Today, we publish our inaugural annual anti-money laundering (AML) supervisory report, highlighting the breadth and range of AML initiatives that the Law Society of Scotland has recently undertaken, along with our first supervisory AML Risk Appetite statement.

The AML supervisory report details the work and initiatives that we have undertaken between January 2019 and August 2020 in fulfilling our supervisory obligations, while the Risk Appetite statement offers a clear definition of our attitude to AML risk moving forward.

The annual report has been produced in line with the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, r.46a, which prescribe that self-regulatory organisations such as the Society must publish an annual report containing information regarding:

  • measures taken by the self-regulatory organisation to encourage the reporting of actual or potential AML breaches
  • the number of reports of actual or potential breaches received by that self-regulatory organisation
  • the number and description of measures carried out by the self-regulatory organisation to monitor, and enforce, compliance by relevant persons with their obligations the MLRs, the Terrorism Act 2000 (TA) and the Proceeds of Crime Act 2002 (POCA)

It is an interim step ahead of any future set reporting periods agreed with Her Majesties Treasury (HMT) and the Office for Professional Body AML Supervision (OPBAS), and contains information relating to:

  • Context
  • The work, structure and objectives of our dedicated AML team
  • How we discharge our responsibility to conduct risk-based AML supervisory assurance
  • AML Assurance statistics and outcomes
  • General observations from our AML Supervisory Assurance Programme
  • Our 2020 Thematic Review on Trust & Company Service Provision (TCSP) within the Scottish legal profession
  • Our AML Governance Structure
  • Staff AML Training
  • Cross-sector joint-working collaboration, intelligence and information sharing
  • How we promote the reporting of breaches and concerns
  • How we fulfil our supervisory responsibilities relating to guiding the profession
  • Our AML supervisory plans moving forward

While the annual report is retrospective, our supervisory AML Risk Appetite statement sets out our position in relation to risk-based supervision and associated outcomes moving forward.

This recognises that, despite the best efforts of the vast majority of legal professionals, money laundering through the sector will never be entirely eliminated.

The risk appetite statement clearly defines our attitude to AML risk within our supervised population, in order to discharge our supervisory responsibilities effectively and responsibly under the Money Laundering Regulations 2017.

This includes how we aim to prioritise and allocate resource, and the basis on which we implement a risk-based approach to our AML supervisory work – including how we may come to fair, balanced and risk-based outcomes and findings.

It also sets out our supervisory position on the use of AML-related technology within the profession, along with our support of innovation to achieve effective AML outcomes.

Graham MacKenzie, Head of AML at the Society, said: "I hope our inaugural AML Annual Report provides some visibility of the breadth and range of AML supervisory assurance work and other initiatives the Society performs in order to discharge our responsibilities under the Money Laundering Regulations 2017.

"I’m extremely proud of what we continue to achieve. We continue to strive for fair, risk-based and effective supervision, balancing a robust approach to cases of non-compliance with providing the necessary guidance and support where appropriate to help Scottish solicitors comply with their obligations. This aspect has never been more important given the challenges and economic backdrop caused by the current pandemic.

"Our new Risk Appetite statement is also a first for us and I hope it sets out clearly and concisely how we aim to achieve a risk-based approach to our supervision, and our approach to associated outcomes. I also hope our statement on supporting the use of technology and innovation is welcomed both by the profession, and those that supply AML-related technology to it."