Independent audit

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The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692 introduced a requirement for certain firms to establish an independent audit function to audit their compliance with the MLR 2017. See Practice Note: Money Laundering Regulations 2017—independent audit function—law firms, which considers the requirement to establish an independent audit function and sets out the key responsibilities of and best practices for the function and the differences between independent audit and your money laundering, terrorist financing and proliferation financing risk assessment.

What is the independent audit function?

The independent audit function is an invention of the MLR 2017 and its purpose is very much as the name suggests, ie to:

  1. •

    assess the effectiveness of the firm’s systems and controls

  2. •

    make recommendations, and

  3. •

    monitor compliance with those recommendations

Is it compulsory to have an independent audit function?

Sole practitioners are exempt from the requirement to establish an independent audit function, so long as they do not employ or act in association with any other person.

For other firms, there

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