In addition to our on-site inspection and desk based review programmes we also adopt a thematic approach to supervision.
We carry out thematic reviews to better understand how supervised firms are implementing a particular aspect of their AML obligations, for example we might focus on risk assessments, staff training or suspicious activity reporting. Thematic reviews may also be used to assess in more detail a current or emerging risk or trend within the legal sector, or to obtain a more indepth anlysis of a higher risk practice area or client type across different firms.
By focusing on specific risks or concerns we can increase our knowledge of the effectiveness of firms’ AML compliance, improve our understanding of the ML/TF/PF threats and vulnerabilities within our supervised population, and help gather information to inform our overall regulatory approach. This in turn enables us to tailor our guidance and outreach accordingly and make clear our expectations.
From November 2021, we will be carrying out a thematic review of firms’ Business Risk Assessments.
Under AML Regulations 8(1) and 8(2), supervised firms and sole practitioners are required to carry out and maintain a documented BRA to identify, assess and understand the inherent risk of money laundering, terrorism financing and proliferation financing to which the business is exposed.
We have chosen Business Risk Assessments (“BRA”) as the topic of our first thematic review based on the importance of getting the BRA right. The BRA is the foundation of an AML compliance framework and drives a risk-based approach. We have also identified through our general supervision some deficiencies and weaknesses in in this area.
On completion of our thematic review, we will publish our findings in a report which will include consolidated examples of good and poor practice on an anonymised basis. It is hoped that supervised firms will find the report useful when reviewing their BRA. We will also consider how supervised firms have incorporated findings from the report as part of our ongoing supervision.