Specialist AML guidance for Trust & Company Work and Notaries published

The Legal Sector Affinity Group (LSAG), which includes the Society and all legal sector supervisors named in the anti-money laundering regulations, has released further guidance for specialist areas of legal practice.

This follows the publication of an extensive revision and redraft of the main UK AML guidance for the legal sector in January this year (referred to as Part 1).

The latest guidance - known as Part 2 - has been published in three sections:

• Part 2a – AML Guidance for Barristers/Advocates
• Part 2b - AML Guidance for legal professionals providing Trust or Company Services
• Part 2c - AML Guidance for legal professionals offering notarial services.

LSAG has published Part 2 in draft form, pending approval by HM Treasury, meaning the text may be subject to some changes.

Parts 2b and 2c are intended to provide supplementary information in addition to the main Part 1 AML guidance, in order to will help those working in these specific areas, and should be read in conjunction with Part 1.

Part 2a is not relevant for those under the AML supervision of the Law Society of Scotland. However, practitioners who wish to read this section of the guidance can do so through the Faculty of Advocates' website.

Graham MacKenzie, Head of AML at the Law Society of Scotland, said: “Prominence and awareness of the AML risks associated with TCSP work has increased in recent years and has notably been highlighted by the government in successive UK National AML Risk Assessments, the most recent one published just before Christmas. We have also previously published a thematic review into TCSP work in the Scottish legal sector. The TCSP guidance published today is also intended to compliment and expand on the information we publish via the TCSP toolkit on our website.

"Notarial services can also, unfortunately, be exploited by criminals looking to add a veneer of verification or respectability to documents, which can then be used to open banking facilities, often in overseas jurisdictions.

"I hope that this further guidance is helpful in providing practical information for legal practices undertaking these types of work - to aid their compliance and effectively protect against the money laundering risks inherent in these specialist areas."

He added: "Part 2 guidance should also be taken to communicate UK legal sector supervisory expectations to those under AML supervision.

"Over and above the strict requirements of the Money Laundering Regulations - documented as “musts” within the guidance - firms may be required to justify why they have deviated from the supervisory expectations as set out in the guidance - documented as “shoulds” - upon inspection.

"Firms should therefore review their own AML governance, policies, controls and procedures in light of the guidance, and update where necessary. We will of course allow firms adequate time to do so, particularly against the extremely challenging business environment that we find ourselves in."

The guidance project has been led by the Law Society of Scotland and the Solicitor’s Regulation Authority, with review and input from all UK legal sector professional bodies and supervisors through the LSAG forum.

Content has also benefitted from extensive practitioner review and input from the Law Society of England & Wales Money Laundering Taskforce (MLTF). The MLTF consists of legal practitioners from a variety of backgrounds with significant specialist expertise, background and experience in AML/proceeds of crime matters.