Regulators have placed six law firms in ongoing ‘disciplinary processes’ as a result of ‘serious concerns’ over money laundering uncovered during a review of 50 firms.
The Solicitors Regulation Authority (SRA) review focused on compliance with the more stringent demands of regulations introduced last June (the Money Laundering, Terrorist Financial and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692)).
While most of the firms, which included both large and small firms, had good training processes in place and were doing appropriate customer due diligence, others were not doing enough to comply.
Across all 50 firms, only 69% of files reviewed had written evidence that the risk had been assessed. And only a third (17 firms) had a firm-wide risk assessment in place or were in the process of implementing one.
In the past three years, concerns over money laundering has led the SRA to close down eight firms, with a further 14 closing voluntarily. It has 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 SRA has now issued a warning notice, highlighting possible indicators of criminal activity such as overly secretive clients and clients acting through third parties.
Paul Philip, SRA chief executive, said: ‘The credibility of law firms makes them an obvious target for criminals wishing to launder money.
‘Tackling it is crucial not only to maintain trust in the profession, but also for the good of society. Money laundering is not a victimless crime—it helps fund terrorism and those involved in drug trafficking and people smuggling.
‘We are encouraged that most firms seem to be on top of the issues, but all firms in scope must now comply with the new regulations. If firms do not step up and treat this issue with the seriousness it deserves, we will take action.’
According to the National Crime Agency, money laundering is likely to cost the UK more than £24bn a year.
Meanwhile, MPs and Peers have published a report on the Sanctions and Anti Money Laundering Bill.
The Joint Committee on Human Rights, chaired by Harriet Harman MP, supported the use of targeted sanctions to combat terrorists and human rights abusers but warned there is a risk individuals or organisations may be wrongly sanctioned, for example, because of mistaken identity.
It asked that there be a strong presumption that the names of those refused entry to the UK, and the reasons for this, be made public. It also highlighted the need for due process for designated person and called for early publication of guidelines on exemptions.
