WHAT DO WE HAVE TO DO TO COMPLY WITH THE MLR?
The MLR do not apply to all law firms. All depends on the definition of what amounts to an ‘independent legal professional’. This is defined as a firm or sole practitioner who by way of business provides legal or notarial services to other persons, when participating in financial or real property transactions concerning
- the buying and selling of real property or business entities;
- the managing of client money, securities or other assets;
- the opening or management of bank, savings or securities accounts;
- the organisation of contributions necessary for the creation, operation or management of companies; or
- the creation, operation or management of trusts, companies or similar structures, and, for this purpose, a person participates in a transaction by assisting in the planning or execution of the transaction or otherwise acting for or on behalf of a client in the transaction. (reg 2.9)
Further guidance from HM Treasury, as set out in the Law Society Practice Note, suggests that the MLR will not necessarily apply, therefore, to litigation work in particular. There is no definitive list of when the MLR does and does not apply, however, and the Law Society recommends taking ‘the broadest of the possible approaches’.
Where the MLR do apply there will be a need to deal with the following obligations, regardless of whether money laundering is actually happening in your firm.
- The appointment of a reporting officer (usually termed the ‘Money Laundering Reporting Officer’, or 'MLRO’)
- Reporting processes for disclosures to the Serious Organised Crimes Agency (‘SOCA’) in pursuance of the statutory obligations
- Identity checking: at a more complex level than in earlier provisions and described as ‘CDD’ (customer due diligence). The obligation is no longer confined to clients but also to those with a beneficial interest as defined by the Regulations, and those who effect control and management over client concerns;
- Training: Regulation 21 provides that law firms that are subject to the MLR must provide suitable training for ‘relevant employees’. The Law Society’s practice note suggests that for most firms refresher training every two years should be sufficient, though it might need to be conducted more frequently in high risk situations
- Record keeping: covering both client ID materials and records of relevant transactions.
CAN WE HELP?
Web4Law MLRO Compliance Manual
The Web4Law MLRO Compliance Manual will take you step by step through the processes involved in ensuring compliance in your firm.
To discuss your firm's particular requirements, please contact Matthew Moore or Simon Bray.
Training Provision
We have provided face-to-face in-house training sessions for management, fee earners and support personnel in numerous firms. Fee earner sessions are either two or three hours’ duration and count for CPD. Please note that we are required to pay £25 per session to the SRA if they count for CPD, which we pass on as a disbursement to client firms. This charge can be avoided if you have an in-house authorisation agreement in place with the SRA, in which case we would be treated as an external speaker at one of your training sessions.
Fees are by negotiation, but are based on our general training rates of £700 for a half day and £1400 for a full day. We will usually conduct a number of sessions on the same day – a common programme is two fee earner sessions of two hours each and two support staff sessions of 45 minutes each. We will be pleased to provide you with a detailed proposal based on your individual needs as a practice.