Solicitors Regulation Authority (SRA) issue anti-money laundering warning notices

In September 2014, the SRA increased efforts to ensure members of the profession do not become involved in money laundering activity and remain compliant with the various regulations and legislation associated with anti-money laundering. The SRA culture and approach is changing. They have been testing systems used to report money laundering, and establishing how widely these measures are known within each firm. The existence of a policy is one thing. Proper implementation and operation is an entirely different thing.

The SRA supervises those it regulates for compliance with money laundering legislation. It has identified an increasing number of firms failing to have adequate systems and controls to prevent, detect and report money laundering. In issuing guidance and directions, the SRA is ultimately concerned to ensure compliance with the fundamental SRA principles. Failure to comply may result in you breaching one or more of the SRA principles, including:

  • Principle 1 - Uphold the rule of law and the proper administration of justice.
  • Principle 2 - Act with integrity.
  • Principle 3 - Not allow your independence to be compromised.
  • Principle 6 - Behave in a way that maintains the trust the public places in you and in the provision of legal services.
  • Principle 7 - Comply with your legal and regulatory obligations.
  • Principle 8 - Run your business or carry out your role in the business effectively and in accordance with proper governances and sound financial and risk management principles.

These are not empty warnings. Solicitors firms must have regard to the specific outcomes under the SRA Code of Conduct 2011, in particular Outcome 7.5 - to comply with your legal obligations under the Proceeds of Crime Act (POCA) 2002, the Terrorism Act (TACT) 2000 and the Money Laundering Regulations 2007. You must ensure that you do not facilitate money laundering, even when money does not pass through your firm's accounts. Your firm should have appropriate policies and procedures in place to protect it from being used for money laundering or terrorist financing Outcomes 7.2 and 7.3. Failure to comply may lead to disciplinary action, criminal prosecution or both.

You that end, the SRA recently issued two warning notices. You can access those notices by clicking on the links below:-

Go to the Money Laundering Notice

The SRA expect firms and individuals to be aware of, and act properly upon, warning signs that a transaction may be suspicious.

Go to the Suspicious Activity Reports Notice

Failure to make a disclosure to the NCA in appropriate circumstances can be a criminal offence, and proceeding with a transaction in the absence of consent may result in the commission of a principal money laundering offence.

We regularly represent solicitors facing SRA investigation or prosecution and much of work involves demonstrating that the relevant firm and/or individual has acted with all due regard to the principles. If you are concerned about your current level of compliance or the SRA have turned their attention to your firm, please contact one of our team for an initial no-obligation chat about what we can do for you. We also offer anti-money laundering training and guidance through mlsolutions4u.

Evan Wright is a partner in the JMW Business Crime and Regulation team.

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