SRA has published the results of a thematic review it carried out on law firms that provide trust and company services, looking at their compliance with the MLRs 2017.
The review followed up a more general review in 2018 which had found failings in certain firms. This targeted review responded to the government warning that the creation and administration of trusts and companies on behalf of clients is one of the legal services most at risk of exploitation by criminals.
The SRA visited 59 firms, and found most of them to be compliant and meeting their obligations under the MLRs. But there was a significant minority who need to improve. FCA found no evidence of money laundering or intent to become involved in criminal activities, but found:
- many firms lacked any, or an appropriate, risk assessment;
- some firms had inadequate processes to manage PEPs, or to carry out ongoing CDD;
- some firms did not provide specific training about trust and company work and beneficial ownership and the SRA has referred this to the disciplinary process; and
- only 10 firms had submitted SARs in the past 2 years, reinforcing the belief that solicitors are not being proactive enough in identifying and reporting suspicious activity.
As a result of the review, 26 of the 59 firms have been referred to the disciplinary process for various failings, and the SRA is now writing to 400 firms asking them to show how they comply with the MLRs.