Regulation 21 Audits

Regulation 21 of the Money Laundering Regulations (MLR) includes a requirement for law firms covered by the MLR to conduct an independent audit of the adequacy and effectiveness of its AML policies, controls and procedures, where appropriate to the size and nature of its business.

The audit must be carried out by someone independent and although that person could be someone from within the law firm, they must have all the relevant skills and knowledge of AML and audits. The auditor can't be the firm's MLRO, MLCO or a member of the compliance team. It's unusual for small to medium sized firms to have an employee or Partner from outside those roles who will have the required knowledge, skill or time.

If a firm decides it isn't required to carry out an independent audit, the reasons for that decision must be recorded and be justified to the SRA, upon request.

This all suggests that the best placed provider of a truly independent Regulation 21 audit of a law firm is someone external, with relevant knowledge and skills and with the experience to provide the service.

That's where Beal Cooper Compliance Ltd can help. Contact us to find out more detail about how it would work for your firm.

How does it work?

We can work with firms to provide a remote, on-site, or hybrid audit process.

We'll have an initial conversation with you to gain an understanding of how your firm operates. Then, we'll provide a timetable to cover the following parts of the audit:

A review of the Firm Wide Risk Assessment and all current AML policies, processes and procedures.
A review of a number of files, covering a cross-section of types of work. The number will vary from firm to firm, but must be sufficient to allow a view of practical engagement with AML requirements.
Interviews with an agreed number of relevant employees.
Provision of a comprehensive, written report.

What is the outcome?

Once you have considered the audit report we'll provide, you will understand which AML processes and procedures are working well and whether anything needs to be (or could be) improved.

You'll have confidence that, in the event of a future AML audit by the SRA, you've complied with the requirement of an independent audit under Regulation 21.

What will it cost?

The cost of the audit will be a fixed fee and will depend on the number of documents to be considered, and how many file reviews and interviews with employees are needed. Please contact us for more information and to have a no-obligation discussion about how we can work with you.