The letters we are seeing from the SRA notifying firms that they intend to visit them to carry out an AML inspection appear to be asking for increasing amounts of information and documents. We thought it would be helpful to give you a heads-up and share this information with you….forewarned is forearmed and all that (although be aware that the list of what they request may change at any time).
- They will ask you to complete an AML Questionnaire, which includes questions about your firm (such as number of offices, percentage of work/ fee earners in scope of the Money Laundering Regulations), services provided (including TCSP and tax adviser work), number of Suspicious Activity Reports (SARs) submitted to the NCA and PEPs the firm has acted for in the previous 24 months, and whether you have a separate sanctions risk assessment and policy;
- Information about all fee earners undertaking work in scope of the MLRs, including a list of all open matters, and matters closed within the last 3 months;
- AML Firm wide risk assessment (together with the date it was first drafted and last updated);
- Proliferation financing risk assessment (which in all likelihood will be included in the FWRA);
- AML Policies and procedures (together with the date they were first drafted and last updated), including any source of funds/ wealth forms, internal SAR forms etc);
- Firm’s template client and matter risk assessment form(s) (or screenshot if they are completed on your case management system);
- Copies of Regulation 21 AML independent audits (whether carried out internally or externally);
- Records of AML training, including material/ content (or an explanatory note) of training provided (together with the date AML training was first carried out (since June 2017) and most recently carried out);
- List of open matters firm has identified as high risk (where firm’s CMS allows this);
- Firm’s File review template and list of file reviews completed in last 6 months (or explanation as to why you do not keep such records).
The above information is usually required within 14 days of receipt of the initial letter from the SRA and should be the documents in place as at the date of the SRA’s request. If you are in the process of updating those documents, you can provide the updated versions too (but not instead).
The SRA will provide a list of files they wish to review, usually 3-5 days before the actual inspection, so that you have time to collate the documents they specifically want to see on each of the files.
On the day of the inspection, the SRA will:
- interview the MLCO and MLRO regarding the firm’s controls and the documents you have sent;
- they may also select 2 fee earners to interview (these are more often than not from the residential conveyancing team where there is one);
- review a number of open and closed files, together with the relevant client ledgers;
- review a copy of any SARs the firm has submitted to the NCA (we recommend keeping a register of internal SARs as well as external ones so that you can show that even if you do not make many (or any) reports to the NCA, you have your finger on the pulse and know what to look out for/ have documented why you did not need to report externally).
We hope that the above is a helpful heads-up. Do get in touch if we can be of assistance, either helping you to review and update your AML policies and procedures, or if you have received the dreaded letter from the SRA.