Author: Nicola Sharp
9 September 2022
2 min read
Nicola Sharp of Rahman Ravelli summarises the most notable aspects of the LSAG guidance that has been approved by the Treasury.
LSAG is made up of UK legal services regulatory and representative bodies, including the Solicitors Regulation Authority (SRA) and the Law Society of Scotland. It produced the guidance last year to help legal professionals and firms comply with the Money Laundering Regulations 2017 (as amended by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 and the Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020).
As the Treasury has approved the guidance, it now has full standing. This means that the guidance and the money laundering regulations themselves will carry equal weight when it is being considered whether a legal practitioner or practice has committed an offence.
In basic terms, the guidance is set out as 36 core compliance principles that provide a framework for AML risk control within a firm. The document introduces new information and requirements for firms, a key example being the requirement to have a policy and to carry out checks on “frontline AML staff”, beneficial owners, officers and managers of the firm. Checks on staff are to be carried out both before and during employment and involve examination of criminal records, credit details, any adverse media, references and electronic ID.
The guidance is in two sections and runs to more than 200 pages. The first part relates to AML guidance for the legal sector. The second part consists of specific AML guidance for barristers and advocates, trust or company service providers and notaries.
In summary, the guidance focuses on:
It highlights the importance of firms carrying out all relevant checks on clients and staff and emphasises the need to focus on areas such as electronic Identity checks in the wake of the pandemic-related increase in remote working.
The new guidance differs from the previous version of the guidance in a number of ways:
The guidance is lengthy and comprehensive and sets out clear expectations of the legal sector. Firms have to view it as a reminder that it is now more important than ever that they make sure that they comply with the regulations and keep up to speed with changes in the market and working practices and the associated risks.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.