AML Regulation 21 Independent Audit
Independent AML audits to help law firms demonstrate compliance with Regulation 21 of the Money Laundering Regulations 2017.
The MLR 2017 requires firms undertaking in-scope work to consider whether an independent Regulation 21 audit is appropriate as part of their AML risk assessment process. RACO provides independent AML audits that assess the effectiveness of your firm’s policies, procedures and risk controls, helping you demonstrate robust AML governance and meet regulatory expectations.
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Independent Regulation 21 Audits For Law Firms
The Money Laundering Regulations 2017 place increasing emphasis on firms being able to demonstrate that their anti-money laundering framework is effective in practice.
Regulation 21 requires firms undertaking in-scope work to consider whether an independent audit is required. Whilst not every firm is legally required to undertake one, the SRA has indicated that it expects independent audits to be carried out by all but micro firms. Our guidance is therefore for firms to undertake an independent audit at least every two years.
A Regulation 21 audit assesses the effectiveness of your firm’s anti-money laundering policies, controls and procedures, together with the practical application of those controls across the business.
As an independent compliance consultancy, RACO satisfies the independence requirements of Regulation 21 and provides an objective assessment of your firm’s AML framework.
Why a Regulation 21 Independent Audit Matters
An independent audit provides assurance that your AML framework is operating effectively and identifies opportunities to strengthen policies, controls and procedures before issues become regulatory concerns.
The audit helps firms to:
- Assess the effectiveness of AML policies, controls and procedures
- Review the practical application of AML processes across the firm
- Identify weaknesses and opportunities for improvement
- Demonstrate independent oversight of AML compliance
- Provide partners and senior management with clear recommendations
- Support ongoing compliance with the Money Laundering Regulations 2017
What Constitutes ‘Independent’?
Regulation 21(1)(c) MLR 2017 allows firms to conduct audits internally, but they cannot be carried out by the firm’s MLRO, MLCO or anyone responsible for maintaining the AML function.
In practice, those with sufficient AML expertise within a firm are often involved in designing, implementing or monitoring the firm’s AML policies and procedures, making true independence difficult to achieve.
As an external compliance consultancy, RACO meets the independence requirements of Regulation 21(1)(c) MLR 2017.
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What is included?
Our AML Regulation 21 Independent Audit provides a structured review of your firm’s AML framework and its practical application.
Discovery Meeting
An initial scoping session to agree the review approach and identify the staff, departments and processes included within the audit.
Policy Review
A comprehensive review of your firm’s Policies, Controls and Procedures (PCPs), assessed against the Money Laundering Regulations 2017 and Legal Sector Affinity Group (LSAG) guidance.
Register Analysis
Review and analysis of your firm’s High Risk Register and Suspicious Activity Register.
Staff Interviews
Interviews with relevant staff to assess the practical application of your firm’s AML procedures, establish understanding and identify any knowledge gaps.
File Reviews
Client and matter file reviews to assess how AML Policies, Controls and Procedures are being applied in practice.
Formal Audit Report
A detailed report including:
- Analysis of Policies, Controls and Procedures
- Practical application findings
- Trend analysis
- Recommendations and practical solutions
Partner / Director Presentation
Presentation and discussion of the audit findings with partners and senior management.
Additional Audit Scope
Where required, additional file reviews and staff interviews can be included to provide a broader representative assessment of the firm’s AML compliance arrangements.
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For more information and costings
Why firms choose RACO
Independent Assurance
Specialist AML Expertise
Practical Recommendations
Regulator-Aligned Reviews
Partner-Level Reporting
Looking for Ongoing AML Support?
Discover our Risk & Compliance Management Service.
For firms that require more than a structured framework and annual audit, our Risk & Compliance Management service provides complete day-to-day management of your compliance infrastructure.
This service builds on SRA Compliance Essentials and goes further. RACO becomes an operational extension of your firm, taking responsibility for the administrative management of compliance registers, notifications and reporting, while continuing to provide technical guidance and regulatory oversight.
Many firms begin with SRA Compliance Essentials to establish a robust framework, and then combine our Risk & Compliance Management service when they require ongoing administration, reporting and case-level support.
If you are seeking a fully outsourced compliance solution, we recommend discussing both services with our team.
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What this includes
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Ongoing maintenance of all regulatory registers
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Collation and review of staff notifications
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Investigation support and monitoring of live matters
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Direct guidance to staff on case-level compliance issues
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Monthly partner reporting with trend analysis and recommendations
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Active support for COLP, COFA, MLRO and Data Protection roles
Compliance officers retain accountability, but the operational workload is managed by an experienced compliance team.
This model is particularly suited to firms where compliance is not a full-time internal function, or where leadership requires greater oversight, reporting and control without increasing headcount.
Contact Our Team
To ask any questions about the Regulation and Compliance Office and how we can support your Law Firm, please call us on 0203 985 8550, complete the online enquiry form below, or email us info@regulationandcomplianceoffice.co.uk