COLPs: Are you ready for the SRA sanctions questionnaire? [31 May deadline]

The regulator of solicitors in England and Wales has announced a new round of sanctions assessments. This takes the form of a mandatory SRA sanctions questionnaire.

The assessment will be sent by email to firms’ Compliance Officer for Legal Practice (COLPs) or authorised signatory. Make sure that your team looks out for the SRA email, and do check your spam filters to ensure you do not miss the 31 May deadline.

Why is the SRA sending this sanctions questionnaire?

Sanctions compliance is an increasingly important element of solicitors’ risk management. The sanctions regime applies to all law firms, not just those within scope of the Money Laundering Regulations.

It is an offence to act for a ‘designated person’ subject to financial sanctions without a specific or general licence from the Office of Financial Sanctions Implementation (OFSI). Trade sanctions may also apply to clients operating in certain jurisdictions or industries.

For some firms, including those with an international presence, the sanctions regimes of other countries (e.g. the USA) will also be an important consideration.

The SRA has identified that there may be gaps in law firms’ approach to sanctions compliance. The regulator wants to assess the profession’s exposure to sanctions breaches.

Is the questionnaire mandatory?

Yes. You must provide responses by the deadline through the link provided in the SRA email. Try to ignore the fact that we are usually encouraged not to click on unsolicited email links!

The SRA says:

“There are no exceptions to the requirement to do this. We may take action against those that fail to submit the information within the required timetable.”

This is not an empty threat. Firms that failed to respond to previous AML questionnaires faced uncomfortable scrutiny from the regulator.

What information do we need to provide?

The questionnaire can be found on the SRA website.

You will note that, even though this assessment is aimed at firms outside the scope of the Money Laundering Regulations, it envisages that firms will be doing full AML checks. It includes questions about identifying ultimate beneficial owners and source of funds.

For many firms out of scope of the Money Laundering Regulations, these will be unfamiliar concepts.

You can understand the logic. How would a firm know if it is breaching sanctions unless it understands who sits behind the scenes, and where the money is coming from?

It remains to be seen what the SRA will do with this information.