Practice advice Q&As

28 June 2018

The Law Society's anti-money laundering helpline is a confidential telephone service for solicitors. Our team of solicitors answers questions on a wide variety of subjects, including anti-money laundering, costs, conveyancing, client care and complaints handling.

The service operates from Monday to Friday between 09:00-17:00 and you can call us on 020 7320 9544.

Below is a selection of questions and answers compiled by the service.

I am the money laundering reporting officer (MLRO) in my firm and as part of my role I am responsible for organising anti-money laundering training for employees within the firm. I have arranged relevant training for many years so as to comply with the regulations. I now understand that following the introduction of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘the Regulations’), the firm is required to keep a record of the training provided. Is this correct?

Regulation 24(1)(b) of the imposes a new obligation upon firms to maintain a written record of measures taken to ensure that relevant employees are made aware of the law relating to money laundering and terrorist financing. The written record must contain details of the training undertaken.

For further information, please see Chapter 3 of the Anti-money laundering Guidance for the legal sector  

Regulation 21(1)(c) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ('the Regulations') provides that, where appropriate with regard to the size and nature of the business, we must establish an independent audit function to examine, evaluate and make recommendations about the adequacy of our policies, controls and procedures and monitor the firm's compliance with them. Does this mean that we have to employ the services of an external provider to fulfil this function?

No. The first question to be considered is whether it is appropriate for a firm to establish an independent audit function. The Anti-money laundering Guidance for the legal sector sets out the factors to take into account when making this decision, which will include the size and complexity of the firm and the work it undertakes, the volume of work and the policies, controls and procedures already in place.

If a firm decides that it should establish an independent audit function the Regulations do not state that this has to be conducted externally, but it should be independent of the specific function being reviewed. The independent auditor should have the authority to:

  • Access all relevant material to be able to evaluate the adequacy and effectiveness of the policies, controls and procedures.
  • Make recommendations in relation to those policies, controls and procedures.
  • Monitor the practice's compliance with its recommendations.

The firm should take a risk-based approach to determine how frequently an independent audit should take place. An independent audit will not necessarily need to be carried out annually, but should occur following material changes to the practice's risk assessment.

For further information, please see Chapter 3 of the Anti-money laundering Guidance for the legal sector  

I have been asked to visit a client at home to take instructions for the sale of his property. I have asked him to have his passport and other proof of identity available so I can undertake customer due diligence. Will it be necessary for me to take these away to photocopy so I can comply with my record keeping obligations under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘the Regulations’)?

If your firm has a policy that original identity documents must be photocopied, you should explain this to the client before your meeting and agree with him the method by which you will return the originals, perhaps by sending them by recorded delivery the following day.

If the client does not want you to take away the original documents, you are required by Regulation 40 to retain records of the client’s identity.

The Anti-money laundering Guidance for the legal sector suggests at paragraph 3.6.1 that the type of details it would be useful to record might include:

  • any reference numbers on documents or letters
  • any relevant dates, such as issue, expiry or writing
  • details of the issuer or writer
  • all identity details recorded on the document

In this situation, you might wish to take photographs of the material on your mobile phone and print these out when you return to the office. You must ensure that the details such as the picture and passport number are clear in the photographs.

For further information, please see Chapter 4 of the Anti-money laundering Guidance for the legal sector  

Disclaimer

While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.

This article is compiled by the Law Society's Practice Advice Service. Comments relating to the questions should be sent by email to Mrs Anjali Mouelhi, Practice Advice Service Manager.

Recommended

ommercial litigation conference 2019
Commercial litigation conference 2019

Litigators will gain expert insight from a high-calibre line up of judges, commercial litigators and barristers. Delegates will be given the opportunity to ask questions and join in debate from the floor

Commercial litigation conference 2019 > More