The legal landscape is on the brink of significant change, prompted by the Solicitors Regulation Authority (SRA) who are determined to ensure regulations across all law are being met by firms across the country.
The SRA has alerted more than 1,000 legal firms to the importance of sanctions compliance. In this era of increased financial regulations, legal professionals must align their practices to avoid legal issues.
This important message from the SRA floods the legal sphere, marking a significant change. Law firms, often seen as protectors of justice, now have the responsibility of complying with sanctions. This wake-up call affects both those who were unaware and those who were not paying attention. The call for change reverberates through more than 1,000 practices, requiring them to navigate the complexities of law with a new focus on sanctions compliance.
The Solicitors Regulation Authority Offers Necessary Guidance to Unsure Law Firms
The SRA’s communications with firms is a positive step in ensuring these firms are practicing compliantly. While the written letters reaffrim their stance regarding the regulations in place, they are clearly here to help law firms as well as set the standards.
They have recognised the gaps in compliance practices within the legal profession and offered assistance where they can. A survey conducted by the SRA last year, showed over 1,700 firms from the 3,000 surveyed lacked essential controls to manage risks of sanctions.
The survey confirmed concerning gaps in verifying their clients’ identities, completing effective source of funds checks and if a client was subject to any sanctions. The SRA have acted where they see fit, writing to the firms to offer guidance on compliance and suggestions including completing a sanction wide risk assessments, client identification criteria and screening options.
Strengthening the Financial Sanctions Regime a Key Reason Behind SRA’s Actions
The SRA is determined to implement the regulations while also ensuring law firms are staying on the right side of the compliance line. One of the reasons they conducted the survey and consequently, acted by offering written advice to law firms, was to strengthen the financial sanctions regime.
“Strengthening the financial sanctions regime is an important part of the government’s response to war in Europe, and law firms have to a key role to play. The sanctions regime applies to all firms that provide legal services, not just those that are captured by the anti-money laundering regulations.” said SRA deputy chief executive Juliet Oliver.
She continued, “Firms we have written to responded to our survey last year by saying they did not have or were not aware of a written-down firm-wide risk assessment, or the process for identifying an ultimate beneficial owner. The support we’ve provided should help address these issues and help firms remain compliant.”
Compliance Remains a Challenge but Solutions are Available
Alongside their survey, the SRA also checked on compliance sanctions and what firms were doing to adhere to the regulations in place. From their findings, 10% of firms did not check whether new clients were designated persons, 47% of firms did not check existing clients and only 20% checked counterparties.
In addition to this, one in five firms understood the steps to take when dealing with a designated person. A worrying set of findings from the SRA who are determined to ensure the regulations and guidelines are followed. We know compliance is a daily challenge for lawyers and law firms as they attempt to complete identity checks, source of funds checks and KYB checks. It’s a difficult task but its essential law firms are practicing within the guidelines.
Solutions are out there for firms attempting to tread the lines and practice compliantly. Viable solutions include innovations in technology which are changing the onboarding process and allowing lawyers to complete compliant identity checks within minutes. Verify 365 is one of those products that are changing the legal landscape and allowing firms to effectively complete identity checks within the guidelines.
Verify 365’s platform is streamlining processes and allowing firms to complete identity verification checks within a few short minutes using our Dynamic ID software. In addition to this, Verify 365 allows you to complete the necessary due diligence on businesses by completing compliant KYB and source of funds data checks.
The platform ensures you are practicing compliantly within the guidelines but crucially allow you to know exactly who you are working with. It’s the ultimate platform that keeps everything you need in one place, meaning you can streamline your processes and enhance the overall experience of your client.
The SRA’s Firm Stance is Clear
The SRA remain committed to ensuring the regulations are adhered to. The survey they conducted highlights a few issues particularly with potentially sanctioned individuals and compliance overall. There is plenty of work to be done but communicating with the firms is a big step in the right direction, giving them the necessary advice and guidance to implement changes.
They are leading the way in the battle to practice compliantly. Solutions are available to law firms as we know the daily challenges they face can be hard to navigate. The SRA’s actions are a collaborative effort to ensure law is practiced compliantly and education is the first step in making sure firms know exactly what they are doing. While their findings will be a concern, the SRA have acted decisively to ensure firms check every detail and process moving forwards.
