We are putting this up so that people may satisfy their curiosity as to what the message to a successful applicant looks like!
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Help with confirming QWE
This is for people who are NOT foreign qualified lawyers. We have confirmed QWE to the SRA for over 50 aspiring solicitors from around the world.
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On 2nd May 2023 the SRA wrote to all firms they regulate who are NOT within scope of the AML regulations (they already asked those within AML scope) with a series of questions on how they comply with the Sanctions Regime. (Check your junk box!)
Answering is mandatory and answers must be submitted by the end of May 2023.
Although the answers seem simple, you do not want to get them wrong. The SRA will keep the answers and refer to them in future audits. They followed this approach with AML earlier and are now auditing and referring back to answer given earlier.
We are helping firms with answering the questions for a nominal fee of £50 + VAT.
Other Sanctions compliance help
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We thought it worth putting up an answer to this questions as it has been asked may times. Compliance with AML is a particularly hot topic and the SRA is increasing inspection, audit and enforcement.
The SRA does not give an absolutely categorical list, but does supply helpful guidance (we understand a lot more helpful than the FCA) and attempt to tell firms it regulates what 'good' looks like.
(We provide a lot of support to businesses in the Legal Sector with AML compliance. Please see more info below.)
Here is a link to the most useful page we have found on the SRA website in answer to this question.
Below we have put part of that page where they have given guidance on what areas of legal work fall in scope of the AML regime:
"Legal areas of work - in and out of scope
The areas of work in the regulations are standalone definitions and do not align with other definitions of legal services. They do not for example refer to reserved activities under the Legal Services Act 2007.
You will need to decide for yourself whether a matter is in scope of the regulations or not.
You should be aware that there is no de minimis for small transactions or limited amounts of work. If something you do is in scope, the regulations apply in full.
It is also important to note that there is no definitive list of activities that are not in scope. While a type of legal work (eg litigation) might be considered out of scope, a particular matter could be drawn into scope if for example you were to set up a trust for the client as part of the matter.
Below are the areas of legal work that will generally be in scope of the regulations. Please note this list is not exhaustive and only reflects the likelihood that work of these types will be in scope. You will need to take a case-by-case approach when deciding whether a matter is in scope. If you are unclear, you should seek independent legal advice.
AML Support from us (HCL)
We provide a lot of AML support to businesses in the Legal Sector. Please see below for a summary and links for further information.
(Sanctions Regime compliance - see separate services for this on our website.)
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The SRA has issued updated guidance on 4th May 2023. This is in response to continued reports of an unsupportive, bullying or toxic working environment and culture in some firms it regulates.
The guidance is for all individuals and firms the SRA regulates, including managers and other individuals involved in senior leadership within law firms and other organisations delivering legal services.
The purpose is to explains the SRA's approach where they consider that individuals and firms have failed to take appropriate steps to look after colleagues' wellbeing. It sets out the main standards that apply to solicitors, and to law firms and those responsible for their culture and the systems in place within them.
It is the responsibility of senior management to do everything they reasonably can to look after the wellbeing of those who work in and with the firm. It seems pretty clear that the SRA will refer to these rules when considering the conduct of a firm.
Here is a link to the Guidance.
The SRA write about enforcement:
"We are likely to take action against an individual where, for example, there is evidence of:
We are likely to take action against a firm where, for example, there is evidence of:
One of our client law firms has forwarded the email they received yesterday from the SRA giving them notice that the SRA will be asking them to answer specific questions about how they comply with the UK Sanctions Regime. They have provided a list of the questions they will ask. It is mandatory that the firm replies. A link to the questions is below. We have also put a copy of the email below.
You will read that the email with the questions will be sent out in early May and the answers have to be submitted by 31st May 2023. This looks very similar to what the SRA did in relation to AML compliance. In that case they referred back to the answers when later doing audits on the AML within firms (we are helping a number of firms to deal with such AML audits). It would not be a surprise if the SRA follow a similar pattern with regard to Sanctions compliance enforcement.
The Email from the SRA
(In order to get this up quickly we have had to put this up as links to the 2 pages of the email, which see below. Apologies for the slight inconvenience.)
https://hunningsconsultancy.co.uk/wp-content/uploads/2023/04/SRA-Sanctions-email-page-1.png
https://hunningsconsultancy.co.uk/wp-content/uploads/2023/04/SRA-Sanctions-email-page-2.png
Link to the questions
Help & Assistance
AML – we mentioned this above. We provide extensive assistance with AML:
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The SRA published information about this in February 2023 to be brought into effect “later in the year”. This seems a sensible approach to streamline the process and save the profession expense. It also comes at a time when the SRA has been given powers to raise the maximum it can fine firms from £2,000 to £25,000. The Fixed Penalty approach seems to be gentle – with the SRA giving you notice to fix the breach and only fining when this is not done. Note that they are thinking of extending this into the area of minor breaches of anti-money laundering compliance requirements. Further information below.
The SRA have written:
“We said that we would develop a scheme that, in the first instance, covers a small number of breaches and limits the breaches in scope of the scheme to firms. We have identified the following breaches for inclusion in the scheme:
• failure to publish the required costs or complaints information, or display a clickable logo, in accordance with the SRA Transparency
• failure to provide information or documentation to us in response to any requests or requirements, for example failure to provide us with firm diversity data or to comply with requests for declarations of compliance with AML requirements
• failure to ensure approval of role holders, for example managers, Compliance Officer for Legal Practice (COLP) and Compliance Officer for Finance and Administration (COFA)
• failure to notify us of role holders, for example managers and owners who need to be approved by us for these positions.
This will allow us to monitor the operation of the procedures before considering other breaches that might be suitable for fixed penalties, for example straightforward breaches of anti-money laundering compliance requirements.”
The fixed-penalty process
Level 1: “Our proposed process will involve writing to the firm once a breach has been identified asking it to bring itself into compliance within a specified time. If after this time, the firm has not complied, the matter will be referred to an Investigation Manager who will issue a fixed penalty at level 1 (£750). The firm will be able to request a review of the fixed penalty only on the grounds that it was compliant within the specified time or that it did not receive our initial letter through no fault of its own. This would not apply if for example a firm had not updated its contact details or checked its email/spam folders. The firm also has the right to appeal to the SDT. “
Level 2: “If after the issue of the fixed penalty, the firm does not bring itself into compliance within a specified time, or it is found to be non-compliant again for the same type of breach, within three years from the initial penalty, we will follow the same process set out above, but the penalty issued will be at level 2 (£1500). “
Level 3: “If after this, the firm continues not to comply, or is found to be in breach for a third time, the matter will be referred to our investigation and supervision team for further investigation and consideration of any appropriate sanction. We will also retain the discretion not to follow our fixed-penalty process in appropriate circumstances. This might arise for example where we have concerns about the systems and controls in place at a firm, meaning a wider investigation and a bespoke sanction is appropriate, or where we identify a pattern of non-compliance over a period of time. Costs: We propose that we will charge a fixed cost of £150 in relation to all fixed-penalty decisions. This reflects the minimum cost to the SRA in each case – some cases might cost more. We think it is appropriate that we recover these costs (which would otherwise fall on the wider profession to meet) from the respondent firm.”
Publication
Remember that the SRA are also talking about publishing more information about misdemeanours. So, although the fine might be low, it won’t be great to have your breach published on your firm’s record on the SRA website.
Heed Help?
We provide a wide range of support for SRA regulated firms: https://hunningsconsultancy.co.uk/compliance-services/
This ranges from assistance with compliance with the
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ingemar@hunningsconsultancy.co.uk
The guidance has two parts:
part 1: anti-money laundering guidance for the legal sector
part 2: specific anti-money laundering guidance for
barristers/advocates (2a)
trust or company service providers (2b)
notaries (2c)
2b and 2c are to be read alongside part one of the guidance. 2a is designed to be read independently of part one.
What’s changed?
The Legal Sector Affinity Group (LSAG) AML guidance is designed to help legal professionals and firms comply with the Money Laundering Regulations (MLRs) 2017.
From 1 April 2023, the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 introduce changes to the MLRs 2017, including:
• a requirement to carry out proliferation financing risk assessments
• changes to the duty to report discrepancies to company registries
LSAG has reviewed and updated the AML guidance in the light of this new legislation, to help you stay compliant and mitigate your firm's money laundering risk.
What is proliferation financing?
“Proliferation financing” is broadly defined in regulation 16A(9) of the Money Laundering Regulations 2017 as:
“the act of providing funds or financial services for use, in whole or in part, in the manufacture, acquisition, development, export, trans-shipment, brokering, transport, transfer, stockpiling of, or otherwise in connection with the possession or use of, chemical, biological, radiological or nuclear weapons, including the provision of funds or financial services in connection with the means of delivery of such weapons and other CBRN-related goods and technology, in contravention of a relevant financial sanctions obligation.”
From 1 April 2023, firms must carry out proliferation financing risk assessments – either as part of the existing practice-wide risk assessment or as a standalone document.
Practice areas that have been identified as higher risk include trade finance, commercial contracts and Duty to report discrepancies to company registries
From 1 April 2023, the duty to report discrepancies to company registries only applies if:
• the business relationship being established is with:
• a company
• a limited liability partnership
• a Scottish partnership
• a trust which is required to register with HMRC’s trust registry
• an overseas entity that needs to register due to ownership of UK real property
• the discrepancy is “material” – not a typo or minor spelling mistake
• the discrepancy “by its nature and having regard to all the circumstances, may reasonably be considered” to:
• be linked to money laundering or terrorist financing, or
• conceal details of the customer’s business
Section 12.6 of the guidance sets out your obligations in more detail.
Here are links
Link to this guidance from the Law Society: https://www.lawsociety.org.uk/topics/anti-money-laundering/anti-money-laundering-guidance
Link to the LSAG Guidance: https://www.sra.org.uk/globalassets/documents/solicitors/firm-based-authorisation/lsag-aml-guidance.pdf?version=49d62e
Link to the summary by the SRA of changes brought in in July 2022: https://www.sra.org.uk/globalassets/documents/solicitors/firm-based-authorisation/lsag-aml-guidance-update-july-2022.pdf?version=49f433
Help with your AML Compliance & Training
We help many law firms with this:
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The Legal Ombudsman (LeO) has published some useful FAQs about handling complaints.
Here is the link: https://www.legalombudsman.org.uk/media/iatjbphd/guidance-scheme-rules-faq-april-2023.pdf
Here are the contents chapter headings:
Chapter 1 – Introduction and definitions
Chapter 2 – Who can complain about what
Chapter 3 – What authorised persons must do
Chapter 4 – When complaints can be referred to us
Chapter 5 – How we deal with complaints
Chapter 6 – Case fees
The Guidance was issued on 23rd November 2022.
It relates to all solicitors, registered Foreign lawyers (RFLs), registered European lawyers (RELs) and firms they authorise and those they supervise to undertake immigration work. For the purposes of this guidance, the term 'solicitor' includes RELs and RFLs.
Summary
It covers:
Here is a link to the full advice document:
Compliance Support
For support on all compliance issues affecting SRA regulated firms please see the drop down menu above or: https://hunningsconsultancy.co.uk/consulting-services/
OFSI have issued guidance on how this will be done. OFSI is part of the UK Government Treasury which runs the UK Sanctions regime. (OFSI stands for 'Office of Financial Sanctions Implementation'.)
The Guidance was issued in March 2023.
Summary of Contents
The Guidance sets out:
• an explanation of the powers given to the Treasury in the 2017 Act
• a summary of our compliance and enforcement approach
• an overview of how we will assess whether to apply a monetary penalty, and what we will take into account
• an overview of the process that will decide the level of monetary penalty
• an explanation of how we will impose a monetary penalty, including timescales at each stage and rights of review and appeal
Click here for the link to the full guidance.
Sanctions Training
We can assist with training on the Sanctions Regime. Below is a link to that service. Feel free to contact us via the form below should you require assistance.
https://hunningsconsultancy.co.uk/sanctions-regime-training/
