consumers – SRA pushing ahead with piloting a close relationship with comparison websites to push the transparency agenda.
- In related news, the SRA is rated ‘Bad’ on TrustPilot – these appear to be genuine complaints from members of the public rather than disgruntled lawyers. But, as is the problem with online reviews, who knows?
Law Society practice notes and updates
- NEW practice note on Handling Complaints – essential reading!
- Is outlining our reporting obligations in client care letters ‘tipping off’?
- Can the Legal Ombudsman re-assess a bill that’s been assessed by a court?
- ICO statement in response to the publication of a draft adequacy decision from the European Commission – although this looks very positive in terms of uninterrupted data flows between the UK and EU, it may be subject to legal challenges.
- Transparency International publishes 2020 Corruption Perceptions Index – New Zealand and Denmark are top of the class. Somalia and South Sudan are easily distracted and could do better.
- FATF rating table for effectiveness of AML controls in various jurisdictions – useful tool for assessing whether a country should be classed as ‘high risk’ in your client, matter and firm-wide risk assessments.
- Cyber-security self-assessment tool launched by the National Cyber Security Centre – hats off, this is a brilliant resource.
Thanks to everyone who attended our monthly webinar last week on Financial Stability – a very insightful session hosted by Paul McCluskey. The slides have been sent out so please feel free to share with colleagues who couldn’t make it.
Looking ahead, please save the date of our next webinar – Wednesday 17th Match at 12pm (available to clients only).
The topic is one that we are receiving a lot of questions about at the moment – the new Legal Sector Affinity Group (LSAG) guidance.
We will be breaking the 200-page guidance down into ‘user friendly’ language and telling you what you need to know.
Previous sessions also include:
- Data protection
- Anti-money laundering
If you registered for these events, you should have been sent links to the recordings. If not, please just ask.
What’s on my whiteboard?
- Bushra Anwar – restored to the roll after being struck off in 1999. “The tribunal was satisfied that restoration of this applicant to the roll would not undermine the profession in the eyes of public. What she had done when young and inexperienced should not blight her for the rest of her life.“
- Mohammed Imran Hussain – fined £10,000 for abusive telephone call to a complaining client.
- Arthur Roger Brooks – fined £10,000 for failing to take jailed client’s instructions to sell property.
- Nato Zondagh – struck off for misappropriating client money, failing to undertake post-completion on property transactions and various acts of dishonesty.
- Ebru Atas – recently qualified solicitor struck off for faking divorce papers and taking client money into her own bank account.
- Suhail Zina – Clifford Chance solicitor, along with Goldman Sachs analyst brother Mohammed Zina, charged with insider trading by the FCA.
- Babita Attra – struck off for facilitating translation fraud against the Legal Aid Agency.
- Gregory Stuart Saunders – former Clarke Willmott partner struck off for misleading his client into believing a damages were to be received imminently, when in fact no settlement had been reached.
- Jonathan Thomas Gorman – department head struck off after being found to be accountable for £15m worth of property claims against EAD Solicitors. Poor service and failure to protect clients’ interests were aggravated by a cosy relationship with property developers.
- Seatons Law Limited – fined £14,000 for failing to spot red flags in conveyancing transactions.