Anti-Money Laundering (AML) Audit

Regulation 21 (1) of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 requires firms in the regulated sector, where appropriate with regard to the size and nature of their business, to establish an independent audit function.

The purpose of the audit is to examine and evaluate the adequacy and effectiveness of the firm’s AML and counter-terrorist financing policies, controls and procedures.

Although external audit is not an express requirement of Regulation 21, it may offer several advantages.

First, the audit must be independent of the work areas being audited, so it cannot be done by the Money Laundering Reporting Officer, the Money Laundering Compliance Officer, or members of the compliance team or the team that did the original work.  In many cases, the firm may not have the requisite AML expertise in other parts of the practice.

Secondly, an external auditor should have experience of the firm’s peers and a wider cross-section of the profession, invaluable both for benchmarking and potentially identifying areas for streamlining processes or making them more effective.

Thirdly, as we are practising solicitors, our legal advice on regulatory compliance will generally be protected by legal professional privilege.

Finally, it may be more cost effective for larger firms than using their own partners or staff who would be taken off fee earning work to do the audit.

We have undertaken audits of a wide cross section of law firms, estate agents, and trust and company service providers (TCSPs).   We have particular experience of the larger US and UK international practices and City firms.