Money Laundering Regulations 2017—identifying and assessing firm-wide risks—law firms
Money Laundering Regulations 2017—identifying and assessing firm-wide risks—law firms

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • Money Laundering Regulations 2017—identifying and assessing firm-wide risks—law firms
  • Do you have to conduct a risk assessment?
  • Risk assessment and the risk-based approach
  • The risk assessment pyramid
  • What are appropriate steps?
  • Statutory categories of risk
  • Sources of information—external
  • EU supranational risk assessment
  • National risk assessment
  • Sector specific risk assessment and guidance
  • More...

This document reflects draft Legal Sector Affinity Group (LSAG) AML guidance, published on 20 January 2021. It awaits HM Treasury approval. Note that any content may be amended before the final version is published with the Treasury's approval.

This Practice Note explains the regulatory requirement to identify and assess firm-wide risks as set out in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, as amended by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, SI 2019/1511, effective from 10 January 2020.

There is no right or wrong way to conduct a risk assessment; just ensure you are thorough. Look at what you do, and what you do not do.

But no matter how thorough your risk assessment or how appropriate your controls, some criminals may still succeed in exploiting your practice for criminal purposes. A comprehensive and documented practice-wide risk assessment, combined with written records of decisions made on individual clients and matters will enable you to justify your decisions and actions to law enforcement agencies and your supervisory authority.

Do you have to conduct a risk assessment?

If the MLR 2017 apply to your firm, you must take appropriate steps to identify and assess your firm's money laundering and terrorist financing risks. For a sample risk assessment, see Precedent: Money laundering and terrorist financing firm-wide risk assessment—law

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