Anti Money Laundering Guidance

Anti-Money Laundering (AML) Guidance

Anti-Money Laundering (AML) is a set of laws, regulations and procedures which are intended to prevent criminals from disguising funds obtained illegally, as legitimate income.

The Chartered Institute of Legal Executives is committed to ensuring that our members can play their part in helping to safeguard the UK against money laundering activities.

The legal sector is one of the sectors at risk of being targeted because of the skills and services that legal professionals offer. Therefore, our members are amongst the professionals that play a key role in both detecting and preventing money laundering.

The legal profession is one of the professions that the AML regulations apply to. Therefore, you may need to be covered by a supervisor from the sector. See the Government website for more information.

CILEx is the named supervisory authority under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘The Money Laundering Regulations 2017’) although it has delegated all regulatory functions to CILEx Regulation (as the independent regulator of our members). CILEx Regulation acts independently and is responsible for monitoring and enforcing relevant members’ compliance with their AML obligations.

CILEx shares the government’s objectives in ensuring the UK has a robust and effective AML regime. To that end, we work in conjunction with government, law enforcement agencies and other supervisory authorities to improve the wider framework on AML.

The Guidance

There is legal sector AML guidance, which has been produced by the legal sector AML supervisors, including CILEx, and has received the approval of HM Treasury and was produced following the changes introduced by the Money Laundering Regulations 2017.

For more information see who needs to register for money laundering and to establish whether you need to be supervised for compliance with the Money Laundering Regulations 2017, see this page.

You can watch webinars and use online courses to find out more about money laundering supervision using the HMRC support page

Coronavirus (COVID-19) update - Anti-Money Laundering and risk awareness

The National Crime Agency has warned that organised crime groups may try to exploit any opportunities that they may spot during current coronavirus crisis. Please see the information which CILEx Regulation have put together here.

The Financial Conduct Authority (FCA) have published its high level expectations on firms' systems and controls during coronavirus. 

Legal Sector Affinity Group (Advisory Note) - the Legal Sector Affinity Group have prepared an Advisory note to assist in preventing Money Laundering/Terrorist financing in legal practices, setting out the risks and other issues to consider. 

*Update* January 2020 – 5th Money Laundering Directive

The EU’s 5th Money Laundering Directive came into force on 10 January 2020, amending the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which were updated by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019

The LSAG has published a summary of changes to the regulations to help compliance with the new requirements, which include:

  • A duty to collect proof of registration for entities (for example trusts and companies);
  • Changes to the client due diligence and enhanced due diligence.

LSAG is currently redrafting the full guidance on the Regulations, which will require the full approval of HM Treasury and should be published within the coming months. In the meantime, please still refer to the guidance for questions.

National Risk Assessment 2017

The National Risk Assessment (NRA) was Published in October 2017, setting out the key money laundering and terrorist funding risks for the UK, how these have changed since the UKs first National Risk Assessment in 2015, together with the action taken to address those risks.

The NRA states that professional services are a crucial gateway for criminals looking to disguise the origin of their funds. The report notes the legal services – like banking and accountancy services – remain at high risk of being abused by money launderers and suggests that high end money laundering almost always requires facilitation by legal services, even if they are unwitting.

The identification of the sector as ‘high risk’ means that those working in the sector “should be vigilant towards the persistent efforts of criminals and terrorists to exploit vulnerabilities.”

The NRA specifically highlights the following services to be at high risk of money laundering:

  • Conveyancing services
  • Client account services
  • Trust and company formation.

To mitigate risks when operating in these areas you must make sure you comply with the latest AML guidance and pay attention to red flags that could cause you to have suspicions of money laundering.

You should also ensure that the conclusions of the NRA are reflected in your firm’s AML policies, controls and procedures, as well as in your risk assessments.

The full report can be read here

Suspicious Activity Reports.

The National Crime Agency offers a range of resources around filling in your Suspicious Activity Reports (SAR), which include:

In June 2019, The Law Commission published its Anti-money laundering: the SARs regime report.

Flag it up campaign

CILEx supports The Home Office’s “Flag it up campaign.”

Copies of posters and images for the legal sector for use can be downloaded from here.

Financial Action Task Force (FATF)

The FATF is an inter-governmental body with objectives to set standards and promote the effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other threats of the international finance system.

The FATF has developed a series of recommendations which are recognised as the international standard for tackling money laundering and the financing of terrorism. It has also reported on money laundering and terrorist financing – vulnerabilities of legal professionals.

It has also updated its Risk based Approach Guidance for Legal Professionals.

FATF Guidance for a Risk-Based Approach for Trust and Company Service Providers.

Additional information and resources

CILEx Regulation have identified red flag indicators and how to spot risks.

You can also find information on your Anti-Money Laundering obligations and the reporting of suspicious activity.

Proceeds of Crime Act 2002.

Office for Professional Body AML Supervisors (OPBAS).

A lawyers Guide to detecting and preventing money laundering, was published by the International Bar Association (IBA) in conjunction with the American Bar Association (ABA) and the Council of Bars and Law Societies of Europe (CCBE).

Guidance of Counter Terrorist Finance risk assessment.

Public Private Economic Crime Newsletter - Issue 1 April 2020

Sanctions and high risk jurisdictions

Selected sanctions lists:

UK – HM Treasury’s consolidated lists
EU sanctions list
EU regimes sanctions list
UN sanctions list

High risk jurisdiction list:

FATF high risk and non-cooperative jurisdiction list