Your firm will probably have received the SRA questionnaire as to your position in relation to anti-money laundering compliance first, along with trust and company service provision and sanctions compliance as well. The first point by way of reassurance is that this is a routine fact-finding exercise by the SRA across all of its regulated firms and should not be taken to mean that you have been singled out for what might be seen to be unwelcome attention.
First – see the guidance provided by the SRA as to the SRA Questionnaire https://www.sra.org.uk/sra/news/firm-anti-money-laundering-sanctions-data-requirements/.
Most of the questions in the SRA Questionnaire should be quite straightforward and be quite easy to respond to. However, when when completing the SRA Questionnaire the further points of explanation in the attached table might be helpful. So far as your responses to the sanctions questions are concerned please see our other main item this month covering the guidance note issued by the SRA earlier this month covering their interpretation of what firms should do to ensure compliance.
| Question Content | Explanation | |
| Q01 | Firm’s activities that are in the scope of the MLR 2017 | Not all legal services are subject to the MLR 2017 and in most general practices there is likely to be a combination of regulated and unregulated work types. The most likely area of confusion will be family law on which the SRA stated in its warning notice of the 18th October 2023[1] as to how detailed they expect matter opening processes, in particular, to be that:
“Ancillary relief work, for example, is typically out of scope, but might in its later stages involve buying and selling real property or forming trusts”. On this basis you might fairly take the view that if you do not create trusts as part of your ancillary advice and services, and then pass on any later conveyancing instructions to your property department when they would then become regulated, that your family law work is outside of scope as described here. On this basis many family law only practices may well be able to claim to be unregulated for all such purposes. |
| Q02 | Trust and Company Service Provision | The unwelcome complication here is that the SRA is not recognised as having the ability to authorise this category of legal work. This is instead the responsibility of HMRC, but unfortunately this is not a register that is open to the public. If you are unsure if you are registered as you may need to be if ever forming companies in particular you will therefore need to ask the SRA Contact Centre to check if this is the case, and if not you will have to ask them to request your registration on your behalf. It would be advisable to check this in advance of completing your return as the SRA have issued fines on firms that are not registered in circumstances where they should be even through the firm was probably unaware of the problem and had no means to check the position for itself. |
| Q05 | AML Risk Assessment | You will probably have seen in the legal press of late that the SRA has issued substantial fines against firms where they are within the regulated sector but failed to complete a risk assessment as required by r.18 MLR 2017. Worse still, the SRA have often delved into the past records of the firm and have been prepared to issue fines where firms did not have a risk assessment in place in the past and after the MLR took effect in 2017 even though they have one in place now. It is also necessary to keep the risk assessment under review – ideally on an annual basis but perhaps slightly longer if there have been no great changes to the firm in the meantime.
Infolegal subscribers that need to refresh their risk assessment can use our “three-in-one” template form which will be found on the Infolegal InfoHub. This form also covers the risk assessment that you are required to conduct on the issue of proliferation finances if you are in the regulated sector. The form also covers sanctions controls where although not mandatory a risk assessment on this topic has been advised by the SRA. |
| Q06 | AML policies controls and procedures | Infolegal subscribers that need to adopt or update AML PCPs will find templates on the Infolegal InfoHub. |
| Q07 | When was AML training last provided? | Continual training in AML awareness is required by r.24 MLR 2017. If a new round of AML training is required see in the Training section of the Infohub the two presentations for fee earners (one on the offences in the Proceeds of Crime Act 2002 and one on the MLR 2017) along with one shorter session for secretaries and administrators. All three recorded sessions have been updated within the last 12 months. |
| Q15-21 | Trust and Company Service Provision | See above for an explanation of the issues here. For the most part this section of the questionnaire will require you to analyse the breakdown of your firm’s work for corporate and perhaps private client work which, as recognised at Q19 might need to be an approximation. |
| Q22-27 | Suspicious Activity Reports | If you have made no SARs to the National Crime Agency at all in the last 12 months then fear not on these grounds alone. The numbers of SARs made by law firms have remained at about 3,000 annually for some time with the 2023 SARs report from the NCA having reported 2,859 for the legal sector and so slightly up on the figures for the previous 12 months. You are likely to be in the majority of respondents if you are making a nil response to Q22.
The SRA have often been critical in the past of the profession for not making enough reports to the NCA but there now seems to be greater acceptance that the main focus of the profession should be prevention rather than a cure. This will mean that firms should avoid becoming involved in the need to make reports in the first place by undertaking careful CDD at the outset of matters and weeding out suspect clients or instructions, rather than having to report at a later stage when the continuation of such instructions has become problematic. |
| Q28-44 | Sanctions Questions | On this topic see our other main item this month reporting on the revised guidance note put out by the SRA earlier this month on the 5th August. |
[1] https://www.sra.org.uk/solicitors/guidance/client-and-matter-risk-assessments/