LSAG anti-money laundering guidance approved by Treasury
This specific regulation sets out that when judging whether a legal practitioner or practice has committed an offence by not following the regulations, the court must decide whether the guidance has been followed.
It is similarly relevant where the imposition of civil penalties is being considered (under regulation 76).
Now the guidance is approved by HM Treasury, firms must consider it when deciding how to comply with the regulations, specifically:
- regulation 19 – policies, controls and procedures
- regulation 21 – internal controls
- regulation 24 – training
- regulation 35 – enhanced due diligence on politically exposed persons
Summary of changes
- Updates around the verification of the identities of beneficial owners (6.14.10), which underlines the expectations of supervisors and HM Treasury for new beneficial owners to be verified, in general, to the same standard as you would apply to a client that is a natural person
- The UK's list of high-risk third countries replaces the EU lists (220.127.116.11, which relates to risk assessments, and 6.19.1, which relates to EDD)
- Small clarifications to the section on legal professional privilege, particularly where it may not apply as you know or suspect a money laundering offence has occurred, invoking the need to make a suspicious activity report (13.4.2 and 13.4.3)
- Clarification on what is not 'an arrangement' for the purposes of POCA (16.3.6) and further clarification on the 'adequate consideration' defence (16.4.2)
There are several other minor amendments (mainly corrections and/or formatting changes).
Other AML guidance
The LSAG also issues advisory notes on AML that set out the expectations of the legal sector professional body supervisors.
These notes do not have the same standing, as they are not approved by HM Treasury.
At the beginning of the COVID-19 outbreak, LSAG issued an advisory note on changes to risk caused by different ways of working, the need to social distancing and changes in the market.
LSAG revised this guidance into two notes:
- remote working, client interaction and associated use of AML technology
- impacts on economic instability
In time, LSAG will seek to wind elements of these into the main LSAG guidance.