Guidance and Sectoral Risk Assessments

As a supervisory authority, we recognise that our firms need to be able to access guidance, so they have a starting point on which to base their compliance with the requirements of the regulations. This is provided as follows:

Legal Sector Anti-Money Laundering Guidance

The Legal Sector Affinity Group (LSAG) has reviewed and redrafted the UK legal sector AML Guidance.

The updated version expands upon the previous AML guidance released after the implementation of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, and incorporates subsequent amendments implemented via:

This guidance is the place for firms to access information about specific requirements of the regulations and incorporates the changes set out in the 2019 regulations which were summarised in the “Key Changes Document”.

The LSAG has provided further guidance for specialist areas of legal practice. The latest guidance – known as Part 2 – has been published in three sections:

  • Part 2a – AML Guidance for Barristers/Advocates
  • Part 2b – AML Guidance for legal professionals providing Trust or Company Services
  • Part 2c – AML Guidance for legal professionals offering notarial services

LSAG has published Parts 1 and 2 in draft form, pending approval by HM Treasury, meaning the text may be subject to some changes.

Parts 2b and 2c are intended to provide supplementary information in addition to the main Part 1 AML guidance, in order to help those working in these specific areas and should be read in conjunction with Part 1.

Part 2a is not relevant for those under the AML supervision of CILEx Regulation.

The LSAG Covid 19 Advisory Note still remains relevant in certain situations because of remote working and the risks that present.

Sectoral Risk Assessment

We are required to set out information on money laundering and terrorist financing risk that we consider is relevant to those we supervise. We have identified and assessed the international and domestic risks of money laundering and terrorist financing to which you are subject. The information in this sectoral risk assessment is designed to assist our firms in carrying out their own money laundering and terrorist financing risk assessment.

National risk assessment of money laundering and terrorist financing 2020

The 2020 National Risk Assessment, carried out by HM Treasury and the Home Office, identifies risks around services, sectors and entities and encourages vigilance in the higher areas of risk. It sets out the key money laundering and terrorist financing risks for the UK, how these have changed since the UK’s last NRA was published in 2017, and the action taken since 2017 to address these risks. Firms should refer to this in preparation of their own risk assessments, so they can understand both the general threats that the UK faces, as well as those specific to the particular areas of work that they carry out.

Mutual Evaluation Report of the United Kingdom’s AML/CTF regime 

On 7 December 2018 the Financial Action Task Force (FATF) published its mutual evaluation report (MER) of the United Kingdom’s Anti-Money Laundering/Counter-Terrorist Financing regime (available here). The report recognises that the UK’s AML/CTF regime is the strongest of any country assessed to date. It also recognises the private sector’s extensive engagement in the production of the two National Risk Assessments (NRAs) and the success of the Joint Money Laundering Intelligence Taskforce (JMLIT).

Tax Adviser Guidance

Since 10 January 2020, the definition of a tax adviser under the money laundering regulations has changed and become wider in scope. This guidance may help you determine whether work you carry out is now within the scope of the regulations.

Pooled Client Accounts

The Joint Money Laundering Steering Group (JMLSG) published in August 2020 new guidance to financial institutions on the operation of pooled client accounts. This guidance may have significant implications for legal firms in terms of their AML arrangements, the operation of their client accounts, and the obligations/restrictions imposed upon them by their banking providers. Firms should study the guidance which is on the menu to on the left of this page, and consider how they may respond to any requests from a bank.

Guidance on reporting AML breaches

This reporting breaches guidance document may help you to understand your requirements under the regulations, to report breaches and determine the circumstances in which breaches must be reported.