Law firms “must review” their anti-money laundering policies following the publication of new guidance, the Law Society for England and Wales has said.
The warning comes after a “radical overhaul” of the Legal Sector Affinity Group (LSAG) anti-money laundering (AML) guidance.
The regulator said the new guidance will help solicitors “navigate” the complex nature of anti-money laundering legislation and better understand the associated “risks and challenges”.
The report follows the introduction of the fifth AML directive in 2020, which includes major changes to “client due diligence and enhanced due diligence”, as well as introducing a “duty to collect proof of registration for trusts and companies”.
Commenting on the report, Law Society president David Greene said: “In light of these changes, the legal profession should review their current AML governance, policies and procedures and update where appropriate.
“The guidance includes fully revised and expanded guidance on risk assessments, expanded guidance on source of funds and source of wealth, an updated training section and a new section on how to effectively use AML-related technology to mitigate risk.”
In February, the Solicitors Regulation Authority (SRA) also published new guidance to help law firms combat money laundering after a major review found that solicitors offering conveyancing, trust, company or client account services are most at risk of financial abuse.
The publication includes:
- Expanded guidance on understanding source of funds and source of wealth
- A new section addressing the need for firms to understand the technology they are using in order to use it effectively
- Clarifications on high-risk sectors, accepting cash into the client account, customer due diligence (CDD) on referrals from another legal practice, timing of CDD/exceptions; and
- Discrepancy reporting to Companies House, and other relevant registries from new duty/obligations introduced in January 2020, such as material changes to the regulations which are reflected in the guidance.
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