Amy Bell, Author at Teal Compliance

Delegating CDD Responsibilities between Lawyers and Central Teams

Anti-Money Laundering, Blogs, Legal Compliance / Amy Bell

As regulatory frameworks have evolved over the years, law firms have increasingly had to grapple with the challenge of managing Client Due Diligence (CDD) requirements. The introduction of the Money Laundering Regulations in 2003 was an important moment in this transformation. In response, many legal practices, including mine at the time, ended up establishing a dedicated centralised CDD team.

These teams emerged out of a need to streamline the cumbersome process that lawyers found themselves caught up in when conducting CDD. To facilitate this, we integrated ID searches into our case management system. This approach allowed the centralised team to handle the task of verifying client identities electronically, except in the case of conveyancing, due to the provisions of the CML Handbook, where documents were still needed.

The centralised team’s process was relatively straightforward: gather client information, attempt electronic verification, and when necessary, directly contact the client for additional details. Once all necessary data was gathered, it was forwarded to the lawyers.

However, a recent interaction with a former trainee, now a Money Laundering Reporting Officer (MLRO) at his firm, underscored a significant challenge: even when provided with detailed information about their corporate clients, lawyers often file this information away without a thorough review.

Moreover, many firms are struggling with properly conducting matter risk assessments. As revealed by regulatory findings, these assessments are not consistently completed, or accurately so, by the lawyers. This happens often because of an assumption that the central team is responsible for it.

This conundrum often raises a common question: how to strike a balance between central team assistance and lawyers’ duties? Here are a few pointers:

Manage Expectations: It’s essential to accurately represent the central team’s scope of work. Sometimes, in an effort to secure budgetary approval, the expected reduction in lawyer involvement is overstated. This can lead to lawyers presuming they are completely absolved from Anti-Money Laundering (AML) duties – A “get out for AML free” card if you will!

Clarity of Roles: Lawyers should have a clear understanding of their responsibilities. Generalised instructions, such as “conduct a risk assessment”, may not be sufficient. To ensure accuracy, break down the process into detailed steps. If possible, incorporate these steps into your routine procedures.

Prompt lawyers to prove they’ve done it: Assigning tasks that compel lawyers to engage with the information sent by the central team as part of the ongoing risk assessment process is crucial. This ensures active participation and reinforces the importance of their role in the CDD process.

Central Team Training: Central teams may often comprise individuals new to the legal sector. They may not fully comprehend what the lawyers need or the nature of information that lawyers are likely to possess. Hence, training them about the firm’s legal practices can improve their ability to anticipate and obtain necessary data.

The above suggestions serve as a starting point to bridge the divide between central teams and lawyers in the world of CDD. The ultimate aim is to ensure an efficient, effective CDD process that also ensures compliance with regulatory requirements and stops baddies from getting through!

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New SRA fining powers for AML – Be careful as they’re going to use them!

Anti-Money Laundering, Blogs, Legal Compliance, Regulatory Compliance / Amy Bell

The Solicitors Regulation Authority (SRA) has long desired more robust punitive capabilities against traditional law firms. They have historically possessed the ability to impose significant fines on Alternative Business Structure (ABS) firms and can forward cases to the Solicitors Disciplinary Tribunal (SDT) for an agreed decision’s endorsement. However, there are now new SRA fining powers. These powers were broadened, enabling them to impose a fine of up to £25,000 without SDT referral and approval.

Recent case study

A recent noteworthy fine was imposed on an Oxfordshire-based two-partner firm, Ferguson Bricknell, for Anti Money Laundering (AML) breaches. The firm was penalised £20,000 for violations of the Money Laundering Regulations and the SRA’s Standards and Regulations.

Although £20,000 might appear insignificant to some, for a small firm, it’s a considerable sum! If you consider a £200 hourly rate at 20% profitability, a lawyer would need to work for more than 14 weeks to generate the profit to cover it. This is because fines are paid from profit; there’s no special budget set aside for them!

The full decision is a worthwhile read, providing insights into the firm’s declaration to the SRA of a compliant Practice Wide Risk Assessment. The SRA periodically requests firms to confirm their compliance with certain regulations and verifies this by checking a sample of firms. In this instance, the SRA disagreed with the firm’s assessment of compliance and investigated further into its AML conformity.

Key take aways from the case

The case provides valuable insights into the SRA fining powers and their approach, and offers seven key takeaways:

Number 1

When the SRA communicates with a firm, ensure a response is made. If your Compliance Officer for Legal Practice (COLP) is the recipient, ensure they’re checking their spam emails as the SRA’s emails often land there.

Number 2

If you claim compliance, be certain that you’re indeed compliant. There is an abundance of guidance, including free templates for Practice Wide Risk Assessments. Never claim compliance if it’s not the case.

Number 3

Keep up with reviews. Set reminders and take action. To show that you’ve reviewed a document, log the date and reviewer’s name (and approval if needed) within a version control table in the document.

Number 4

Consider establishing an independent audit function. Although not mandatory for all firms, it’s crucial for those of significant size and nature. The audit doesn’t have to be external, but in smaller firms, it must be conducted by someone independent of the people who oversee the policies, controls, and procedures.

Number 5

Regularly train your staff. The latest Legal Sector Affinity Group Guidance emphasizes annual refresher training. Additionally, the Money Laundering Reporting Officer (MLRO) and the Money Laundering Compliance Officer (MLCO) should receive specialist training for their roles.

Number 6

Conduct a matter risk assessment, as required by the 2017 Money Laundering Regulations. The SRA expects to see an assessment on every file falling within the regulations’ scope, with enough information to judge the risk assessment’s accuracy.

Number 7

Perform source of funds and wealth checks when necessary. Make sure it’s complete before accepting or moving any transactional money through the client account.

The case underscores the SRA’s commitment to enforcing AML Compliance. They’ll act against non-compliant firms, even if there are no actual money laundering allegations. Firms are expected to take their responsibilities seriously, with disciplinary actions waiting for those who don’t.

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Managing risk and learning from mistakes

Anti-Money Laundering, Blogs, Risk Management / Amy Bell

As legal professionals, it is crucial to manage the risks we face daily and learn from our mistakes. The common goal of most professionals is to prevent messes in the first place. Building Compliance That Works is fundamental to being able to demonstrate resilience and self-reflection on internal policies and procedures.

In the legal sector, professional identity insurance has seen a significant increase, with some firms experiencing a minimum increase of 20% in their annual premiums. To combat the increase or limit it, it is essential to prepare early, not treat it as a tick box exercise, utilize a specialist broker, demonstrate that the taint has been removed, put in the work and time to the process, demonstrate your firm’s value on the proposal form, and have a standalone document.

We all have problems, things which haven’t gone to plan, so how do we explain them?

If a problem is identified, Root Cause Analysis should be conducted for each instance. The purpose of this is not to blame a person but to investigate the different factors that enabled the incident to occur. In doing so, effective changes and prevention can be implemented to limit recurrence.

It is essential not to merely scratch the surface and dig down below to find the root cause. If the root cause is missed, the incident is likely to occur again, increasing the risk exposure. Human error is never the ultimate root cause, and firms or individuals should not feel ashamed in near misses. Instead, they should feel confident and empowered to share these experiences with others.

We worry people will fear it is a witch hunt if we dig too much into the issue.

Creating a positive environment to have these chats and building a safe environment where staff are confident that they will not be judged or penalised for asking for help or alerting a person to an underlying issue is crucial. Ensuring that the culture is embedded throughout the firm sets the right undertones for all staff, regardless of level or position.

Risk is there, through firms at all levels, and risks may change, but they are still present. Consider reporting lines or lines of support, whether internal or external. In most firms, the line manager automatically handles reporting lines, which can make people bury their heads and not speak out for fear of repercussions, insecurity, stress, and compromised decisions.

It’s important we face these causes, because without it people suffer. In many parts of the legal sector, (for example Conveyancing in 2022), there can be real risks that are exacerbated due to several factors outside the staff member’s control and, in some instances, the firm’s. Even if those risks do not transpire into meritorious claims, it is inevitable that there will be claims and complaints arising out of these risks, which will have a considerable impact on staff and firms.

Everyone, at one time or another, will make mistakes within their careers, and it is how we deal with them that helps shape our careers and share the firms we work within.

How can we mitigate the consequences of issues arising?

Make it easier to find out what actually went on – Recording file notes is essential, documenting what is done at each stage, what has been found, what the client has been informed of, when they were informed, and by what means, and why the matter cannot proceed further.

Supervise properly – In the remote world we currently operate within, identifying signs in others is crucial. If you are a supervisor, think about how to monitor, motivate, and supervise daily. Remote working adds another layer of complexity, making identifying a gut feeling a lot harder. Make a conscious effort not to focus solely on the work and be visible and personable, building trust and relationships.

Use your data – Data collection and analysis can help fill gaps and identify where and who requires support. Data that could be considered includes low WIP or alternative high WIP, money held on the file, inactive client records, average case length, non-billing for a period, what happens when the file gets to 75% of the fee estimate, and retainer profitability and written off time.

Taking action if you think there might be a problem – doing more file reviews, and stacking the odds in your favour is invaluable regarding risk exposure and learning. Get curious, ask why, and continue learning about your team and how they operate.

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Do you have to collect CDD on employees of clients?

Anti-Money Laundering, Blogs, Data Protection, Legal Compliance / Amy Bell

This is a question I get asked loads of times!

In fact, last week I had a client who has a policy of asking for ID for employees, and their client refused citing Data Protection concerns. I’m not planning to go into the data protection issues here, but instead whether you have to ask for it.

To get to the answer here, we need to start with the law.

The law requires, in connection with a client who is not a natural person (I prefer using the word human here!) that you need to obtain and verify certain information about entity. For a company that is

name,
company number,
registered office,
the law to which it is subject,
its constitution,
the full names of the board and senior persons responsible for it.

In addition, you need to identify and verify the ultimate beneficial owners.

So, do we need ID from directors, or people who instruct us on behalf of a company?

In the original 2003 Money Laundering Regulation it was a requirement to identify and verify at least 2 directors, but this was removed by the 2007 regulations. I’ve found despite this change many firms still have that process, whether as a legacy from the original regulations or as a risk management measure – so that they have proof a real person is connected with the company. After all, the whole point of passports and utility bills is so you can tell the police which door to knock on, to talk to about the entity.

I think many of the more recent queries I have had come from confusion arising from Money Laundering and Terrorist Financing Regulations, which introduced in 2017 Regulation 28(10).

(10) Where a person (“A”) purports to act on behalf of the customer, the relevant person must—

(a) verify that A is authorised to act on the customer’s behalf;

(b) identify A; and

(c) verify A’s identity on the basis of documents or information in either case obtained from a reliable source which is independent of both A and the customer.

There was concern when this first came in that an employee or director might be thought to be purporting to act on behalf of the client. Fortunately, the Legal Sector Affinity Group Guidance helps here:

Section 6.6

Examples of someone purporting to represent might include:

a parent on behalf of an adult child.
an individual not employed by your client; or
a situation where the instructing persons authority to instruct is not clear or does not make sense.

Section 6.14.9

Someone employed by your client (depending on their position or seniority) or a director of your client may be considered as having apparent or ostensible authority to provide instructions on behalf of the client, though you may seek comfort of this on a risk sensitive basis. They should not be considered to be intermediaries, agents, or representatives. Where it is not clear or apparent what their authority to instruct on behalf of the client is, CDD should not be considered to be complete.

Accordingly, it is now much clearer in that “purports to act” is not intended to mean officers or employees of a company. That said, many firms still do carry out individual CDD on Directors and sometimes on employees instructing who are not directors, and whilst that is not required by the Regulations, it can be useful to provide an audit trail for the client in case you are challenged later on as to why you acted on instructions provided on behalf of the non-human client.

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Anti-money laundering top 10 tips

Anti-Money Laundering, Blogs, Legal Compliance / Amy Bell

The legal sector is vulnerable to money laundering – and we’re here to help law firms with compliance and training, and make sure you’re fully equipped to ‘stop the baddies’.

The credibility of a law firm makes it an obvious target for money laundering criminals and having weak processes or staff that aren’t properly trained is like leaving your front door open.

So, here are our top 10 Anti-Money Laundering tips:

1. Evidence

All firms have to show regard to their supervisor’s risk assessment when preparing their own. (Reg 18 (2)). Make sure it is mentioned in the steps you’ve taken in preparing the risk assessment. If your assessment of risk differs with theirs, explain why.

2. Client account focus

In your Firm Risk Assessment, don’t forget to include the risk from the client account. It’s referenced in the National Risk Assessment and the Supervisors Risk Assessment, so it should be in yours. Often the focus is solely on the work types and firms don’t always identify the more generic operational risks. Detail what you do to protect the client account in the risk mitigation section. Also, don’t forget to include or cross reference your accounts procedures (for example, the timing of accepting funds and refusing to provide banking facilities and how you deal with funds from third parties) in your AML policy.

3. Source of funds and source of wealth

Tell people what you want them to do, ask them to record the steps they’ve taken, check that they’ve reviewed the information and most importantly remember their assessment of risk, having considered the information they have. I ask lawyers all the time.

“If I were to look at your files tomorrow, would I be able to see you have considered the source of funds and source of wealth?”

4. Client communication

Help your lawyers with what to say to clients about why your firm carries out Customer Due Diligence (CDD), in particular source of funds and wealth enquiries. If I had a pound for every time I heard the concern that

“Clients will think they are being accused/would be insulted if we asked.”

… Actually, clients don’t mind being asked nearly as much as we think they do – everyone asks all the time. But it does help if you give your lawyers some wording to explain the rationale for the checks. Clients understand this and are often appreciative of your efforts.

5. Timing of verification

You know the law, you must complete the ID&V part of CDD before the establishment of a business relationship or before carrying out a transaction. Some firms won’t issue a file number until it’s done. The Solicitors Regulation Authority certainly seem in favour of that approach.

However, many firms open the file first but require CDD to be completed soon thereafter, using the exception in Regulation 30(3). If you are going to do that, make sure you monitor that ID&V is in fact completed ‘as soon as practicable’. Make sure you can track the files and that CDD is obtained.

I see many policies which say the CDD must be obtained in, say, seven or 14 days, or work must stop – but it’s not always clear how that is managed. Is it a system issue – the file locks to prevent any further work – or is it manual, with compliance checking and chasing? Whatever it is, include it in your written procedure and be ready to show an auditor/the regulator the records of the monitoring.

6. CDD on existing clients

Something I hear all the time is:

“We will rely on existing client due diligence unless we become aware of a change in the client’s identity, risk profile or there is a three year gap in instructions”.

That’s because it is in the guidance. However, in theory, for an existing client that instructs once every two years, the CDD would never be refreshed if the lawyer doesn’t ‘become aware’ of a change. When considering a private individual, they are unlikely to change their identify, but a company could, and their beneficial owners could. So, where you don’t act for the beneficial owners, how would you know? I have always preferred to give the CDD a ‘shelf life’ – the longest we will rely on existing CDD is x months/years and then we will refresh. I would also capture the consideration of whether the fee earner thinks anything has changed in the matter risk assessment.

7. ‘purports to act’

The regulations require that, where a person purports to act on behalf of the customer, you verify the person’s authority to act and ID&V them. Some people have taken that to mean a director, but, if you look at the guidance for the legal sector, it refers to a ‘representative’. Most firms take the view that a director does not ‘purport’ to act, they do act for the company. Usually, I see firms apply Regulation 28(10) when they have an agent or attorney situation. That said, I’m still a fan of ID&V-ing at least one director because I like to know a ‘real’ person is attached to the corporate client.

8. Information for clients

The Money Laundering Regulations 2017 were amended by the Data Protection Act 2018. Make sure you’re giving your clients the required information.

9. Know your searches

Know how your electronic verification searches work. Many firms now have electronic verification of ID as part of their CDD processes. I was an early adopter in 2006 and I’m still a big fan but I say be careful. I find that many people can’t explain to me how they work, what they are checking and how many matches are required to pass.

Is it checking what you think it’s checking?

Sometimes, I see examples of CDD searches passing with the wrong date of birth included! Also, if the contract with the provider was agreed with the previous MLRO and you are the new one, make sure you are fully briefed.

10. Certifying copy ID

Be careful who you ask to certify copy ID. I prefer to rely on someone who is either well briefed or is familiar with the AML legislation, like lawyers or accountants. Also, you (or indeed the police) may want to speak to the certifier in the future so make sure it’s someone who can be traced.

That’s going to be difficult if you rely on post office or bank counter staff. Make sure they’ve signed and dated the certification and their name is printed in a way that you can read it.

I find giving the client an explanation of requirements that they can then hand to the certifier is the most effective way of getting it right.

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New AML Guidance needs a careful review

Anti-Money Laundering, Blogs, Legal Compliance / Amy Bell

On 20th January 2021 the Legal Sector Affinity Group (LSAG) finally issued their new draft AML guidance for law firms.

Since 2017 LSAG have agreed to issue one sector wide piece of guidance rather than different versions for each type of lawyer.

We were told to expect this guidance with both the Law Society of England and Wales and the Solicitors Regulation Authority talking about the project at events last year. However, it’s no surprise it’s taken a while to finalise since it does represent a comprehensive refresh of the existing guidance.

Part one (which applies generally to all legal professionals) is some 212 pages (about 50 more than the previous version) while part two contains specific guidance for Barristers and Notaries, but that is yet to be released.

Only a couple of pages in, you can detect a change in emphasis in the guidance, from focusing previously mainly on interpretation of the legislation for the sector to now setting out the Regulators expectations of good practice.

Practices must now pay attention to the parts of the guidance which LSAG think they should be doing, and if a practice decides to deviate from that, they need to be prepared to explain why. Clearly MLROs and MLCOs are going to have to consider this guidance carefully to ensure they’ve picked up all the areas of mandatory and recommended practice and that they can demonstrate they’ve thought about what is appropriate for their firm. This is not a small task!

That said, the guidance really is very good at setting out in some detail how to comply. In my experience many firms will welcome this additional detail, particularly for example the table listing out how to approach screening of staff, and a clear remit for senior management and nominated officers in the firm.

There are new chapters on the use of Technology and Internal Controls and a rewrite of the Privilege content.

With any new piece of writing which is over 81000 words long, there are some minor inconsistencies which will be resolved hopefully in the next draft. From our brief reading of the document there are some differences between early parts of the document (in the compliance principles) and the more detailed parts of the document further on. Therefore, we recommend reading the document cover to cover to ensure you pick everything up.

Conspicuous by its absence is the recent SRA Guidance on Tax Advisers, which if you’re not aware, could have some very substantial implications for the way your firm operates. It’s not that easy to find, but you can view it here.

Do consider this at the same time as the guidance because it may be that for parts of your practice where you’d previously not considered the need to comply with the Regulations (Family Law, Employment and Litigation specifically) you may now have to.

One point we should make is that the guidance is draft, and it could be some months before it receives Treasury approval. From experience, any changes are likely to be minor but you should be aware of the possibility, particularly if you’re investing in new solutions.

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Managing Risks When Supervising Remotely

Blogs, Legal Compliance, Risk Management / Amy Bell

Effective supervision has always been important from a risk management perspective but never more so than now, when it comes to managing risks when working remotely. Especially if you’re having to grapple with new technology and processes.

SRA Code of Conduct

As it is a requirement of the SRA Code of Conduct for firms to have in place an effective system for supervising client matters, most firms will already have policies and processes in place. However, these processes will need to be reviewed to ensure that they are still workable and effective in light of the remote working and different hours that some staff may be working to fit in around childcare and home schooling.

Supervision process

When reviewing supervision processes, consideration should be given to the following key areas:

Experience of Staff: The staff that are being supervised and their qualifications and level of experience. For example, qualified experienced Solicitors will not need as much day to day supervision or quality checking as a Paralegal or Trainee Solicitor.

Communication: Good clear communication is key as, in the office, some supervision happens informally as Supervisors can overhear a telephone conversation when someone is struggling or can be approached for a quick sense check of a matter that a member of their team is unsure about or they need clarification about a query they have received from a client.

It is important that good communication continues between a supervisor and their team to ensure a high level of work and effectiveness is maintained as well as staff morale.

Consideration should be given to weekly team meetings and one on one meetings being held via Skype or Zoom. Dates and times for these meetings should be agreed in advance and put in everyone’s diaries so staff can plan their work and appointments around them. An agenda should be prepared in advance so all staff know what is going to be discussed and what they need to bring and prepare. This will ensure that these meetings are as productive as possible and valuable time is not wasted.

File Surgeries: Allocating a file surgery day each week can also be an efficient and effective way of ensuring that matters can be supervised and allow both the supervisor and team members to plan and manage their time and work effectively. Staff should be informed of a timeline by which they need to email and confirm to their supervisor the issues they wish to discuss at the file surgery meeting together with the name and file number of the matter if applicable. The supervisor should then acknowledge receipt and allocate a time slot to their team member on the allocated file surgery day for the matter to be discussed over the telephone.

File Reviews: It is important that these reviews continue as these are a very effective way of supervising and of being able to identify any potential issues that could turn into a claim or a complaint if not dealt with. Consideration should be given as to whether the number of file reviews undertaken needs to be increased for some staff. It should be noted that file reviews can also help identify any other office processes and policies which may need to be reviewed and amended as a result of people working remotely.

Checking of Work: Supervisors should inform their team on the process for the checking of work before it is sent to clients. Confirmation should be given to each team member of the process that needs to be followed and when the supervisor will need to receive the work by together with the timescale for them reviewing the work and returning it. This will help staff be able to effectively manage key dates and timelines as well as client’s expectations.

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Ark Group Conference Panel

Anti-Money Laundering, Blogs, Legal Compliance / Amy Bell

I attended the Ark Group Annual AML Conference in London yesterday to speak on the panel about the challenges for MLROs who are also fee earners in their firm.

The session posed questions to the audience, and we, the panel, put our two penneth in.

Joining me on the panel was Alex Ktorides from Ince Gordon Dadds, Colette Best from the SRA and the chair was my Taskforce colleague Guy Wilkes

The first question was about how challenging MLROs find combining their compliance obligations and fee earning roles.

Most voted very challenging, (4 out of 5), which I absolutely agree it can be. Interestingly, if unsurprisingly, nobody voted it not challenging!

The main points I shared were:

Culture is key – without strong support and a culture of buying into Compliance you will fail. If we fail to tackle non compliance in firms, our compliance programmes will collapse! Colette agreed, where a firm has a person who refuses to comply, they will expect a firm to deal with it and may themselves deal with that individual.

Don’t put things in your policies which you know don’t work – don’t set yourself up to fail. Check things work, introduce controls so you know things work. Don’t leave things for the SRA to discover. Make sure people can make an assessment of risk when you ask them to, don’t say people can’t open a file without the client ID if you know that’s impossible.

Have controls so you aren’t caught out. Audit the controls. If you let fee earners open a file before client ID is completed, make sure you’ve set a deadline and that that is monitored and enforced.

Litigation need to know too! Don’t forget to make sure your litigation teams also have AML training and appreciate the risk that on boarding a client they are happy to deal with may cause AML issues if they also instruct the firm to carry out transactions.

Get a process in place for source of funds and source of wealth. Tell your teams they won’t spot money laundering if they think the extent of their obligations is to get a passport and utility bill, that’s doesn’t prevent money laundering #baddieslivesomewhere!

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Price Transparency: An opportunity not to be missed!

Blogs, Legal Compliance, Regulatory Compliance / Amy Bell

As part of the recently launched Teal Compliance Officer Training Programme, I ran a webinar session running through all the requirements in relation to Price Transparency and the impact it is having on firms.

The first thing I would say is that the new rules create a market of opportunity on which you can take stock and look at your pricing structure, how you price and the services you offer to your clients. The stated aim of the new rules is to provide good quality information to potential and existing consumers to enable them to make the best decision for the type of service they require and within their budgets.

A lot of firms are focusing on the perceived negative impact, e.g. that it is “big brother” or that other competitors will undercut their fees and poach clients. But by focusing on that firms risk missing opportunities. The research which was commissioned in 2016 by the Competition & Market’s Authority (“CMA”) concluded that generally speaking there is insufficient information available to consumers and small business, in relation to the price, range and quality of legal services on offer. This was particularly evident in relation to the conveyancing market.

The majority of consumers looking for legal services said that if better information about price, quality and range of legal services was available online that would help them in making a decision as to which firm to approach.

Consumers also said that firms with a “digital badge” displayed on their website, would give them greater confidence about the services on offer and could in fact be the deciding factor on whether or not to use a firm.

To recap on what is required under the new rules:

I have done some of my own research looking at how firms have improved price transparency on their websites. Some firms have absolutely got it spot on, however I have to say I am quite surprised by the number of firms who are not yet publishing transparent information and those whose attempts to be compliant have fallen short of what is required. The CLC and SRA have already started to undertake reviews of firms regulated by them. Whether firms want to accept the rules or not, you still have to comply.

If you are not sure how to ensure you are compliant with the new rules, or you just need a sense check then we are here to help, for example by running pricing workshops to give you the opportunity review and update all the services that you charge for.

The new rules are designed to stop those firms who add on the “hidden” costs at the end of a transaction, leaving the client confused, and uncertain as to how they are going to pay for those additional fees. Introducing transparency, guidance on services offered, what is and isn’t included will assist clients in assessing what is right for them from both a personal and financial perspective.

A lot of firms are using online calculators, and these are a great way of providing an estimate where the onus is on the client to provide the correct information. Again, if this information changes you can make it clear the fee may change accordingly. There is evidence to suggest that, particularly in conveyancing, the use of online calculators is assisting in winning business. Some firms have platforms which also automatically send the terms of business letter out, so you could arrive in the office in the morning with new clients already committed to working with you. These are fantastic examples of what you can do to be compliant under the new rules and maximise business potential. What’s not to like?

My top tips for making sure you are up to speed with price transparency include:

Use price transparency as an opportunity to revisit your current fee structure and prices
Ensure that your website contains all relevant information about the range, quality and price of your services
Obtain and display your digital badge
Communicate and provide training in price transparency to all staff
Remember to update relevant policies and marketing materials

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Lettered cubes spelling out the word "Consent"

Teal Tales: Consent for missing CDD information

Anti-Money Laundering, Blogs, Legal Compliance / Amy Bell

We get many calls from firms who have unusual compliance queries. They are my favourite calls!

Today’s tale is a common one, and the issue it raises is a common misconception. In fact, we had 2 calls about this on the same day, with similar issues.

“We’re ready to complete, there is a third-party funder, we’ve asked for source of funds information, but it’s not forthcoming. Can I get consent?”

The answer to that question will depend on the facts of each case, and whether there is a suspicion of money laundering.

Quite often in these situations I ask the firm what they are suspicious about, they will say, the fact the clients are refusing to provide the information is making me suspicious. And that is true.

However, consent, or a defence against money laundering will only be given if there is a suspicion of money laundering; for there to be money laundering, you need to know or suspect there is criminal property.

So, the next question I ask is what is the suspected criminal conduct, and very often the answer is, “I have no idea” or “I don’t think there is any”.

If the firm can not detail on the Suspicious Activity Report what they think the criminal property is, and the suspected criminal conduct from which it is thought to have come from, the NCA are unlikely to accept it as a valid SAR.

Having no idea won’t get you there, you won’t have the relevant suspicion.

If you can’t get consent for missing CDD information, what can you do?

Regulation 31 stipulates that you must not establish a business relationship with someone for whom you can’t complete your due diligence enquiries. So, if you’re in a position that you can’t complete your CDD enquiries because of an uncooperative client or third party, you may need to withdraw.

Many people who contact us about this are concerned about how to explain to their client without telling them they are suspicious. If you don’t already, you should consider setting out your source of funds and wealth policy at the very beginning, explaining to the client the depth you are likely to go to and then if they do not provide the information, you can point to the policy and withdraw from acting.

If you are already in receipt of funds, the situation will be a lot more difficult, you may need to press the client further for the information, and keep returning to the question, do you suspect any criminal conduct.

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