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

The Scottish legal profession is well regarded and provides its regulated services, both to a domestic and international client base. Some of those services are inherently susceptible to use and abuse by criminals, and all firms have a vital role to play to ensure legitimate services are not abused for illegitimate purposes.

Some areas of law are inherently higher-risk than others – for example, HM Treasury National Risk Assessment, 2017, highlighted that the provision of Trust or Company Services Provision (TCSP) by the legal profession as inherently high risk and open to criminals looking to conceal or disguise their assets through the trust and corporate structures. This type of insight informs the focus of our own supervisory activity.

Introducing Thematic Reviews – an additional supervisory tool

To fulfil our responsibilities as the AML supervisor for Scottish solicitors, we deploy a number of tools and resources - for example onsite visits, desk-top reviews, selected file audits and the requirement to submit the AML Certificate. One such tool is thematic review. Used by other AML supervisors such as the Solicitors Regulatory Authority and the Financial Conduct Authority, thematic reviews are a compulsory exercise which will help us to identify and assess specific current and emerging AML risks within the regulated population.

They will allow us to:

  • Work collaboratively with our supervised population to gain a better, more detailed understanding of the products and services which may be exposed to use and abuse for illicit purposes
  • Gain a greater insight into how the profession complies with obligations under the Money Laundering Regulations.
  • Use the data gathered to provide further information and support to members to mitigate the AML risks inherent in this type of work.
What does this mean for our members?

We will begin our first thematic review next month on the subject of Trust and Company Service Provision undertaken by Scottish solicitors.

We are aware that a significant number of firms offer Trust or Company services to their clients and this review will be in the best interests of our supervision and the profession:

  • It will aid our understanding of services provided – allowing us to supervise more effectively and efficiently
  • Efficient and effective supervision minimises our impact on firms and understanding the services provided by our regulated population also allows us to provide more effective, tailored AML-related information, feedback and support to our membership.
Who, what, when  and how?

We have selected 30 firms based on the information previously provided by firms in the AML Certificate and will contact the MLROs of these firms directly.

This thematic will consist of five stages.

Stage 1: From the end of March, selected firms will be required to complete an online questionnaire (accessed through the members portal of our website).

  • Each firm will have eight weeks to complete and submit the questionnaire
  • Selected firms will be notified in advance of the questionnaire going live and how to access it.

Stage 2: Our AML team will analyse the data gathered and select firms that we will take on to stage three.

Stage 3: We will then take forward a smaller cohort of these firms into stage three. We will ask these firms to provide details of their Trust or Company Services Clients, the services they have engaged and copies of their policies, controls and procedures before undertaking further onsite visits, desk-top reviews and staff interviews with these firms.

Stage 4: Firms who participated in stage three will receive an individual and confidential report of our findings during the onsite visit, desk-top reviews and staff interviews.

Stage 5: An overarching thematic report will be published on our website - detailing our anonymised findings, including statistical information as well as examples of poor and good practice we have seen.

This report will enhance our existing AML toolkit which is currently available for our members use.

We look forward to working with you as your supervisor – your co-operation and participation is required to minimise the AML risks to you, your business, your clients and to the profession as a whole.

Should you have any questions regarding thematics please do feel free to get in touch at aml@lawscot.org.uk or call me directly on 0131 476 8150.

Also, please look out for further updates in the Journal, Lawscot News and your inbox.

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. 

Anti-money laundering

The fight against money laundering and counter terrorist financing - the role of the legal profession.