It has been announced that the Solicitors Regulation Authority (SRA) will no longer be the regulator for anti-money laundering (AML) supervision responsibilities, with overall responsibility moving to the Financial Conduct Authority (FCA), which will be the single professional services supervisor.
The Government has taken this action as it reviews reforming the approach to anti-money laundering (AML) and counter-terrorism financing (CTF) supervision regime.
The Solicitors Regulation Authority Will No Longer be The Regulator for Law Firm Anti-Money Laundering Activity
It has always been the case that the Law Society holds responsibility for the statutory obligations under Schedule 1 of the MLRs 2017, but has delegated the regulatory and enforcement powers to the SRA. The Law Society reports that it will continue with a non-essential supervisory role, which will include:
- providing information, guidance and education on AML and economic crime compliance.
- supporting best practice within the legal profession.
- contributing to policy development, sector engagement, and strategic reform.
SRA to Step Down as AML Supervisor for Law Firms
Although the Law Society has expressed concern that the Government has chosen to create a single professional services supervisor, it has pledged its full support to the FCA. The Law Society President, Mr Mark Evens, has stated:
“Whilst we see significant challenges and would not have chosen this route, we stand ready to work with the government and the FCA as it implements the SPSS model”.
The next stage is for HM Treasury to hold a consultation on the powers the supervisor should have. There is currently no confirmed timeframe for the change to occur, and until that point, the SRA will remain as the supervisor.
Read the full announcement here: Government strips SRA of anti-money laundering powers.
Over the coming weeks and months, we will learn more and watch, with interest, if the SRA changes its approach to regulation and enforcement.
As the Regulation and Compliance Office (RACO) also works outside of the legal services sector and has multiple clients who are regulated by the FCA, we are used to their regime and understand their approach to regulation. You can view the Financial Crimes Guide by clicking the link below. Although this does not refer to legal service providers, it is expected to be updated to encompass the required approach. RACO will be ready to embrace the change, and we will work with our firms to ensure a smooth transition over to the new supervisor.
https://handbook.fca.org.uk/handbook/FCG.pdf
Until the change, firms are highly recommended and expected to follow the guidance of the SRA, and tocontinue to ensure they meet all of the obligations and guidance provided.
There is clearly a lot of work still to be done to affect the new arrangements, and any changes are unlikely to happen soon.
If you have any concerns about anything raised in this article or you are concerned about your firm’s compliance with the MLRs 2017, you can contact us via the details below.
Contact Us
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, or email us info@regulationandcomplianceoffice.co.uk
Compliance and Regulation Support UK
All firms must demonstrate and uphold high standards in their AML systems and processes, as well as in their management and supervision. This also involves outlining how the firm operates, including the conduct of staff in accordance with established policies, controls, and procedures.
At the Regulation & Compliance Office, we can offer a number of outsourced support solutions, including:
- Regulation & Compliance Service – Our Regulation and Compliance Service, Inc. Risk Management Assessment and AML Risk, provides a cost-effective but essential solution for law firms to ensure they achieve a compliant environment. We work with firms of all types, from sole practitioners through to partnerships, Limited Companies and ABSs. We recognise that it is essential to recognise how a firm implements compliance to tailor the solution to each firm’s working practices. This is why our service is completely bespoke to each firm we work with.
- Regulation & Compliance Outsource Guidance and Support Service – This service provides law firms with a cost-effective outsourced solution which sees the compliance managers of RACO take on the day-to-day guidance and support expected to be provided by COLPs, COFAs, Data Compliance Officers, MLROs and MLCOs. This addition to the Regulation and Compliance Service—including Risk Management and AML Risk—relieves the Compliance Officers from most of the day-to-day burden of keeping up with regulatory requirements and ensures staff have access to compliance and risk advice when they need it.
- Due Diligence & Risk Assessment Service – At the Regulation and Compliance Office (RACO), we provide law firms with a seamless, outsourced solution for Client Due Diligence (CDD) and Risk Assessments. Our Due Diligence and Risk Assessment Service has been designed to enable law firms to focus on the provision of the legal services while we collate the necessary documentation for Due Diligence, Enhanced Due Diligence (where needed), and completion of the Client and Matter Risk Assessment, which must be completed on all matters in scope of the Money Laundering Regulations 2017.
- AML Training Courses – Our Typical AML Training Includes:
- AML Training for ALL staff to meet the firm’s obligation to provide annual training.
- One-to-one training for the MLRO and MLCO on their obligations and requirements.
