FATF Risk Based Approach Guidance for Legal Professionals: A Quick Overview
Who are the Financial Action Task Force (FATF)?
What is the FATF Risk Based Approach Guidance for Legal Professionals?
- “Support the development of a common understanding of what the risk-based approach involves.
- Outline the high-level principles involved in applying the risk-based approach.
- Indicate good practice in the design and implementation of an effective risk-based approach.”
- And it is certainly important reading for anyone caught by the Money Laundering Regulations 2017 (or to give them their proper title, The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017).”
ABS Success!
We recently helped forward-thinking accountancy practice, RRL Accountants, launch a separate SRA-regulated wills, trusts and LPA company.
RRL Wills is headed by solicitor Nick Latimir, who told Legalfutures that there are ‘clear benefits’ to a joined up approach to accountancy and private client work:
What RRL Wills said about us
Continuing competence a success, says SRA
The SRA has found that the Continuing Competence regime, which replaced CPD in 2016, has been ‘well received’ by the profession and has resulted in law firms ‘doing more training’.
Although they recognise that it is too early to draw firm conclusions, on the basis of a recent thematic review (20 firms) and online survey (500 responses), they seem overall happy with how things are going.
- “Most firms and solicitors implemented the scheme without significant problems.
- The vast majority of firms have maintained or increased their support for learning and development, with 52% of solicitors doing about the same amount of learning and development; 40% doing more; and only 9% doing less.
- Solicitors tell us that our approach has helped them to better identify their needs, as learning and development appears to be more relevant and targeted.
- Most firms reported a reduction in the cost of learning and development by focussing activity on specific roles and teams, and working with other firms to develop and deliver training.”
Really?
Putting aside for a second the small sample and lack of independence, there is a general feeling that solicitors have not engaged with Continuing Competence as eagerly as the SRA suggests.
In fact, the Legal Services Board all but committed in its 2019/20 budget to revisit the issue.
Our own, albeit anecdotal, experience paints a different picture to that presented by the SRA. We find that many solicitors:
- are not sure of what is expected of them
- have not heard of (let alone read) the Competence Statement
- do not comply with the ‘reflection’ or evaluation part of the exercise
- do not keep proper records
- are not aware that their firm has to sign off their compliance with the regime on the annual renewal exercise.
Transparency for all (except the regulator)
Faced with growing criticisms about the secrecy surrounding decision-making at the SRA, the regulator has committed to a more transparent approach to regulation.
The new Chair, Anna Bradley, will increase her communication through blogs and social media.
SRA Board meetings, however, which were closed in 2017, will remain closed.
Physician, heal thyself
This is an issue of credibility for the SRA. Whilst more transparency generally is welcome, it is a mistake to keep Board meetings closed. The profession relied upon open access, so that journalists could keep us updated on the latest thinking at the regulatory level.
How can the profession continue to be brow-beaten about transparency when its own regulator maintains secrecy?
And it gets worse for the SRA. The popular legal blog Roll On Friday has run a series of posts alleging ‘cronyism’ at the executive level of the SRA. Whilst we all know there is a merry-go-round of quango appointments, there does seem to be a concentration from one or two bodies.
No doubt the SRA will face additional pressure to publish details of appointment decisions (although it is notoriously hostile to FOI requests).
SRA Standards and Regulations website goes live
You can now sign up to the trial service (beta) of the new ‘Standards and Regulations’, including the new Codes of Conduct and Principles.
Looks like a good start to us. We particularly like the ability to annotate the rules with your own notes, as you might do in a book. (Why don’t all reference websites have that function??)
You have to submit AML forms to the SRA when you take on new partners
It has come to our attention that some firms are not aware of their obligation to keep the SRA updated about partner hires (including Directors and shareholders for ABSs).
You are required to submit an FA10b – there is a separate AML authorisation process that goes on in the background.
This is the same form that you need to file if you are changing MLRO and changing whether or not your firm is caught by the Money Laundering Regulations.
Please let us know if you need any guidance on this.
Disciplinary decisions
Read the latest SDT decisions in the Gazette, including strike offs for solicitors:
- involved in a Ponzi scheme
- using client money for personal investment
- dishonestly backdating documents
- acting in a transaction bearing the hallmarks of mortgage fraud
- supplying false information on an insurance proposal form
We couldn’t help but raise an eyebrow about this case, in which the SDT appears to have been unusually lenient. A Clyde & Co solicitor blamed pressure of work on making a ‘mistake’, in irregularities around attendance notes, which purported to evidence an agreement to extension of time. No such extension had been agreed with the other side. Although pressure of work is undoubtedly a real problem, it is not usually given much weight in tribunal decisions.
