Firstly, if you’re new to the role of a compliance officer in your law firm, congratulations! If you’re the MLRO or the COLP, which are key positions in a law firm, getting to grips with our Handy Hints will help you stay on top of regulatory expectations and best practices.
If you haven’t downloaded already, our Guide to Source of Wealth & Funds for Law Firm Compliance is a must have.
Here are some of our key tips, plus practical guidance written for you, if you’re new to the role in a law firm in England or Wales.
As MLRO, your primary duties include:
- Receiving and assessing Suspicious Activity Reports (SARs) from staff
- Deciding whether to report suspicions to the National Crime Agency (NCA)
- Keeping a clear and auditable record of decisions
- Ensuring compliance with the Money Laundering Regulations 2017 (as amended)
- Keeping up-to-date with Sanctions Regimes (especially in light of post-Brexit UK sanctions)
As COLP, your duties include:
- Ensuring compliance with the SRA Code of Conduct and SRA Principles
- Reporting serious compliance breaches to the SRA
- Acting as the firm’s ‘whistleblower’ for misconduct
If you don’t already have a TOOLKIT then you can get hold of our TEAL TRACKER HERE which will get you off to a great start.
Some key documents and sources you must be familiar with:
- The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended)
- Proceeds of Crime Act 2002 (POCA) – especially on offences like failure to report and tipping off
- SRA’s Anti-Money Laundering (AML) Guidance
- Legal Sector Affinity Group (LSAG) AML Guidance – this is tailored for law firms
- Sanctions and Financial Crime Guidance from the Office of Financial Sanctions Implementation (OFSI)
3. Risk Assessment & Client Due Diligence (CDD)
- Ensure your firm-wide AML risk assessment is up-to-date
- Make sure your firm is risk-based – i.e., clients, transactions, and matters are assessed for risk at the outset and on an ongoing basis
- Implement proper Know Your Client (KYC) checks – ID verification, beneficial ownership checks, source of funds/wealth assessments
- Make use of electronic verification tools, but don’t rely on them alone
- High-risk clients (PEPs, high-net-worth individuals, complex structures) require enhanced due diligence (EDD)
- Have a clear matter risk assessment process that all fee-earners follow
4. SARs & Internal Reporting
- Train staff on how to spot red flags (e.g., unusual payments, urgent last minute changes in payments, complex company structures, reluctance to provide information)
- Have a clear SAR reporting process – encourage staff to report suspicions internally first (to you as MLRO)
If you file a SAR to the NCA, remember:
- You mustn’t tip off the client
- You may need a Defence Against Money Laundering (DAML) before proceeding with a transaction
- Keep a clear record of why you did/didn’t report
HOW WE CAN SOLVE YOUR COMPLIANCE HEADACHES
- AML SORTED Programme (for medium to large sized law firms) CLICK HERE
- AML SORTED Programme (for small law firms) CLICK HERE
- Regulatory SORTED Programme (for medium to large sized law firms) CLICK HERE
- Regulatory SORTED for Small Firms Programme (for small law firms) CLICK HERE
5. Training & Staff Engagement
- Provide regular AML training for all fee-earners and staff
- Training should be practical – use real-life examples of risks in legal work
- Ensure all new joiners get AML training as part of induction
- Encourage an open culture where staff feel comfortable raising concerns
6. Staying Compliant with the SRA
- Be prepared for SRA AML Audits – they’ve increased spot checks on firms
- Ensure your Policies, Controls, and Procedures (PCPs) are documented and kept up-to-date
- If you’re ever unsure about an issue, document your reasoning before making a decision
- Keep a register of AML breaches and near-misses
- Attend their Compliance Conference each year
AML AUDITS WITH TEAL COMPLIANCE
7. Managing Stress & Your Own Risk
- Keep an audit trail of key AML decisions – this protects you if questioned by the regulator
- Use external resources and networks – join MLRO/COLP forums for peer support
- If in doubt, seek external legal or compliance advice rather than making risky decisions alone
- LawCare is the legal sector’s charity, supporting us in our roles in law firms. Their helplines are confidential, if you’re struggling with stress please contact them. They’re excellent and all the volunteers on the helplines have either worked in law, or still do, i.e. they “get it”.
READ THIS ARTICLE FOR FURTHER INSIGHTS
Need Help?
Did you know that Teal provides specialist training to both COLPs and MLROs? If you want to find out more, simply GET IN TOUCH HERE.
