Key Findings from the 2023 SRA AML Assessment

Key finds from the SRA's annual assessment of AML compliance

This year’s SRA Annual AML Assessment identified new and existing areas of concern for the regulator that all law firms should be aware of.

Following the report, the SRA made it clear that the level of compliance was too low and will introduce additional measures to address their concerns including the possibility of automatic fines.*

Below we have summarised the main areas of concern and how Credas can help you efficiently address them.

Key statistics from the SRA report

  • SRA has increased resources to prevent and detect financial crime
  • Enforcement action against 47 firms and individuals – including £137,402 in fines
  • 24 suspicious activity reports submitted to the National Crime Agency, by SRA, relating to £75m of assets mainly in conveyancing
  • Organised crime costs the UK economy £100bn every year
  • SRA supervises 6,000 firms for money laundering purposes
  • SRA received 249 reports of suspected MLR breaches; slightly down from 2020 and 2021. 39 resulted in action of which 23 received a fine. Most due to a lack of firm-wide AML controls

Area of Concern: Risk Assessments

What the report said
The lack of client and matter risk assessment was a major concern for the SRA with 20% of files reviewed missing a risk assessment and 50% lacking a rating or rationale.

How Credas can help
Our platform allows you to create custom risk assessment forms or use the standard SRA risk assessment template already built in to capture and document your rationale.

Area of Concern: Source of Funds

What the report said
Overall the SRA found there was a lack of Source of Funds information and evidence on file. When evidence had been captured such as bank statements rarely did they interrogate or query it.

How Credas can help
Our Source of Funds solution utilises Open Banking to gather digital statements that are automatically analysed for you. Incoming / outgoing funds are categorised making it easier to spot suspicious behaviour.

Area of Concern: Sanctions / Ongoing Monitoring

What the report said
Sanctions and ongoing monitoring were a particular concern with 10% of firms not checking whether new clients were sanctioned and 47% not checking existing clients. The use of eVerification and automated electronic monitoring were recognised as effective controls by the SRA.

How Credas can help
Credas’ PEPs and Sanctions checks help automate client screening with daily ongoing monitoring against the latest international sanctions list for less than 1p a day. Our bulk upload module makes it easy to screen existing customers against the latest international watch lists.

Area of Concern: Customer Due Diligence

What the report said
The SRA found that 14% of files lack identity documents and there was a general lack of enhanced due diligence across the board. The report also highlighted how law firms were failing to meet their AML obligations by relying upon existing knowledge of customers and skipping important steps in the process. In one scenario, a solicitor decided not to conduct CDD having known the client for many years personally. An internal review of the file identified this as an issue, and full due diligence was then conducted resulting in clear evidence of illegal funds being used.

How Credas can help
Our government-certified ID verification solution makes it easy to gather and store ID documents. We also offer adverse media checks and whether individuals appear on any law enforcement lists.

To learn more about how Credas can help your law firm meet its AML obligation with minimal impact on internal resources then get in touch