SRA Updates Sectoral Risk Assessment on ML/TF Risks for Legal Sector

The publication aims to identify the most relevant risks for the firms under SRA supervision.

Emerging risks identified in the report include:

➡️High-risk countries: Geopolitical uncertainty leading to clients and capital fleeing high-risk countries to the U.K., including those who pose an elevated ML, politically exposed person, and bribery and corruption risk;

➡️Client account use: Faulty record keeping, incorrect use, and the bloated retention of client funds pose a risk to facilitating or obscuring ML;

➡️Poor scrutiny of customer due diligence (CDD): Although CDD is gathered, it is often left without appropriate scrutiny, making it an ineffective ML/TF control;

➡️Business models: Increasingly decentralised business models pose a challenge to centralised AML policies and the implementation of adequate scrutiny and ongoing monitoring; and

➡️Resourcing: In a challenging economic climate, firms must adequately resource their compliance function and programmes to ensure they meet regulatory expectations.

✅Firms should review the risks highlighted by the regulator and ensure their control frameworks are responsive to the emerging threats applicable to them.

💡Plenitude’s Advisory & Transformation Service conducts Business-Wide Risk Assessments, helping clients to assess their inherent and residual financial crime risks. Visit our website for more information: https://www.plenitudeconsulting.com/services/advisory-and-transformation