Risk Update

AML in the time of Covid19 — Legal Sector Affinity Group (LSAG) Issues Advisory Note

Preventing money laundering during Covid-19: LSAG Advisory Note” —

  • “Graham Mackenzie, Head of AML at the Law Society of Scotland, said: ‘This is an extremely difficult time for all of us, bringing unprecedented and untold challenge and damage to our society both at a human and economic level. Unfortunately, some will choose to exploit any weaknesses or vulnerabilities we may have and will see opportunity in other people’s misfortune. As some money laundering routes close due to the crisis, criminals will explore alternative means to launder their proceeds of crime, potentially including increased targeting of the legitimate services provided by the legal profession. Above all, solicitors should continue to ask questions, to know their clients and the markets in which they operate – and to understand their sources of wealth. For example, would it make sense that a business client in an industry forced to close, is still generating revenue or has money to invest? Taking time to pause and ask these questions is vital, perhaps even more so in times such as these.'”

Text of full note available here — 

  • “Legal practices and practitioners should be aware that criminals will continue to operate throughout, and look to take advantage of, the COVID-19 outbreak. This includes laundering the proceeds of crime and terrorist financing, so it is important that everyone is aware of the changing risks.”
  • “As well as changes to how we live our lives, COVID-19 is also changing the economy. An economic downturn may make legal practices more susceptible to financial difficulties or other pressures, which creates risk and potential weaknesses for criminals to exploit.”
  • “An inability to conduct in person ID&V does not mean you cannot complete CDD, but you may need to consider using other methods that give you the necessary assurance that the person is who they say they are.”
  • “No matter what ID&V service or procedure is used, the responsibility to make sure the ID&V is undertaken correctly, is with the relevant practitioner and practice. If you are placing reliance on others to conduct CDD under Regulation 39, e.g. an instructing solicitor or accountant, you
    should ensure that you understand how they have adapted their CDD procedures to the different circumstances.”
  • Make sure that you keep a record and evidence of the processes you follow; for example, of any video calls you make.”
  • These methods alone may not be appropriate or sufficient where the money laundering and terrorist financing risks inherent in the particular client or matter are greater. In higher risk situations, further verification (including verification of source of funds/wealth) will likely be required.”
  • “It is not for your supervisor to provide specific legal advice and/or confirmation on the application of the MLRs. You are required to satisfy yourself on your legal/regulatory obligations under the MLRs and that you have complied with them.”

 

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