Money laundering

Why this risk matters

  • There is always a risk that those who wish to launder money will target the legal sector because of the perceived legitimacy it offers to criminal activities or transactions.
  • The UK’s National Risk Assessment (NRA) described the risk to the legal sector as significant and highlighted that there are knowledge gaps about the sector's role in money laundering.
  • As we have anti-money laundering (AML) supervisory responsibilities, we are required to monitor AML compliance as part of our wider risk assessment.
Actions icon

Actions

  • Solicitors and firms have obligations under the:
    • Money Laundering Regulations 2007 (MLR)
    • Proceeds of Crime Act 2002 (POCA)
    • Terrorism Act 2000
    • SRA Handbook 2011.
  • You can find good practice tips for writing and submitting a SAR from the NCA.
  • Firms should assess the risks that relate to individual clients, the type of legal services offered, the method of service delivery and jurisdiction. By using this risk-based approach, firms can tailor their AML policies and appropriate controls, and decide how best to deliver them.
  • Our thematic review included examples of how firms have implemented AML procedures cost-effectively, such as:
    • accessing our online resources, find out about the warning signs of money laundering, firm and individual duties and information about submitting SARs
    • reviewing AML policies regularly to ensure they are up to date, relevant and fit for purpose, including being appropriate to a wide audience
    • having a process to test the effectiveness of systems and controls, such as client due diligence (CDD) procedures
    • recording and monitoring staff training in AML, including finance staff
    • where possible, appointing a money laundering reporting officer (MLRO) that is not a fee earner involved in transactional client work, and appointing a Deputy MLRO for support
    • not providing client account details on websites or in client care letters – only after CDD is completed.
  • We recognise that some aspects of AML compliance can be more challenging for smaller firms. For example, succession planning and providing relevant training to staff are both mandatory under the MLR. We therefore encourage firms to use the SRA's Small Firms web pages to access support from us.

Further information

Case studies icon

Read case studies

Report icon

View full report