AML round up: July 2023

The ever-increasing importance and visibility of anti-money laundering (AML) and other economic crime issues at international, domestic and sectoral level means that it's vital for solicitors to be aware of the latest developments.

This AML round-up covers all the latest news for the legal sector, plus what the AML team has been working on to help aid practices since our last round-up in September 2022.

Meet our new AML team member

We have recently expanded our team and welcomed Emma Cairns to the Law Society of Scotland as an AML Risk Manager.

• Faculty visit

  • Our Head of AML, Graham MacKenzie, and AML Risk Manager, Bob Clark, delivered a presentation to the Greenock Faculty recently and screened the video ‘All Too Familiar’ - a thought-provoking video that depicts how money laundering can manifest in typical, real-life business scenarios. The feedback received from the Faculty was really positive.
  • Further Faculty visits are planned, so if you would like us to arrange a visit to you and screen the video 'All too Familiar', please do get in touch. 

• AML and Financial Crime Conference

  • We attended the AML and Financial Crime Conference run by the Society in October 2022 and Graham delivered a presentation covering updates on the AML team's resources and ongoing assurance work, as well as high level trends and feedback from that work.
  • The next AML and Financial Crime Conference is on 5 September 2023, where Graham will discuss the HM Treasury consultation on the AML supervisory regime.

• Insight days

  • Our AML Risk Managers, Jenni Rodgers and Dale Trahms, participated in numerous Law Society insight days, covering all things AML for school pupils, LLB/Diploma students and graduates. During the insight day, students hear from four departments within the Society, getting an insight into their work and then have a chance to undertake a task relating to each department. The insight day is designed for those attending to learn more about the Law Society and its work within the legal industry.

• Upcoming blogs

  • Keep an eye out for our AML Risk Manager Dale Trahms’ next blog on terrorist financing.

AML Certificate

The AML Certificate portal closed in April for the 2022 period submissions. We would like to thank all practices and their MLROs for taking the time to complete it and the results will be published towards the end of the year.

Legal Sector Affinity Group (LSAG) updates

In March 2023, we provided details of updates to the LSAG guidance to reflect amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which include the requirement to carry out proliferation financing risk assessments and changes to the duty to report discrepancies to company registries. 

LSAG also provided an advisory notice in relation to Chinese underground banking and funds from China.

Refreshed templates

We have recently launched several new templates to aid practices to meet their regulatory obligations. These include:

• New Client and Matter Level Risk Assessment templates: These have been tailored towards assisting practices undertaking holistic risk assessments and due diligence at client and matter level in line with regulatory and LSAG guidance.
• A new PCP template: this was launched on the back of the PCP thematic review, which identified areas where practices could improve.
• An updated AML breach reporting form: this form should be used by practices to report to the AML team any serious breaches of the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.

Cryptocurrencies

Our advisory note, Cryptocurrencies - Risk Assessment & Source of Funds/Wealth Considerations in the context of Conveyancing Transactions, was published in November 2022. This covers what crypto is, assessing the AML risks associated with crypto, high-risk mixer/tumblers and regulation of crypto.

AML FAQs

We continue to update and refresh our AML FAQs, having recently developed more around Source of Funds / Source of Wealth and Chinese/ Hong Kong money laundering risks. We launched our Financial Sanctions FAQs in 2022 following the invasion of Ukraine and the resulting sanctions imposed.

HM Treasury consultation

• HM Treasury has recently published a consultation on reforming the anti-money laundering and counter-terrorism financing supervisory system. The consultation sets out four potential models for a future AML/ CTF supervisory system. It is open for responses until 30 September 2023.

National Crime Agency (NCA)

• The NCA’s latest edition of “SARs in action” was published in April, covering topics including modern slavery and human trafficking, illegal wildlife trade and cryptocurrencies.
• You can find this and previous editions of the magazine on the NCA website, alongside other relevant SAR guidance and their recently updated SARs Reporter Booklet.

UK Economic Crime Plan

• The UK’s Economic crime plan 2023 to 2026 was published in March. This document sets out the UK’s strategy to prevent economic crime and protect national security, while at the same time supporting economic growth and competitiveness.

Economic Crime Levy

• Get ready for the Economic Crime Levy: Member firms with a UK revenue equal to or greater than £10.2m need to register with HMRC and pay the levy.

Office of Financial Sanctions Implementation (OFSI)

• The OFSI has published guidance on enforcement and monetary penalties for breaches of financial sanctions, which now includes a section on ownership and control.
• Trust services sanctions update: the OFSI has also announced it is sharpening Russian sanctions to close off UK trust services providers from providing trust services to designated persons.

Financial Action Task Force (FATF)

• The FATF has published Guidance on Beneficial Ownership of Legal Persons.

Russian sanctions

• The UK Government has imposed fresh sanctions on Russia to further restrict its access to UK legal expertise. The move increases global activity to weaken vulnerable sectors of Russian economy.

• Almost £1.5m of "dirty money" channelled through Paisley law firm: In this case, the Law Society acted to protect clients when serious issues were identified at Paisley law firm Roberton and Ross.

• SRA fines small firm £20,000 for AML breaches: This article highlights the importance of properly assessing the risk of your practice and clearly documenting this in your Practice Wide Risk Assessment.

• Inadequate AML checks lead to property fraud: This article highlights the importance of conducting adequate client due diligence checks.