New AML Registration Requirements

Please use our list of frequently asked questions and answers we have compiled to assist you in completing the AML registration application process.

To complete your firm's AML registration go the the members' area sign in and click on 'AML registration'.

If you or your practice unit offers any services that are subject to the Regulations you will need to complete the form. Those services are listed below:-

  • The buying and selling of real property or business entities
  • The managing of client money, securities or other assets
  • The opening or management of bank, savings and securities accounts
  • The organisation of contributions necessary for the creation, operation or management of companies
  • The creation, operation or management of trusts, companies, foundations or similar structures
  • Forming companies or other legal persons
  • Acting or arranging for another persion to act;
    • as a director or secretary of a company
    • as a partner of a partnership; or
    • in a similar capacity in relation to other legal persons
  • Providing a registered office, business address, correspondence or administrative address or other related services for a company, partnership or any other legal person or legal agreement
  • Acting or arranging for another person to act, as;
    • a trustee of an express trust or similar legal arrangement; or
    • a nominee shareholder for a person other than a company whose securities are listed on a regulated market

If you do not offer any of the services listed in question 1 it may be that you do not need to complete this form. You will of course need to satisfy yourself on the legal position.

Please note that we have written directly to those practice units who we believe do not carry out work which falls within the scope of the 2017 Regulations. However, if you have not been contacted, and you believe that you do not offer the services listed in question 1, please contact us at amlregistrations@lawscot.org.uk as we may arrange for you to formally confirm that to us.

If your practice unit has any individuals that under the Regulations are considered a beneficial owner, officer or manager of the practice unit, they need to apply for approval to us under regulation 26.

Please note that for those individuals occupying more than one role - i.e. a beneficial owner who is also an officer - those individual's details need only be provided once.

These FAQs are to assist practice units when deciding who in their practice unit falls under the definitions of beneficial owner, officer and manager contained in the Regulations.

Where appropriate, with regard to the size and nature of your business, you may need to appoint a board level person with overall responsibility for compliance with these Regulations. Please also provide details of that individual via the appropriate drop down within the form.

While we want to assist you in interpreting the Government regulations, you will of course need to satisfy yourself on the legal position. The obligation to identify your beneficial owners, officers and managers is on you as a practice unit. If having read this guidance you are still unsure, you should consider obtaining specialist advice on your position.

  • Beneficial owner
If you are a "body corporate" (i.e. a company (not listed) or a limited liablity partnership (LLP)):

A beneficial owner is:

a. any individual who exercises ultimate control over the management of the body corporate

This would mean an individual who, regardless of their position as director, shareholder or member is able to exercise control over the management of the body corporate in the sense of being able to control the composition and/or voting of the board of directors and the decision they take.

b. any individual who ultimately owns or controls (in each case whether directly or indirectly), including through bearer share holdings or by other means, more than 25 percent of the voting rights in the body corporate

This means an individual who owns 25 percent or more of the voting rights in the body corporate. They could hold these rights directly, in their own name, or indirectly, for example, via a relative or a company.

c. an individual who controls the body corporate.

A person will control the body corporate if they qualify as a Person of Significant Control in accordance with the Companies Act 2006, or if the person was an undertaking, the body corporate would be its subsidiary.

If you are a partnership:

A beneficial owner means any individual who:-

a. ultimately is entitled to or controls (in each case whether directly or indirectly) more than a 25% share of the capital or profits of the partnership or more than 25% of the voting rights in the partnership.

b. satisfies one or more of the conditions set out in Part 1 of Schedule 1 to the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (references to people with significant control over an eligible Scottish partnership); or

c. otherwise exercises ultimate control over the management of the partnership.

Please note that salaried partners and equity partners below the 25% threshold are likely to be required to seek approval in their capacity as an officer or manager of the practice unit. As above, you will of course need to satisfy yourself on the legal position.

  • Officer

The definition of "officer" in the Money Laundering Regulations is wider than those individuals who are legal officers of the company. We set out some guidance below, however we would stress that the question of who is an officer in your practice unit is dependent on the individual management structure of each practice unit.

We cannot provide a list of job titles that would meet the definition of "officer" under the regulations, as it is a question of fact as to whether an individual exercises control, or purports to exercise control. In our view, an individual would not be purporting to have control simply by their job title, there would need to be some element of control.

If you are a company (not listed) or LLP:

An officer includes director, secretary, chief executive, member of the committee of management, or a person purporting to act in such a capacity, or an individual who is a controller of the body, or a person purporting to act as a controller.

If you have any directors, a company secretary or a chief executive that are not already approved, they will need approval and to be included in your application. You must also have approval for those who sit on either the most senior decision-making committee in your business (such as a board, an executive committee or an executive board in each case where there is no higher committee or board to defer to or seek approval from) or a committee that has been given the authority to make decisions on behalf of the board/senior decision-making committee.

An officer under this definition may consist of lawyer and non-lawyer employees such as HR and/or finance directors. In terms of who would have 'control' of the body, the persons of significant control guidance found above in relation to beneficial owners.

If you are a partnership:

This means a partner, and any manager, secretary or similar officer of the partnership, or a person purporting to act in such a capacity.

You must consider the MLR definition above, and satisfy yourself as to whether anyone else in your practice unit is a manager, secretary or person purporting to act in such a capacity not already approved by us.

  • Manager

It appears that the definition of Manager in the Regulations is intended to be wider than the definition of "officer". Again, each practice unit will need to consider their own management structure against the definition below.

In relation to a practice unit, it means a person who has control, authority or responsibility for managing the business of that practice unit, and includes a nominated officer.

This would include any person who has sufficient authority to take decisions and who exercises control over the mangement of the business. it includes your Money Laundering Reporting Officer (MLRO) and any others who have sufficient knowledge of your practice unit's money laundering and terrorist financing risk exposure and has the authority to take decisions around this.

  • Board Level Person

Dependent upon the size and nature of your business you may need to appoint a board level person with overall responsibility for your practice unit's AML compliance. That individual will need to be part of the senior management of your business, who has at least part of the responsibility for practice unit wide business development, strategy and governance. Please note that this individual may be the same person as the MLRO. We anticipate that many practice units in Scotland will not need to make this appointment.

 

Yes, if the subsidiary is a seperate legal entity, you will need to complete a seperate form for this company.

Yes, all firms that we authorise are required to complete the form. However, as long as all legal services are being provided through the main entity, you can declare that you are not carrying out any of the activities covered by the money laundering regulations and you will not need to appoint any of the relevant individuals.

You will not be able to submit the form without a Disclosure Scotland Certificate or DBS (If your work in England). Approval to act as a beneficial owner, officer, or manager of a practice unit is not valid if the person in question has been convicted of a relevant offence. A 'relevant offence' is determined by reference to a list of offences in Schedule 3 of the Regulations.

HM Treasury has advised that any self-declaration provided by a beneficial owner, officer or manager stating that they do not have a relevant unspent criminal conviction is not sufficient to satisfy the requirements on the supervisory authorities in terms of the Regulations.

 For that reason a basic disclosure certificate is called for. If you have such a certificate for another purpose, that will be acceptable provided it is dated to within 6 months of date of the application for approval.

If you are living or working in England or Wales, you will need to decide whether you require a DBS certificate - visit Gov.uk's Disclosure and Barring service for more information.

Please complete the form, confirming to us that such a conviction has been identified and upload a copy of the Disclosure Scotland Certificate. We will then review your application and contact you in due course.

The online form will be available soon and we will contact you to let you know as soon as possible. The deadline for completion is 25 June 2018. Practice units are encouraged to apply for their Disclosure Scotland Certificate (or DBS, if required) in early course to allow for submission.

It is a criminal offence to act as a beneficial owner, manager, or officer without approval from the Law Society. No offence is committed if the application is made on or before 25 June 2018 and we have not yet determined the outcome of that application.

The online form will need to be submitted by the relevant practice unit's Money Laundering Reporting Officer. MLRO's are encouraged to thoroughly review the information contained in the form prior to submission. Please note that for practice units with 10 or more partners it is possible to nominate an assistant to the MLRO to complete the data entry. This in no way may be seen as relieving the MLRO of their duties as such, and they bear sole responsibility for any errors, inaccuracies, or omissions on the form.

There is no fee for completion of the application for approval under the Regulations. You will need to pay for the cost of the basic Disclosure Scotland Certificate, currently £25 per application.

We will contact you as soon as possible about approval in terms of this regulation. Please continue to operate your business in the normal way prior to any contact.

A Disclosure Scotland Certificate (or DBS Check) will need to be submitted with your application for approval. We recommend that you make the necessary application to Disclosure Scotland for basic disclosure as soon as possible. We will accept certificates dated within 6 months of the date of the application, so any certificate obtained now will not go out of date. Please continue to refer to our website for more information and for further updates from us.

Yes, this is an ongoing process. You will need to keep us informed of the arrival and departure of beneficial owners, officers and managers at and from your practice unit. That information may be provided by updating the information provided via the online portal.

A beneficial owner, officer or manager who moves practice unit should take their Disclosure Scotland Certificate (or equivalent) with them so that their new practice unit can make the relevant application to us for approval. Their former practice unit should also notify us via the online form of the departure of one of their beneficial owners, officers or managers.

Please direct all questions to AMLRegistrations@lawscot.org.uk. We will respond as soon as is practicable and use incoming questions to update F.A.Q.

You can see your MLRO start date by clicking on "My profile" on the left hand menu while logged in. Scroll down to "Employer details" where your MLRO appointment start date will be given. If this date is blank we don't have a note of your start date in which case please return to the AML online process and enter your best guess date.