AML Certificate 2022 results

The AML landscape in the legal sector is constantly evolving and gaining more attention. There is an increased awareness of the various ways in which legitimate services provided by practices can be exploited for illegitimate purposes.

It is important to remember that money laundering is not a victimless crime. It can contribute to human rights abuses, such as human trafficking, kidnapping, or extortion, and fund criminal activities and serious organised crime through tax evasion, corruption, fraud, or counterfeiting.

The AML Certificate remains a crucial tool in our risk-based supervision approach. We want to emphasise that each individual practice has a responsibility to ensure the accuracy of the data submitted.

The AML Certificate is a mandatory annual questionnaire for all practices under the scope of the Law Society's AML supervision. It provides the Society's AML team with an indication of the inherent AML risks posed to each practice.

We recognise that reporting on the AML Certificate can be a cumbersome process and we appreciate the effort and dedication of all practices in collating the data.

To ensure the accuracy of the data, we have increased our efforts and resources dedicated to testing the data. We have contacted practices to verify answers to some of the certificate questions and ensure accuracy.

We hope this information provides valuable insights into the AML landscape and the risks associated with different areas of practice.

For more information on the AML Certificate and our risk-based approach, please visit the dedicated AML section of our website and review previous results.

Thank you again for your participation and commitment to ensuring the accuracy of the data reported.

Over our supervised population, £649,696,604 was declared in gross fees from AML relevant work reported on the Certificate.

Conveyancing remains the largest portion of those fees and in-scope work reported, and continues to pose the highest risk of money laundering in our sector.

Practices reported that 681 clients of conveyancing transactions were those whose business interests were known to be a higher risk industry, such as:

• high value goods
• mining
• metals
• arms
• tobacco
• gambling
• crypto
• real estate & property development
• oil & gas

Practices are asked to take into consideration the elevated risks attached to these sectors as they are identified as giving rise to an increased risk of money laundering.

It is important to note that not all work in these sectors will be higher risk in all instances, but it is essential to be aware of the higher risks inherent.

84 practices reported that they complete conveyancing transactions with a nexus to China. China is a country that imposes significant constraints on its citizens investing or moving capital abroad, which has led to the emergence of alternative shadow banking or money service dealers to move money out of the country.

In our sector, we view the inherent risks associated with Chinese Individual Direct Investment as significant. As a result, our Society continues to review transactions where funds are received from China to mitigate these risks.

• 100 Practices have reported completing work with a nexus to High Risk Third Countries (HRTC) for the relevant period.
• Enhanced Due Diligence (EDD) is mandatory for clients who are residents or incorporated in a HRTC.
• For more guidance on identifying HRTCs, exploring EDD and other geographic risks, please refer to our blog written in 2022. This discusses recurring themes related to HRTCs and assists with applying a risk-based approach.