Sunday, April 16, 2017

Money Laundering Rules Shift, AML Breaches Cost Partners Money

via Legal Risk Solicitors comes: "Anti-money laundering: a seismic shift" --
  • "HM Treasury published draft The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) on 15 March 2017. These are intended to implement the provisions of the Fourth EU Anti-Money Laundering Directive with effect from 26 June 2017."
  • "The Regulations will introduce significant changes for any firm doing business in the regulated sector. All firms will have to undertake a thorough review of their anti-money laundering and counter-terrorist finance policies and procedures to ensure they are truly aligned to their own individual risk profiles. The changes are extensive and the draft runs to 106 pages, hence our reference in the heading to a seismic shift."
  • "Each firm will have to produce a written risk assessment taking account of a number factors prescribed in regulation 18, including its clients, countries where it operates and services – which the Solicitors Regulation Authority (SRA) will be required to check;"
  • "Firms will need to undertake risk profiling on client/matter engagement (and evidence it!) and apply customer due diligence not only to all new customers but also at appropriate times to existing customers on a risk-sensitive basis, or when the relevant circumstances of a customer change and in certain other circumstances specified in regulation 27;"
  • "Nobody should think they can escape under the radar: the SRA itself will be subject to review through a new Office for Professional Body AML Supervision, to be hosted by the Financial Conduct Authority (FCA).  We have advised firms on SRA investigations into alleged failures to carry out adequate due diligence and investigation of source of funds, and there have been a number of cases in the Solicitors Disciplinary Tribunal and SRA sanctions."
  • "We are already advising firms, including international, City and regional practices on implementing the new compliance requirements and training, and have advised hundreds of firms since the profession became subject to anti-money laundering regulation in 2004."
And, on this topic: "Three Clyde & Co partners receive £10,000 fines for money laundering breaches" --
  • "Three Clyde & Co partners have each been fined £10,000 by the Solicitors Disciplinary Tribunal (SDT) for breaching money laundering rules. [The partners] all of who are based in London, admitted that they had allowed the firm’s client bank account to be used as a banking facility, which breached a number of regulations under the SRA Accounts Rules 2011 and the Money Laundering Regulations 2007."
  • "Duffy and Purnell admitted that they had not heeded the Law Society’s Fraudulent Financial Arrangements warning or the Warning Notice on Money Laundering, in that they acted as escrow agent in transactions on behalf of a client that had the hallmarks of dubious financial arrangements or investment schemes."
  • "Clydes has also been ordered to pay £50,000 by the SDT for its failure to comply with accounting rules. The firm admitted that it failed to have in place adequate procedures to deal with dormant client balances, which breached the Solicitors Accounts Rules 1998."
  • Said the firm: "'We have worked constructively with our regulator, the SRA and we are confident that the circumstances which led to these breaches could not happen again. We have since reviewed and strengthened a number of aspects of our approach to risk management."

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