Neil Williams of corporate crime solicitors Rahman Ravelli criticises what he sees as a lack of joined-up thinking.
Treasury-approved guidance on how to comply with the Fifth Money Laundering Directive may not be available for months, according to the Solicitors Regulation Authority (SRA).
All firms are expected to be fully compliant with the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, which came into force on 10 January 2020 and updated the UK's existing anti-money laundering legislation to take the Directive into account.
But in response to a lack of guidance, the SRA has said that its enforcement activity will take into account the limited amount of time that firms have had to prepare for the Directive. HM Revenue and Customs has stated it will take a similar approach.
The new requirements include a duty to collect proof of registration for entities (such as trusts and companies), a duty to inform the registry of any discrepancies in their information and changes to client due diligence and enhanced due diligence.
The Legal Sector Affinity Group (LSAG) - which includes the SRA - is drafting updated guidance regarding the regulations which will require the approval of the Treasury. SRA Chief Executive Paul Philip said it would provide a range of support to help firms comply with the new regulations.
Unfortunately, this situation is far from ideal. The chasm which appears to have opened up between the implementation of the new regime and an absence of guidance means it is only fair that practitioners should be afforded a degree of leniency when apparent breaches occur in the period between the regulations coming into force and the guidance's arrival.
Unfortunately this is a situation that highlights a lack of joined-up thinking when it comes to making the most of what appears to be an effective weapon in the battle to combat money laundering.
About the author: Neil Williams, legal director at award-winning law firm Rahman Ravelli, is a leading expert in the subject of money laundering investigations. Read the guide: A Brief Summary Of Money Laundering And How To Respond To Allegations.
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