New AML guidance, registration and information requirements

As part of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the regulations), we are required to collect, retain and provide AML related information about our membership. These regulations also place further AML related obligations on our members in private practice.

More information about the new requirements for the Law Society and our members can be found below:

Regulation 26 – Approval of the beneficial owners, managers and officers of the firm.

Broadly, this regulation means that no one may be the beneficial owner, manager or officer of a firm unless they are approved as such by the Law Society.

After extensive consultation with other legal supervisors and government departments including HM Treasury, we are asking all beneficial owners, managers and officers within a firm to submit an application to us for approval. This will need to include a current, basic Disclosure Scotland certificate (or equivalent English DBS check for those members working or living in England) for each individual. We have been advised by HM Treasury that self-certification (i.e. simply telling us that you have no relevant convictions) is not an option.

As per the requirements of the regulations, applications for each beneficial owner, manager or officer will need to be submitted by the Money Laundering Reporting Officer (or designated person) through the member’s login area of the Law Society’s website by 26 June 2018.

If no application is made by 26 June, the individual will not be able to continue as an owner or relevant post-holder (in the case of non-owners and non-solicitors who go through the process).

We will let all members know as soon as applications are open.

Read the definitions of beneficial owners, managers, and officers.

Submission of trust or company service provision information to HM Revenue & Customs

Under Regulation 54, HM Revenue & Customs (HMRC) are required to maintain a register of Trust or Company Service Providers (TCSPs) who are not registered as TCSPs by the Financial Conduct Authority (FCA).

A business must not act as a TCSP if they are not on the HMRC register.

We (along with other AML professional body supervisors) will share information with HMRC on a regular basis to enable the register to be populated and maintained. We’re initially planning to use information gathered through annual returns to identify firms which do, or might, provide TCSP services. This means most Scottish law firms will appear on the register.

The register will hold information on all businesses regulated by any of the professional body supervisors which undertake this type of work. HMRC have no plans to publish the register, although they have confirmed they have the power to do so.

Arrangements are now advanced for the first download of data to HMRC, which will take place shortly.

A new AML certificate

The new regulations require us to collect more granular information regarding our member firms’ AML risks, controls and processes.

In order to capture, store and analyse this information in an efficient and effective manner, we will shortly introduce a new stand-alone AML certificate, to be completed by each member firm on an annual basis (in addition to the current accounts certificate). Please note that this is a compulsory exercise for practice units whose work brings them into the scope of the regulations.

We will use this information to deliver further risk-based AML supervision, allowing us to focus activity on firms that undertake work or hold clients who pose a higher money laundering risk.

This information will also allow us to fulfil our regulatory obligations to share AML information on our membership with interested parties such as the Office of Professional Body AML Supervision (OPBAS), HM Treasury, and HMRC.

You will need to submit this information via the member’s login area of the Law Society’s website, and we will provide further instructions as soon as we can.

HM Treasury have now approved UK-wide AML guidance for the legal sector. The guidance has been devised to meet the needs of all UK legal professionals who are involved in anti-money laundering compliance. It provides information on how to ensure AML procedures are effective and on the signs to look for that can signal your firm is at risk. The guidance also offers information on primary money laundering and terrorism offences, legal professional privilege, making disclosures under the SARS regime, and enforcement measures.

We encourage all MLROs to renew their practice unit policies, controls and procedures to ensure they are compliant with the requirements of the new regulations.