LONDON (Within the Law) - Despite multiple warnings the Solicitors Regulatory Authority says firms are still not taking anti money laundering seriously. Firms are also wasting time by reporting gossip as misconduct, reports the Law Gazette.
At this time of year, compliance officers would normally be heading to the SRA’s annual compliance conference in Birmingham. This year, though it happened virtually over the course of five days. While the setting may have been different, the message was the same. Money laundering remains the biggest compliance issue firms face.
Mark Boyle, SRA’s policy lead on anti-money laundering (AML), warned against the myth that firms need only check a client has a bank account. “You really need to be checking how did the person get their money, be it through salary, investment or gifts,” he said. “It can be many legitimate means, but you need to understand that and be evidencing that,’ he said.
Money laundering has been a growing problem across all businesses throughout 2020. New payment systems and the rise of peer to peer platforms allow money launderers to adopt increasingly sophisticated schemes. Lockdown has also made it more difficult for firms to conduct the usual know your customer checks.
However, regulators have been tightening their approach to money laundering and the SRA are no different. They say they have noticed an increase in money laundering matters. Firms managing conveyance work, handling client money and managing trust are number one targets.
As if to hammer home their point, on the same day as they issued their warning, they announced a £14,000 fine for Northamptonshire firm Seatons Law Limited. The firm admitted to failing to perform adequate customer due diligence, having adequate ALM policies in place and failing to perform ongoing monitoring. According to the SRA, Seatons failed to heed a number of red flag warnings.
Elsewhere the SRA raised a number of other issues including law firms lending credibility to dodgy investment deals which were proving a huge drain on the financial services compensation fund. These increasingly complex schemes are hard to spot, often involve property and may appear legitimate at first sight.
‘The amount of money being lost through these schemes is just unbelievable. It is really sad,’ said Jatinderpal Loyal policy associate for the SRA.
For the most part, this conference was all about alerting people about the threat of fraud and encouraging them to engage with the SRA. However, there was one exception. General Counsellor Juliet Oliver warned firms to stop mistaking gossip for misconduct. Misconduct, she said, should go beyond suspicion or gossip and urged firms to stop bombarding the regulator with every tiny concern.
(Written by Tom Cropper)