On the money

Paul Philip, chief executive of the Solicitors Regulation Authority, recently referenced the BBC drama McMafia (pictured) on the subject of money laundering.

Philip’s comments came in March as the SRA launched Preventing Money Laundering and Financing of Terrorism, a review of 50 firms (large and small) which explored the profession’s compliance with the more stringent demands of the Money Laundering Regulations 2017, introduced last June.

Over the last three years, in cases linked to potentially improper money movements, the SRA has closed down eight firms (another 14 closed voluntarily), and referred 49 solicitors and two other firms to the Solicitors Disciplinary Tribunal. This has resulted in 12 strike-offs, 13 suspensions and fines of more than £800,000.

The third edition of this toolkit includes an anti-money laundering policy which covers the appointment of a nominated money laundering reporting officer (MLRO). It contains procedures for making disclosures within the practice and by the MLRO to the authorities; for checking clients’ identity; and for the proper maintenance of records.

This book is much more than a knee-jerk, panic buy for those who might rightly be concerned about the SRA drawing attention to the new money laundering regulations. It is a comprehensive work on the panoply of risks latent within our firms. It starts with an introduction to risk management before offering a thoughtful risk management framework. It then suggests a simple step-by-step method of building a risk register, first identifying risk then analysing and mapping it.

There is much practical content here. This includes pithy suggestions for dealing with supervision, file management and, indeed, ‘the mental block file’.

The SRA expects practices to have a compliance plan. The Lexcel standard requires practices to have such a plan, although it does not specify format. The toolkit helps with this and offers a sample compliance policy.

Back to the SRA and money laundering matters: despite it being a requirement, only a third of law firms reviewed by the SRA had a firm-wide risk assessment in place or were in the process of implementing one. When the SRA review was carried out, firms only had limited time to implement the new regulations, but the SRA now says it expects firms to move towards compliance as a matter of urgency. This toolkit carries a template anti-money laundering policy and much else of use. It will help practitioners a good deal.

Tony Roe is a family law arbitrator and principal of Tony Roe Divorce & Family Law Solicitors, Theale, Reading. He is also a member of the Law Society’s Small Firms Division committee.