01 November 2021
Supervisor’s Annual Report - Anti-Money Laundering
Regulation 46A - Money Laundering, Terrorist Financing, Transfer of Funds
(Information on the Payer) Regulations 2017 (Amended)
The Solicitors’ profession continues to take its’ place at the
forefront of advising and assisting members of the public in the provision of
legal services. Whether it is purchasing a first home, establishing a new
company, resolving a contractual dispute or seeking advice on an accident at
work a solicitor remains the trusted point of contact.
As a result of this trusted position a solicitor firm can be
considered attractive to criminals or other third parties as they seek to
provide a level of distance from themselves and any illicit funds or proceeds
of crime. Anti-Money Laundering (AML) work undertaken by solicitor firms in
Northern Ireland is therefore essential in ensuring that the proceeds of crime
are not introduced into the wider economy.
Whilst the services most at risk of exploitation for money
laundering purposes continue to be conveyancing and trust and company services
it is imperative that all Solicitor firms are aware of and adhere to anti-money
The risk of firms being exploited by criminals and other third
parties increases when legal professionals fail to carry out their obligations
under the Money Laundering Regulations or they take a tick box approach to
compliance. A key objective for the Society is to ensure the effective
regulation of Solicitors in Northern Ireland.
The Society through its’ Professional Conduct Committee has put
in place a robust monitoring and inspection regime to ensure compliance, to
educate and to promote best AML practice. The Society introduced an AML Annual
Return process where 457 relevant firms were required to complete a series of
AML related questions.
The results of the Return were analysed to inform the Society’s
AML work and firm risk assessments.
The AML Annual Return indicated that in addition to appointing a
Money Laundering Officer (MLRO):
• 95% of firms, who provide the services of an independent legal
professional have appointed a Money Laundering Compliance Officer;
• 12% of firms had made internal Suspicious Activity Reports to their
MLRO. The Society is reporting on the period 6 April 2020 to 5 April 2021 (‘the
In this reporting period each of the 457 relevant firms in
Northern Ireland has been given an individual risk profile by the Society.
The risk rating is formulated from information received from the
AML Annual Return, as well as from cross departmental intelligence sharing
informed by previous regulatory action, monitoring inspections, Solicitors’
Disciplinary Tribunal (SDT) findings, and complaint referrals.
As part of the Society’s commitment to educating and promoting
best AML practice a series of CPD seminars were provided to members in this
reporting period. In conjunction with Willis Towers Watson (the Society’s
insurance broker) the Society hosted a Risk Management webinar looking at the
key risks law firms face during the pandemic.
A well-attended series of three AML webinars in November 2020
covered a range of AML topics. With representatives of the National Crime
Agency the Society provided an online seminar on ‘Making Quality Suspicious
Activity Reports’. A further risk management seminar was delivered on risk
associated with Cybercrime.
The pandemic and associated lockdown restrictions have required
the Society to move elements of our Regulatory supervision online whilst also
undertaking on-site supervisions when circumstances permitted. During
desk-based reviews and at on-site inspections, monitoring officers will
consider a number of the firms’ files (usually between 10-15, depending on the size
of the firm) and will further raise queries relating to the firms’ client due
diligence and source of funds/ source of wealth policies and procedures.
At these DBRs and inspections, firms are asked to provide the
monitoring officers with their Firm Wide Risk Assessment & Policies,
Controls and Procedures which are subject to further review and consideration.
During the 2020/21 reporting period 20% of all relevant firms were subject to
desk- based review or on-site inspection. Of the 54 desk-based reviews
completed in the period, 43 firms were given a compliant rating, 9 firms were
provided with a generally compliant rating and 2 firms were not compliant.
The Society works with firms to monitor improvement and to
ensure compliance. The Society continues to expand both its’ onsite and
desk-based review capacity and anticipates that in the next reporting period
33% of all relevant firms will be subject to desk-based review or on-site
inspection. The Society has also introduced measures to ensure that every new
firm will be subject to a standalone AML inspection within the first six months
This process will provide assurance that every new firm has
sound AML governance in place from the start of their practice. Robust
anti-money laundering policies and procedures should be at the heart of every
firm’s operational practice.
The Society is committed to working with firms to ensure that
regulatory obligations are adhered to and that the risk of exploitation of
firms for money laundering purposes is significantly reduced.