A recent Financial Times report on the state of anti-money laundering (AML) supervision in the UK has sent a clear message to the professional services sector: while compliance is improving, enforcement still lacks the “teeth” necessary to be a true deterrent.
At Lexsure, we perform Independent AML Audits for a wide range of legal firms on a weekly basis. When we read the latest findings from OPBAS, we didn’t just see a news story—we saw a reflection of the exact challenges and “blind spots” we uncover during our client engagements.
Here are three key areas where the FT’s reporting and our AML audit findings align:
1. The “Assisted Compliance” Trap
The OPBAS report critiqued some supervisors including the SRA for relying too heavily on “assisted compliance” essentially coaching firms through failures rather than taking robust disciplinary action.
Our Audit Perspective: In our independent audits, we often find that firms have policies that look good on paper because they followed a template provided by the SRA. However, the practical application is frequently missing. An AML audit’s job is to test if those policies actually work in the “wild,” and we often find a significant gap between “having a policy” and “living it.” I know the SRA AML Audits are now turning their attention to this. The FCA, who will taking on AML oversight in the next few years will certainly be on top of this.
2. Inadequate Firm-Wide Risk Assessments (FWRA)
The report noted that many firms still struggle with inadequately documented policies and flawed firm-wide risk assessments.
Our Audit Perspective: The FWRA is the foundation of any AML framework, yet it is consistently the weakest link we identify. Many firms treat the FWRA as a “one-and-done” administrative task. Again often the SRA template is used. Our AML audits repeatedly show that when a FWRA is not tailored to the specific client base and geographic reach of a firm, the subsequent Customer Due Diligence (CDD) often fails to capture high-risk indicators.
3. The Consistency Crisis
The Financial Times highlighted a disparity in enforcement, noting that law firms face significantly higher fines and more frequent inspections than accountancy practices, despite accountants often ranking more of their clients as “high risk.”
Our Audit Perspective: This inconsistency is something we see across the board. Firms often feel they are “doing enough” compared to their peers, but “enough” is a moving target. An independent AML audit provides an objective benchmark that goes beyond “regulatory standards” to ensure a firm is actually meeting statutory obligations under the Money Laundering Regulations.
The Bottom Line
The era of “light-touch” regulation is ending. With the government moving toward a single supervisor model under the FCA, the grace period for “assisted compliance” is shrinking. FCA AML Audits are on the horizon.
As the OPBAS report suggests, the focus is shifting from having the right paperwork to proving effective enforcement and oversight. Our Independent AML Audits are designed to help you find these gaps before a regulator does, ensuring your controls aren’t just a “regulator-centric” law firm AML checklist, but a robust shield against financial crime.