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.
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This ranges from assistance with compliance with the
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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/
We don't publish most of the thanks and testimonials we get, but here is one.
It is from Firas Jayyusi, Senior Consultant at Cedar White Bradley
"Only a few people would have the chance to come across a remarkable professional like Ingemar. Ingemar, and his amazing team, helped me with the confirmation of my Qualifying Work Experience, which has now been accepted by the Solicitors Regulation Authority. Ingemar was extremely helpful, patient, knowledgeable and systematically walked me through the steps, with easy-to-use forms, into a great result. It is definitely a privilege to have that kind of professional and trusted service for Aspiring Solicitors like me."
QWE Confirmation - External Solicitor Service
We can be your External QWE Confirming Solicitor –
The deadline is 5pm on 31st March 2023. Contracts are planned to start 1st September 2023.
This is for the following Practice areas:
• Family
• Housing, Debt and Welfare Benefits
• Immigration and Asylum (including work at Immigration Removal Centres)
• Mental Health
• Community Care
• Claims Against Public Authorities (formerly known as ‘Actions Against the Police etc’)
• Clinical Negligence
• Public Law
• Family Mediation
• Education
• Discrimination
Here is a link to the document from the LAA called 'Selection Questionnaire Information for Applicants' which will give you more information: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1140758/2018_Civil_Contracts_from_September_2023_SQ_IFA_V1.pdf
Help with obtaining the Contract & SQM or Lexcel
We assist firms with this process. Here is a link to this service with some more info.
To contact us, fill in the form below, or email our lead consultant, Ingemar, at [email protected] or call on 07887 524507 (leave a message if we are unable to answer).
We have checked out the process with the SRA.
The Agreed Exemption applies with regard to the application for exemption from SQE2. You fill in the details through your ‘MySRA’ profile on the SARA website.
The Agreed Exemption does NOT apply to any other exemption you are applying for – such as exemption from the SQE1 exam. For that you will need to complete the form with all the accompanying documentation to persuade the SRA that your experience and knowledge of a wide range of practice areas in English & Welsh law is so detailed that you do not need to take the SQE1 exam. You will need to prepare a detailed dossier of evidence, pay a fee and the SRA will take 6 months to assess this. The threshold is very high. Out opinion 8is that it is hard to get exemption from SQE1 (unless you have already passed the LPC).
Please remember that, if you are a Foreign Qualified Lawyer, you will be exempt from the QWE requirement.
For more information about the application for exemptions see the link below: https://hunningsconsultancy.co.uk/sqe2-exemption-for-foreign-lawyers-review-advice/
External QWE Confirmation Service
If you know of someone who needs an SRA regulated solicitor to confirm their QWE but there is no-one in their organisation to do so - we can help. This would apply to someone who is NOT qualified as a lawyer. Please see the link below and feel free to signpost them to us: https://hunningsconsultancy.co.uk/external-qwe-certification-service-2/
The SRA has issued some guidance on the situation when a client has approached a firm asking them to hold monies on their behalf, but the firm does not wish to do so.
First of all it is worth pointing out that it is up to the firm to decide whether it has a Client Account. It is also for the firm to decide if it will accept the money. However, there are several factors that might influence that decision.
Here is a link to the reply to the FAQ that the SRA has produced. Go to number 12.
https://www.sra.org.uk/solicitors/guidance/operate-client-account/#collapse_6a1d
Also the SRA has provided more case studies to help law firms avoid providing Banking Facilities. Here is the link.
https://www.sra.org.uk/solicitors/guidance/improper-use-client-account-banking-facility/
Help with SRA Accounts Rules Compliance
We have a team of experts in the SRA Accounts Rules. Please feel free to reach out for advice. They can also provide training for the COFA & COLP and the accounts team. In addition they can also assist with a review of the firm's finances, benchmarking against other law firms (as they are involved in one of the major annual benchmarking exercises for the Legal sector), cashflow forecasting and work on improvement of profitability. We can also assist should there be an SRA inspection or investigation. (The same applies for CLC regulated firms.)
For help, fill in the form below or contact our lead consultant, Ingemar Hunnings: [email protected]
These changes will come into effect on 1st April 2023. In summary:
1 – A change to time limits for referring a complaint to the LEO (reduced to 1 year from the date of the act or omission giving rise to the complaint, or date of knowledge)
2 – Discretion to decline to issue a formal Ombudsman decision after investigator case
decision if neither party raise any substantive objection to the findings of the case decision (seems to enhance their ability to proceed in the absence information)
3 – Changes to Ombudsman discretion to dismiss or discontinue a complaint in certain
Circumstances (seems to enhance their ability to dismiss or discontinue)
4 – Minor drafting changes to update Scheme Rules including new dates and correcting previous typographical drafting errors
The impression we get is that they are seeking to streamline the process.
Please refer to the detail. Link:
Legal Ombudsman Guidance: https://www.legalombudsman.org.uk/media/xfrfzben/guidance-scheme-rules-april-2023.pdf
Compliance Support from HCL
We provide compliance support across all areas of compliance affecting law firms regulated by the SRA & CLC. Our Data Protection consultants/DPOs also provide support and act as DPOs for businesses outside of the Legal Services sector. Fill in the form below to make an enquiry and see the drop down menus above for more details of services.
