Companies subject to the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) are supposed to conduct a written firm-wide risk assessment. As of June 26, 2017, this has been a formal requirement.
Criminals use money laundering to make the proceeds of their crimes look legal. Companies may take away offenders' ability to commit exploitative crimes, such as drug smuggling or human trafficking, by stopping money laundering. All of these crimes often affect the vulnerable. This contributes to a reduction in overall violence, resulting in a safer, secure world for everyone. Terrorist financing can be supported by the same high controls that enable money laundering to arise.
The Solicitors Regulation Authority (SRA) can request a copy of your company's risk assessment if anything goes wrong with security at your company.
Advantages of Carrying out a risk assessment:
The MLR 2017 summarizes the factors to include in risk assessment, these include:
It's crucial that you write down and keep track of your risk assessment. Your risk report can be formatted in various ways, including chapters, tables, and risk rating matrixes.
Once you complete your risk assessment, ensure that you:
In your risk assessment, determine what portion of your work is made up of controlled activities, particularly those defined by the NRA as "high risk."
Money launderers are most likely to misuse the following programs, according to the NRA:
To minimize risk while operating in these areas, you must follow the most recent AML advice for the legal sector and be aware of money laundering danger signs. You should keep track of the steps you've taken to reduce these risks and change your protocols, controls, and procedures as needed.
If you're working with clients or dealing with matters in a "high-risk" jurisdiction, the risk management should indicate that. At the minimum, you'll need to think about how you handle clients and issues, including countries on the EU's list of high-risk third countries. Stay up to date with the Financial Action Task Force (FATF) list of high-risk countries with shortcomings in their anti-money laundering and counter-terrorist funding regimes.
A matter or customer risk assessment is frequently confused with a firm-wide risk assessment. Both documents are distinct that have various purposes, but money laundering regulations require both.
In the legal market, the Solicitors Regulation Authority (SRA) has revised its sectoral risk assessment for anti-money laundering (AML) and terrorism funding. The SRA's risk assessment comes after HM Treasury's third national risk assessment (NRA) was released in December 2020. The SRA's risk review, which was published in January 2021, describes the following emerging threats to the profession:
Firms may be vulnerable to exploitation as a result of the coronavirus (COVID-19) pandemic. The SRA recognizes that the legal sector's AML regulatory culture is becoming more advanced. Still, it emphasizes that any company without effective regulations, controls, and procedures (including accurate risk management at any level) is vulnerable to exploitation.
The SRA warned about the dangers of using emerging financial technologies, including fund transfer mechanisms and crowdfunding sites.
Any new software should be followed by the following:
Through Sanction Scanner AML Compliance solutions, you can make an accurate risk assessment suitable for the sector and your company and the basis of a risk-based approach in your company accordingly. Talk to us for detailed information.