The SRA’s Anti-Money Laundering (AML) Data Collection Exercise 2024 went live in August. The SRA is responsible for enforcing the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), ensuring firms have robust systems to prevent money laundering and terrorist financing.
COLPs, along with MLROs and other senior role holders, play a critical role in this process. The SRA has written to COLPs advising them to “Get ready to provide information about your firm’s Anti-Money Laundering (AML) and financial sanctions activity“. This data collection exercise takes the form of a 44-question survey.
The deadline for submitting responses to the SRA is 23 September 2024.
Initial Questions: Determining Your Path
The AML Data Collection Exercise 2024 begins with three initial questions that will determine the subsequent sections of the questionnaire you need to complete.
1. Scope of Activities (Q01): You will first be asked if your firm engages in activities covered under the Money Laundering Regulations 2017 (MLR 2017). These activities include buying and selling property or business entities, managing client money or other assets, opening or managing bank accounts, organising contributions for company management, and providing tax-related advice. If you answer “Yes” to this question, you will be required to complete the AML questions section.
2. Trust or Company Services (Q02): Next, you will be asked if your firm provides any trust or company services, such as forming legal entities, acting as a director or secretary of a company, providing registered office addresses, or acting as a professional trustee. A “Yes” response here means you will need to complete the Trust or Company Service Provider section.
3. Suspicious Activity Reports (Q03): The third question will ask how many Suspicious Activity Reports (SARs) your firm has submitted to the National Crime Agency in the last 12 months. Depending on your answer, you may need to complete the SARs section.
Section Breakdown and Actions
Based on your answers to the initial questions, you will proceed to specific sections of the questionnaire. Here’s what to expect in each section:
AML Questions (Q04 – Q14)
If your firm engages in activities within scope of the MLR 2017 (Q01), you will need to complete the AML questions section.
- Risk Assessment (Q04 – Q05): You will need to confirm whether your firm has an AML firm-wide risk assessment compliant with regulations 18 and 18A. If you do, you will be asked when it was last updated.
- Policies and Procedures (Q06 – Q07): You will need to verify if your firm has AML policies, controls, and procedures in place as required by regulation 19. If so, you will state when they were last updated.
- Employee Training (Q08): You will be asked when your relevant employees last received AML training.
- Open Matters and Fee Earners (Q09 – Q10): You will need to estimate the percentage of your firm’s open matters and fee earners that involve AML-related activities.
- Client Account Activity (Q11): You will report the largest single deposit into your client account in the past 12 months.
- Enhanced Due Diligence (Q12): You will estimate the percentage of new AML matters in the last year that required Enhanced Due Diligence.
- Politically Exposed Persons (Q13): You will report how many clients you have acted for in the last 12 months who were Politically Exposed Persons (PEPs).
- Returned Funds (Q14): You will state how many times you have returned more than £5000 from your client account in the last year.
Trust or Company Service Provider Questions (Q15 – Q21)
If your firm provides trust or company services (Q02), you will need to complete this section.
- High-Risk Clients (Q15): You will identify if you have undertaken any trust or company service work for clients assessed as high risk.
- Turnover Estimates (Q16 – Q19): You will estimate the percentage of your firm’s turnover from various trust or company service activities.
- Risk Assessment for TCSPs (Q20 – Q21): You will confirm if the risks posed by trust or company service providers are addressed in your firm-wide risk assessment and describe the steps taken to mitigate these risks.
Suspicious Activity Report Questions (Q22 – Q27)
If you have submitted any SARs in the past year (Q03), you will complete this section.
- SAR Details (Q22 – Q27): You will report the number and type of SARs submitted, including those related to trust services, real property transactions, and other MLR 2017 activities.
Sanctions Questions (Q28 – Q44)
All firms must complete this section.
- Sanctions Risk Assessment (Q28): You will assess and document the sanctions risks your firm may be exposed to.
- Client Connections (Q29): You will identify clients connected to sanctioned countries.
- Sanctions Compliance (Q30 – Q31): You will outline procedures for checking sanctions lists for new and existing clients.
- Work with Sanctioned Entities (Q32 – Q44): You will report on work conducted with sanctioned entities, frozen assets, and related reports to relevant authorities.
Additional Steps and Best Practices
1. Documentation: For self-preservation, maintain detailed records and evidence for all your responses. This includes risk assessments, training records, and SAR logs. The SRA has been known to prosecute firms for ‘misleading’ the regulator, if responses to these surveys does not align with future AML audits.
2. Review and Update: Regularly review and update your AML policies, risk assessments, and training programs to ensure compliance with the latest regulations. This data collection exercise should be a good prompt to undertake that process. Is it time to undertake an Independent AML Audit under Regulation 21?
3. Training: Ensure that all relevant employees are adequately trained and aware of their responsibilities under AML regulations. You might be able to distill your answers to the SRA survey into an overview of the firm’s policies, processes and controls by way of reminder.
4. Timing: You will need to liaise with all departments to ensure accurate data collection and reporting. The window for completing the survey is relatively short, so do not leave it until the last minute.
