Alex White is the AML Auditor, in our Financial Compliance team.

Early last year we announced our intention to carry out our first thematic review to help us better understand and minimise risk in what is an inherently high-risk area  – Trust and Company Services Provision (TCSP).

A total of thirty firms who provide TCSP services completed an in-depth questionnaire and four participated in stage three of the review - which was a deep dive into their policies, controls and procedures using desktop file reviews and face to face interviews.

The cooperation of our members in this process, means that we are now able to publish the end report, which highlighted a need for improvement in terms of compliance with the Money Laundering Regulations, 2017, in TCSP work. 

While we would strongly encourage all our members to read the report in its entirety, to share and discuss it with your colleagues in order that your firm can benefit from the learnings, we have also summarised our findings below.

  • while we were encouraged by the data received in the questionnaire submissions, the information and statements provided in the questionnaires did not always correspond with our findings when conducting stage three of the review, namely –
  • the failure of some firms to fully consider and acknowledge the provision of trust or company services and the associated risks in their firm level risk assessment
  • a failure to address those services in their policies, controls and procedures to mitigate the risks
  • poor AML file management and record keeping to evidence compliance with the Money Laundering Regulations and the Law Society of Scotland Practice Rules
  • a failure to produce AML-specific files relating to client matters and relationships in a timely manner
  • inadequate ongoing monitoring of client relationships and documenting “know your client”
  • the review has provided us with a valuable insight on the nature of trust or company services provision by the profession, including the level of compliance with all aspects of the Money Laundering Regulations, 2017 (the Regulations)
  • the report provides illustrative guidance on good and bad practices found
  • all firms should take the time to consider the contents of the report in its entirety and to see how it, along with the information contained the Society website, can determine and direct how your firm complies with the Regulations

You can read the full report here.

To further assist firms, this year’s CPD & Training programme will feature coverage of best practice compliance with the Regulations when acting as a TCSP across multiple training events. Look out for the latest General Practice conference in your area, the AML and financial crime conference on 27 August 2020.

 

Trust or Company Services Provision thematic review report

Last year we carried out our first thematic review to help us better understand and minimise risk in what is an inherently high-risk area of law – Trust and Company Services Provision (TCSP).

Trust or Company Services Provision

Trust or Company Services Provision (TCSP) work has come under ever increasing scrutiny in recent years and legal entities, for example Limited Liability Companies and Scottish Limited Partnerships, and Trusts can be misused by criminals to obscure the true origin and ownership of assets.

TCSP toolkit

As per the HM Treasury National Risk Assessment, 2017, the highest risk Trust or Company Service providers are those which offer a wide range of services and includes Registered Office Only Provision and Company Formation Only services. We have created a dedicated TCSP toolkit to provide further guidance. 

AML Certificate

The AML Certificate is a questionnaire about your clients, products, services and the way in which you deliver those services.  It is a crucial tool in our statutory obligation to deploy a risk-based approach to our AML Supervision and must be completed by those firms in the scope of the AML Regulations. This year the submission deadline is 10 April 2020.