Are you ready for an SRA AML Inspection?

In the last month the SRA has published details of more Regulatory Settlement Agreements with eye-watering fines, ranging from £3,370 to in excess of £31,000 for law firm AML shortcomings.

The hefty fines were meted out despite the regulator finding no evidence of harm to consumers, a low risk of repetition and having received full cooperation from the firms involved.

Many of our smaller law firm clients tell us that they feel unfairly targeted, and not without reason. The SRA has acknowledged that its risk-based approach means smaller firms are more likely to be identified as requiring a visit because they don’t have specialist compliance teams. This supports Thirdfort’s recent report that in 2023-24, smaller firms (with 20 or less fee earners) were the subject of 55% of proactive inspections, 74% of desk-based reviews and 86% of SRA enforcement actions.

How can smaller law firms protect themselves in the event of an SRA AML Inspection?

If you’re a small law firm owner, manager, COLP or MLRO, beware! Protect your firm by ensuring that:

• Your Firm Wide Risk Assessment complies with Reg. 18 and is up-to-date
• Your AML Policies, Controls and Procedures comply with Reg. 19
• There is a compliant Client and Matter Risk Assessment, completed appropriately, on every file in scope
• Every member of your firm has received relevant AML training in the last few months and your AML training records are complete
• You diarise a Reg. 21 independent AML audit (most firms need one periodically)

And if you need help with any of these, please let us know!