Trust and company service providers—law firms—anti-money laundering compliance

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

  • Trust and company service providers—law firms—anti-money laundering compliance
  • What is a trust or company service provider?
  • TCSP register
  • Firm-wide risk assessment
  • Client due diligence and risk assessment
  • Identifying and verifying your client
  • Client risk assessment
  • Source of wealth (SoW) and source of funds (SoF)
  • Red flags
  • Ongoing monitoring
  • More...

Trust and company service providers—law firms—anti-money laundering compliance

Trust and company service providers (TCSPs) are at a high risk of being used for money laundering or terrorist financing. This is because trusts and companies can be used to:

  1. obscure the beneficial ownership and control of assets and wealth

  2. create and control multiple legal entities at a relatively low cost

  3. create complex and opaque structures

  4. operate across multiple jurisdictions, and

  5. avoid tax or duties

Trusts and companies are, of course, the vehicle of choice for the legitimate investment and business world, however criminals may use them to add a veneer of legitimacy to illegal transactions.

If your firm provides any service as a TCSP, you are in scope of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, as amended, and must be in full compliance with them, including any requirements specific to TCSPs.

This Practice Note reflects:

  1. SRA TCSP guidance, March 2021

  2. SRA Thematic review of TCSPs, May 2019

  3. Legal Sector Affinity Group (LSAG) AML guidance 2021, Part 2b—Specific guidance for TCSPs

It is supplemented, where appropriate, with guidance issued by the Financial Action Task Force (FATF) for TCSP providers: Guidance for a risk-based approach, TCSPs.

What is a trust or company service provider?

TCSP work is frequently not a discreet practice area within law firms. You may inadvertently provide TCSP

Related documents:

Popular documents