A recent examination by the Solicitors Regulation Authority (SRA) has unveiled a concerning trend among law firms in their approach to anti-money laundering (AML) training. The findings highlight that many firms are treating these crucial training sessions as mere formalities rather than vital compliance exercises.
The SRA’s thematic review, which involved discussions with thirteen training providers and nearly 400 onsite AML inspections, revealed that a significant number of law firms regard AML training as an annual ‘tick-box exercise.’ This approach poses risks as AML threats evolve, necessitating more tailored and ongoing training instead of generic, one-size-fits-all solutions.
Evidence suggests that firms with Money Laundering Compliance Officers (MLCOs) who undertake additional training are approximately 50% more likely to comply with regulations. This underscores the necessity for training that is specific to a firm’s processes and the risks it faces. The authority emphasised the need for continuous training to ensure it remains effective and relevant.
The shift towards online training has also been noted, with firms increasingly opting for webinars and digital sessions. While this is cost-effective and flexible, it brings challenges such as reduced interaction and engagement, as participants may become distracted. To counter this, some providers recommend keeping cameras on during remote training or integrating face-to-face sessions.
Cultural issues present another hurdle, with some experienced fee-earners believing they do not require further training. However, the SRA points out that the AML landscape is ever-changing, and ongoing education is necessary to keep pace with new methods criminals use to launder money. Despite recognising the importance of AML training, past negative experiences have led some firms to view the sessions as repetitive.
The review uncovered that some firms failed to maintain records of completed AML training, with certain fee-earners unclear about essential compliance aspects like source of funds checks and due diligence. This lack of clarity contributes to non-compliance, as indicated by the SRA’s report that only 22% of firms were fully compliant with AML rules after recent checks.
The SRA stresses the need for engagement and up-to-date training to secure fee-earners’ commitment and improve compliance. By addressing these issues, the authority hopes law firms will take more proactive steps to adapt their training methodologies and respond to the dynamic AML environment.
The insights derived from the SRA’s review highlight a critical need for law firms to reconsider their AML training strategies. As compliance regulations evolve, firms must prioritise effective and ongoing training to mitigate risks and ensure adherence to legal standards.
