A review of 50 law firms based in the UK resulted in six firms now facing further investigations for money laundering as a result of the demands imposed by the Anti-Money Laundering (AML) Regulations introduced in June 2017. These regulations were put into place in order to combat money laundering by requiring that institutions establish a customer’s source of funds and wealth, particularly in the case of possible high-risk customers such as politically exposed persons (PEPs) or individuals from blacklisted countries.
The review conducted by the Solicitors Regulatory Authority (SRA) discovered that some firms were missing important records and, of all the files reviewed, only 69% indicated that a risk assessment was conducted with only 17 out of the 50 firms reviewed having a risk assessment procedure either already implemented, or in the process of being created.
Paul Philip, SRA Chief Executive, stated that “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.” It is not enough to just follow regulations but businesses and institutions should also strengthen existing compliance systems and programs including keeping employees well trained on anti-money laundering (AML) procedures and the consequences if AML regulations are not adhered to.
The SRA has closed eight firms since the start of the review, while 14 firms volunteered to close on their own in the past three years. As a result, there have been 12 strikes, 13 suspensions and fines reaching a total of £800,000 ($1.1 million).
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