Skip to main content

AML Firm-wide Risk Assessment: No1 Document

By
The foundational document when is comes to AML compliance is the AML firm-wide risk assessment. It is often described as the keystone of money laundering compliance in a law firms. Once a well drafted AML firm-wide risk assessment (FWRA) is in place the remainder your AML policies and procedures, training and due diligence will flow from it.

The Focus of the FWRA

The Money Laundering Regulations 2017 sets out five key areas for the FWRA to focus on:

  • Clients
  • Geographic areas
  • Products and services
  • Transactions
  • Delivery channels

However, there are many other elements that need to be considered. Regulation 18A of the money laundering regulations also requires firms to identify the risk of proliferation financing. This can either be considered separately or within the AML firm-wide risk assessment. Further guidance on how to carry out a proliferation financing risk assessment can be found in the Legal Sector Affinity Group (LSAG) guidance.

Common Pitfalls

I have been told by some of the AML assessors in Lexsure's Independent AML audit team that that most firms now have a firm wide risk assessment in place. That said, they say that to find a significant proportion of firm wide risk assessments which would fall short of the expectations of the SRA.

The requirement to have a firm wide risk assessment has now been in force since 2017. The purpose of a firm wide risk assessment is help identify the risks a firm is or could be exposed to, and the measures which should then be put in place to help mitigate the firms' exposure to financial crime. It is a crucial step in being able to prevent money laundering.

SRA Enforcement

The SRA have made it very clear that they will take robust action against any firms who do not have an acceptable AML firm wide risk assessment in place. Law firms should read the SRA decisions or firm wide risk assessment case studies to learn from the mistakes of others.

Labels:

Comments

New comments are not allowed.

Popular posts from this blog

Argie Bargie over Home Information Packs

By
In response to a question from Conservative MP David Amess on what methodology would be used to use to evaluate the effectiveness of the Home Information Pack programme, Communities and Local Government Minister Ian Austin was involved in heated argument. The wording of the debate ( reported in Hansard ) makes interesting reading, so I thought I would share it with you : Mr. David Amess (Southend, West) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement. Mr. Andrew Mackay (Bracknell) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement. Mr. David Jones (Clwyd, West) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement. The Parliamentary Under-Secretary of State for Communities and Local...
Post a Comment
Read more

Paperwork is not a shield: Why your SRA aml audit demands more than just a dusty manual

By
The Solicitors Regulation Authority continues its aggressive crackdown on financial crime with a recent fine issued against Whiteheads Solicitors (Staffordshire) Ltd . This decision serves as a stark reminder that the regulator is looking far beyond simple paperwork during an SRA aml audit . The firm was fined 2,584 GBP plus 600 GBP in costs following an investigation into its compliance with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. While the firm had a firm-wide risk assessment and general policies in place, the SRA identified critical failures at the matter level. Key compliance failures included: Failure to conduct adequate client and matter risk assessments . The SRA found a consistent pattern where the firm failed to sufficiently assess client matter risk levels as required by Regulation 28. Inadequate scrutiny of source of funds . In one specific property transaction, the firm failed to properly investigate the origin of funds provided by ...
Post a Comment
Read more

The High Street Practitioner’s Guide to Surviving the FCA

By
For a sole practitioner or the MLRO in a small high-street firm, "AML compliance" often feels like just another mountain of paperwork standing between you and your actual work. When you are juggling a heavy conveyancing caseload, a sensitive probate matter, and the day-to-day survival of your practice, the last thing you need is a new regulator with a reputation for being data-heavy and "zero-tolerance." But the ground is shifting. As the Financial Conduct Authority (FCA) takes over AML supervision from the SRA, the "high-street way" of doing things—relying on long-standing local reputations and gut instinct—is being replaced by a requirement for hard, documented proof. The end of "I’ve known them for years" In a small town, you often act for the same families for generations. You know their business, their parents, and their reputation. Under the old mindset, that felt like enough. Under the FCA, it isn’t. T...
Post a Comment
Read more