Tackling money laundering – making sure firms are doing their job

Legalex blog post image 1

Word provided by Paul Philip, SRA Chief Executive

 

At our December Compliance Conference, delegates heard from West Midlands Counter Terrorism Unit on money laundering. It was one of the most powerful presentations I have heard in the last year.

We heard about how extremists were exploiting lax processes to help launder their money so that they could plan attacks on UK soil. Beyond terrorism, money laundering also supports serious crimes ranging from people trafficking to drug smuggling.

The type of work law firms do and the credibility of solicitors makes them an attractive target for terrorists and criminals who want to process their ‘dirty money’. If law firms don’t play their part in tackling the problem, the social, economic and security consequences may be devastating and people’s trust and confidence in the legal profession will rightly be undermined.

So how is the fight against money laundering in the legal sector going? Frankly, it is a very mixed picture. There is excellent practice out there but, despite lots of information and support, firms are still struggling to get to grips with the 2017 regulations. So, we are about to write to an initial sample of 400 firms asking to see evidence of compliance with the Money Laundering Regulations. Those who fall short should expect to enter our enforcement process.

It’s not just us at the SRA who are concerned. The National Crime Agency (NCA) are concerned by the low number of suspicious activity reports from the legal profession, with numbers falling a further 12 percent last year. Numbers only tell part of the picture - the quality of the reports is important. The NCA have concerns there as well.

Talking to solicitors after the West Midlands Counter Terrorism Unit’s speech, we all agreed how much this issue matters and how serious the consequences are if we do not get it right. Many are already stepping up to that challenge, but many is not enough. Compliance is not optional.