According to The Law Society Gazette, the chief executive of the Solicitors Regulation (SRA) stated that the demands placed on the law firms to stop money laundering will not ease up.
To avoid money laundering, businesses are already required to conduct risk assessments, with a significant number of firms having received fines in the previous year for performing them improperly. The SRA has also bought legal action against companies who falsely claimed to have a compliance risk assessment.
Since last December, sanctions imposed by the UK government have also prevented law firms from offering trust services to anyone associated with Russia unless a pre-existing agreement was in place.
Paul Philip told the Law Society’s Risk and Compliance Annual Conference:
“The reality is we are piggy in the middle […] Do we think there is a problem [for firms]? Absolutely. The vast majority of legal practices in England and Wales are in a relatively small business unit and I suspect – in fact I know – most people are just trying to catch up and be aware of what their obligations are.
For those firms you have nothing to fear from us. We will do our best to provide guidance.
There is nothing we can do to stop the onslaught of regulatory requirements coming from direct legislation which we are forced to implement. Arguably we are playing catch-up as we should have been doing this sort of thing a long time ago.”
Checks for source of funds are providing to be a significant burden on legal firms, with SRA guidance stating that “firms should go back as far as it is needed” to create a clear image of how clients accrued their funds from the transaction.
The SRA will be more heavily relied upon by the upcoming Economic Crime Bill, to prevent money laundering, and Phillip told The Law Society that the “level of fines for economic crime, particularly in the financial sanctions era, will increase radically”.