Solicitors Regulation Authority of England and Wales publishes latest annual reports

The Solicitors Regulation Authority (SRA) has published its suite of annual reports, which cover five core topics, these are: ‘Anti-money Laundering‘, ‘Authorisation‘, ‘Client Protection‘, ‘Education and Training‘ and ‘Upholding Professional Standards‘.

Key findings from the reports include:

  • There has been a year-on-year increase in the number of solicitors qualifying through apprenticeships, firms offering recognised training and solicitors gaining higher rights of audience qualifications.
  • There is further evidence of continued growth of the legal sector in Wales, with Welsh firms now accounting for a combined turnover of over £435 million, up from £370 million five years ago.
  • £10.4 million was paid out from the Compensation Fund, up £2.9 million from 2018/19, with the average payout around £28,000.
  • The Upholding Professional Standards Report, includes a review of the diversity characteristics of solicitors involved in the SRA’s enforcement processes. It has been found that as was the case in a similar analysis published last year, there is an over-representation of Black, Asian and minority ethnic solicitors, and men, in both concerns raised and investigated with the SRA when compared with the diversity of the profession as a whole. Based on this the SRA are currently commissioning independent research into the societal and structural factors that might be driving the over-representation in reports made to us, as well as reviewing our own decision making and working to improve diversity data collection.

Anna Bradley, Chair of the SRA Board, has said: “Publishing this suite of annual reviews is an important part of our ongoing commitment to transparency and accountability. Last year was difficult for everyone, and I’m pleased that our reports show that both we and the profession rose to the challenge, adapting to new ways of working, maintaining performance and services and showing real resilience in the face of the pandemic. Since we published our last set of reviews, we have made significant progress in many areas, not least the work now well underway to understand and address what may lie behind the overrepresentation of Black, Asian and minority ethnic solicitors, and men, in our enforcement processes. Our 2019/20 Upholding Professional Standards report again confirms the historic trends we have already seen and reaffirms how important it is that we continue to push on with this work as quickly as possible.”

Access the full suite of reports here. 

Watch the Nova Scotia Barrister’s Society’s webinar on anti-money laundering and client ID and verification

On the 9th of June, the Nova Scotia Barrister’s Society (NSBS) hosted a webinar entitled ‘Anti-Money Laundering/Client ID and Verification.’

This webinar was hosted by Caron Ferguson Eagan (NSBS Staff Lawyer, Education & Credentials) and presented by Jillian Barrington (in practice with Sheldon Nathanson Law), Bernadine MacAulay (NSBS General Counsel), and Elaine Cumming (NSBS Professional Responsibility Counsel).

A full recording of the webinar as well as the slides used has been made available by the NSBS.

View all the material here. 

Legal Sector Affinity Group for England and Wales publishes new guidance on anti-money laundering and SRA sectoral risk assesment

The Legal Sector Affinity Group (LSAG) which is made up of representatives from the different regulatory and representative bodies in the legal profession, releases information and guidance for legal services professionals. The LSAG 2020 guidance provides a detailed commentary on recently amended UK regulations on money laundering (as well as the 2017 regulations).

The LSAG guidance provides an update to material previously published in 2018, updating the content to match the new regulatory environment. Key changes in the new publication include:

  • Expanded guidance on understanding source of funds and source of wealth
  • A new section addressing the need for firms to understand the technology they are using
  • Clarifications on high-risk sectors, accepting cash into the client account, customer due diligence (CDD) on referrals from another legal practice, timing of CDD/exceptions
  • Discrepancy reporting to Companies House, and other relevant registries from new duty/obligations introduced from January 2020

As well as this the SRA have produced further guidance, in light of a UK Government risk assessment, published in December, producing a legal sector-specific money laundering risk assessment, focused on the specific challenges of the sector.

Juliet Oliver, SRA General Counsel, said: ‘Tackling money laundering is a priority for all of us and we know the vast majority of firms are committed to keeping the proceeds of crime out of the profession. These documents offer comprehensive information on some of the better ways to achieve this. Our sectoral risk assessment identifies and discusses the biggest issues and emerging threats currently facing providers of legal services as they look to combat money launderers. It is complemented by the LSAG guidance, which covers all the bases of the 2017 regulations, plus a thorough review of how regulations and expectations on firms have evolved since then.’

Read the LSAG guidance here, or the SRA’s risk assessment here. 

Updated UK national risk assessment of money laundering and terrorist financing

The UK Treasury has published an updated UK National Risk Assessment of Money Laundering and Terrorist Financing. This follows the previous update from October 2017 and sets out the key money laundering and terrorist financing risks for the UK, and how these have developed since the first publication in 2015.

Specifically, chapter 10 documents the UK Government’s view of the key money laundering risks associated with legal services.

Key risks:

  • Legal services is at high risk of being abused by criminals seeking to launder money
  • These risks increase when legal professionals fail to carry out their obligations under the money laundering regulations (MLRs) or take a tick box approach to compliance
  • Specific services provided which may be most vulnerable to abuse remain conveyancing, Trust and Company Service Provision (TCSP) and the provision of client account facilities. Other areas of risk include sham litigation, notarial services, cryptocurrencies and crowdfunding
  • The risk of legal services being used for terrorist financing purposes remains low
  • The assessment notes that most legal firms comply with their AML obligations and there has been an improvement in technical compliance. However, it further states “there are a significant minority of Legal Service Providers which do not focus on AML compliance and some still lack an understanding of the risks they face”.

Graham MacKenzie, Head of AML at the Law Society of Scotland has said “The legal sector risks, findings and trends noted in the new UK National Risk Assessment are generally consistent with the findings of our AML supervisory assurance work, and we welcome the more nuanced tone taken by the government in recognising not all conveyancing or TCSP work warrants a higher money laundering risk rating. I’d advise firms to now review, and (where necessary) refresh their firm-level risk assessments under r.18 of the Money Laundering Regulations. There is a wealth of information available on our website to support firms in this process, and lookout for new, fully revised UK legal sector AML guidance which will also be released later this month. We ourselves are obliged to review and refresh our supervisory Scottish legal sectoral risk assessment, previously published in March 2018 following the publication of the UK national assessment. This process will start shortly, and the document will be made publicly available on our website.”

Read the full updates here. 

Hong Kong Law Society responses to AML consultation

The Law Society of Hong Kong has released its responses to questions arising from an online consultation on anti-money laundering (AML) and counter-terrorist financing (CTF) regulation. The consultation was launched on the 3rd November 2020 by the Financial Services and Treasury Bureau. The consultation gave members of the public, as well as private companies the opportunity to ask questions about the future of AML and CTF regulation.

Amongst the questions, the Law Society provided responses on topics such as increased penalties, reserved legal activities and licensing agreements.

Read the Law Society’s full response.

Solicitors Regulation Authority publishes compliance officers conference online

The Solicitors Regulation Authority of England and Wales (SRA), has published recordings of their recent compliance officers (COLP) conference on their website. Due to the content of the conference, looking at regulatory and compliance developments, ICLR members may well find the content interesting and relevant to their own regulatory work.

Sessions included:

  • Discussions around rule changes that allowed for third party management of client accounts and why there hasn’t been more uptake
  • Anti-money laundering
  • Changes to the legal education system with the new solicitors qualifying exam, and
  • The cybercrime risks associated with working from home.

All the sessions are available to watch on the SRA website.

Hong Kong to consider extending AML and CFT rules to cryptocurrencies

In the Financial Secretary’s 2020 – 2021 budget speech, the Hong Kong government announced that it will consider extending the anti-money laundering/counter-terrorist financing requirements to cover cryptocurrency service providers. Cryptocurrencies are currently classified as virtual assets in the city and are regulated by the Securities and Futures Commission.

By including cryptocurrencies under AML regulations, the government would attempt to curb the use of platforms such as bitcoin in money laundering. This is an issue that has arisen for many global regulators, as by their nature crypto assets are often designed to obscure the identity of the user, as well as to hide the purpose of the transaction, making them extremely attractive to those with nefarious purposes. However, they also hold many attractive benefits to users including transactional security, low transfer costs and decentralisation, meaning that many regulators are facing an environment where they are already widely used. By bringing service providers into the existing AML regime Hong Kong is hoping to address some of these ongoing issues.

Read the full article from the Law Society of Hong Kong.

More regulatory responses to COVID-19

Following on from last month’s newsletter, we’ve put together the following list to examine different regulator responses to the COVID-19 pandemic. Here it is interesting to note the development and changes, as regulators begin to get a grasp on the crisis and develop innovative responses to meet the changing environment. If you have any questions or best practice for the rest of the ICLR community, please do get in touch, and we will be happy to include any of these in the next newsletter.

Illinois has introduced executive order 2020-14, this satisfies notarial requirements that a person must “appear before” a notary public if a two-way audio-video connection is used. It also allows documents to be witnessed through the same technology.


The Law Society of New South Wales has decided to run it’s annual Law Careers Fair as an online event, rather than cancelling it. The event will use zoom to create virtual presentations, with individual video booths and company landing pages replacing exhibitor booths. More information about the event is available here. The Society has also decided to reduce its $410 membership fee to $10, for the 2020-2021 period, allowing members to redirect funds to priority areas during the crisis.


The Law Society of Hong Kong has announced that civil hearing will take place remotely, with all other non-essential court hearings currently adjourned.


The Legal Sector Affinity Group which is made up of all the legal supervisory authorities in the UK, including the Law Society, Bar Council, CILEx, and the Law Society of Scotland, has released an advisory note on preventing money laundering during the crisis. The note discussed the increased risk of money laundering at the current time and what checks can be put in place to mitigate this.


The Council for Licensed Conveyancers in England and Wales is to allow members to defer fee payments, following the near-complete standstill in the UK property market. Members will be given the option to defer paying their practice fee and compensation fund contributions for April, May and June, which can be paid off over the following 4-12 months.


The California State Bar Board of Trustees has written to the California Supreme Court offering options and recommendations for the June First-Year Law Students’ Exam and the July Bar Exam. Full letter available here. Whilst the State Bar of Califonia has put in place emergency measures waiving late payment fees, as well as extending payment deadlines for membership fees and compliance deadlines.


The Law Society of Ontario has cancelled the lawyer licensing examinations and the call to the bar ceremonies due to take place in June. The society has said that alternative summer/autumn examination dates are being explored and that the administrative aspect of the call to the bar process is being undertaken remotely, allowing students to progress with their careers, with a celebration planned later in the year.


The Law Society of Saskatchewan and the Law Society of Alberta have temporarily reduced the articling requirements to a minimum of 8 months, instead of the previous minimum of 12 months, preventing a backlog of articling students due to limits created by coronavirus. Full statements available here and here. The Law Society of Alberta has also introduced changes allowing articling students to work remotely, as well as giving instructions on the supervision students doing this.


The American Bar Association has created a “Task Force on Legal Needs Arising Out of the 2020 Pandemic”, which launched a website on the 3rd of April to provide resources and information on the ongoing crisis and how this relates to the law. Statement available here, website available here. The ABA has also backed calls to adopt emergency rules that would allow recent and upcoming law school graduates who cannot take a bar exam because of the COVID-19 pandemic to engage in the limited practice of law, under the supervision of a licensed attorney, these individuals would have until the end of 2021 to practice without passing the bar exam. They hope this would limit the disruption to students careers, and help prevent the widening of the access to justice gap.  Full statement available here.

FLSC launches anti-money laundering and terrorist financing risk advisory for the legal profession

The Federation of Law Societies of Canda (FLSC) has launched a series of risk advisories and risk assessment case studies, designed to help legal professionals adapt to the new anti-money laundering rules. The rule changes are based on an FLSC model rule and have been adopted by Nova Scotia, Alberta, Saskatchewan and British Columbia. The new rules particularly focus on client identification and verification.