What Does the Recent SRA Thematic Review on AML Training Tell Us About What Firms Need to Do?

The Solicitors Regulation Authority (SRA) has recently published a thematic review on Anti-Money Laundering (AML) training, shedding light on the areas where law firms are performing well and where they need to step up. This review provides crucial insights into the expectations and requirements for AML compliance in the legal sector, emphasizing the importance of continuous improvement in this high-risk area.

The Role of AML Training in Law Firms

AML training is not just a regulatory requirement; it’s a key component in safeguarding firms against financial crimes. The standard approach was that firms ensure that all staff had had AML training and that the same was repeated every 18-24mths, depending on the firm’s risk profile. Under the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations 2017 (MLRs), firms are obligated to regularly train their staff to recognize and report suspicious activities.

The SRA review highlights that law firms must understand both the procedural and strategic importance of AML measures. Effective AML training helps prevent staff from inadvertently becoming involved in financial crimes, which can carry severe penalties.

Essential Compliance Steps Identified by the SRA

The SRA’s review outlines several critical areas where law firms need to focus:

Employee Awareness and Education

Employees must be well-informed about money laundering regulations, terrorist financing laws, and related data protection rules.

Continuous Training Programs

Training should not be a one-off event but a continuous process that includes real-life scenarios to enhance relevance and engagement. Customizing training to address specific risks and using interactive methods like case studies are more effective than generic training packages. Employing diverse training methods, including e-learning, workshops, and brief, frequent sessions, improves both engagement and compliance rates.

Comprehensive Documentation

Firms are required to maintain detailed records of training activities, including attendance, materials, and assessments, which must be available for SRA review. As we love to say, when it comes to the SRA if it isn’t documented, it didn’t happen.

The ROLE Framework for Effective Training

To help firms enhance their AML training, the SRA recommends adopting the ROLE framework:

R elatable

Training content should be specific to the roles and risk profiles of the staff and the firm. Generic training won’t be enough. Theory alone won’t be enough. Training needs to reflect the actual scenarios and risk that this firm will face. If you have very different departments, one size will not fit all and training in teams would have more impact.

O ngoing

AML training needs to be continuous, with regular updates to reflect evolving risks. Regular updates on emerging money laundering tactics help staff stay informed and prepared. One of our favourite suggestions is to make AML issues part of the firms overall compliance and engage staff with weekly scenarios or challenges to be solved. This is both fun, inspires a competitive nature and puts what they have learned into the context in which the risk is likely to occur.

L eadership-driven

Active participation from senior management underscores the importance of AML compliance. Gone are the days when senior leaders sighed or rolled eyes at the term AML, as this just instils a disregard or tick box attitude to the firms culture. Firms that provide additional, specialized training for their Money Laundering Compliance Officers (MLCOs) are significantly more likely to be compliant.

E ngaging

Interactive and practical training helps employees retain crucial information and stay vigilant. Combining different formats such as e-learning, in-person sessions, webinars, and informal learning opportunities ensures that training is accessible and effective for all staff. Layering of training (no pun intended) is far more effective than a one size fits all for one time only. Coming at the problem regularly and from different angles is far more effective.

 Common Challenges and Areas for Improvement

The review identifies common pitfalls that firms need to avoid:

Tick-box Mentality

Viewing AML training as a mere regulatory formality rather than integrating it into the firm’s compliance culture. Ticking the box is unlikely to protect the firm.

Generic Training Approaches

Using off-the-shelf training that doesn’t address the specific risks faced by the firm. That training looks nice and cheap until its effectiveness is tested and it fails. Its not just the eye watering fines, think of your firms reputation. Good quality training doesn’t need to be expensive to be effective – you just need to give your training a little tlc.

Inadequate Record-Keeping

Failing to document training activities thoroughly can result in non-compliance during inspections. Comprehensive documentation of all training activities helps firms demonstrate compliance and track staff participation. Lets say it again for those in the back – if its not documented, it didn’t happen.

Next Steps for Law Firms

Call tlc and we can create a cost effective bespoke solution for you.