Regulatory and Compliance Training & Consultancy

MLR 2017 Regulation 21 Independent Compliance Audit

Every firm of solicitors operating in the regulated sector that has appointed a Money Laundering Compliance Officer (MLCO) must, under Regulation 21 of the Money Laundering Regulations 2017 (MLR2017), establish an independent audit function which:

• examines and evaluates the adequacy and effectiveness of the policies, controls and procedures adopted by the organisation to comply with the requirements of the MLR 2017;
• makes recommendations in relation to the firm's policies, controls and procedures; and
• monitors the relevant person's compliance with those recommendations.

As an MLCO, how do you fulfil your obligation to have an effective independent audit function?

A recent report on the outcome of the SRA's program of AML visits to firms found of 74 firms visited in relation to independent audits under Regulation 21 of the Money Laundering Regulations 2017 (MLR2017) -

• 14 had not conducted any form of AML audit
• 21 firms relied on accreditation schemes for an external audit which did not address AML adequately or at all
• 18 firms used other external providers, however not all addressed the effectiveness of their firm's policies, controls, and procedures.
• 4 firms were unaware of the requirement to have an independent audit.

The SRA's report also highlighted the fact that the independence of an auditor can be an issue, observing that the job of conducting an internal audit was often given to the MLRO/MLCO or compliance department. The SRA noted that can be problematic because those involved were assessing the adequacy and effectiveness of their own work.

At Legal Finance Professionals Limited, we are pleased to be able to offer MLCOs and their firms a truly ‘independent’ solution to the problem. Working within an agreed budget, we will plan and carry out an ‘independent’ audit, as required by Regulation 21 of MLR 2017, which covers a detailed review and evaluation of the following areas:

• AML policies, procedures and internal controls
• the firm-wide AML risk assessment
• staff screening procedures
• provision of staff training
• record keeping
• practical application of the policies and procedures

For further information about our MLR 2017 Rule 21 Independent Compliance Audit call us now on 0330 223 5346 or contact us by e-mail.