CILEx Regulation’s latest AML Supervision Report highlights a positive year for AML compliance, with firms demonstrating stronger controls, improved governance and better understanding of their regulatory obligations.
The key findings of the report included:
- The AML risk profile for CRL regulated entities overall has reduced from medium to low risk.
- All firms reviewed during the reporting period achieved a Compliant supervision outcome.
- Onsite inspections were completed at three CRL firms, complementing the programme of desk-based reviews.
- Firms generally demonstrated improvements in the areas of:
-
- Practice-Wide Risk Assessments (PWRAs)
- Customer Due Diligence (CDD)
- Governance and oversight arrangements
- Use of electronic verification and screening tools
Common areas identified for improvementWhile overall standards were strong, some recurring themes for improvement were identified:
- Source of Funds and Source of Wealth evidence was not always sufficiently documented.
- AML training records and evidence of ongoing competence could be strengthened.
- PEP and sanctions screening processes were sometimes inadequately evidenced.
- Client and Matter Risk Assessments would benefit from more detailed and risk-focused narratives.
Change of focus
The focus for the coming year will be less on addressing fundamental weaknesses and more on improving the quality of evidence, risk assessments and documentation that support existing controls. This will include:
- Further risk-based onsite inspections.
- Enhanced guidance on Source of Funds requirements.
- Continued development of expectations around Practice-Wide Risk Assessments and proliferation financing risks.
- Strengthening standards for sanctions compliance and audit trails.
- Preparing for potential future changes to the UK’s AML supervisory framework.
The report highlights the continued progress firms are making in strengthening their AML compliance arrangements and responding positively to regulatory expectations. Through our ongoing supervision activities, we are able to identify emerging risks and areas for improvement, enabling us to adapt our regulatory focus where it is needed most. This proactive approach helps safeguard clients, firms and the wider legal sector from the threats posed by money laundering, terrorist financing and financial crime.
Find out more:
