Understanding Anti Money Laundering Risk Assessments

'Ticking a Box' isn't the same as 'Ticking The Box'. It's very easy, and tempting, to buy a suite of template documents, put your firm's name on the top and then use them without further thought. This is generally fine until the SRA undertake an assessment and then it's far from fine. We all know that we need to have effective AML risk assessments but what will be deemed to be effective and what will not? The answer is a bit like an elephant, it's difficult to define but easy to recognise.

Our Practice Wide Risk Assessment is bespoke to your practice, makes reference to data from your practice management system and your operational practices. It is supported by bespoke client and matter risk assessments and data mapping so that you can easily update the policy when your firm changes so it is not at risk of becoming out of date and therefore ineffective.

What if I don't have good data? Not having encyclopaedic data is not a regulatory offence. If in your practice management system your staff have put in 'Cheshire' as the country of residence, that's fine: in fact it's better than that, if your PWRA notes the error it demonstrates that the PWRA is a living document that actively identifies and manages risk. The travails at the SRA around the collapse of SSB and Axiom Ince are well known, and the pressure to deal with money laundering and the facilitation of financial crime is not going to diminish.

As a consequence we can only expect more regulatory focus on this area and more investigations. What's the difference between a 'witch hunt' and a 'hunt that catches a witch'? The former tends to follow intelligence i.e. reports of concerns, including not reporting matters to the NCA, but often a random 'desktop review' can lead to something else more involved and concerning. Relatively few reviews proceed into a disciplinary investigation, but of those that do a significant amount are due to the documents produced being defective. Pass this first assessment and the focus is likely to be turned elsewhere.