On 25 July, the Solicitors Regulation Authority (SRA) published its Risk Outlook for 2016/17 (the Report). The Report provides the legal services sector with an indication of the areas on which the SRA is focusing its attention and why. The Report also provides an indication as to how the SRA is currently helping to control certain risks in the public interest and how firms should be managing risk.

The Report identifies seven priority risks; namely the lack of access to legal services, standards of service and considering vulnerability, information security, independence and integrity, protecting client money, money laundering and diversity. This summary will focus on the money laundering aspect of the Report.

The SRA explained that the risk of money laundering was described as `significant' to the legal sector in the UK's National Risk Assessment (NRA). The NRA identified that there are gaps in the knowledge of the legal sector regarding its role in preventing money laundering. However, the SRA indicated that it did understand the difficulties encountered by solicitors in relation to money laundering; for example, due to legal professional privilege. Despite this, the SRA highlighted that the number of Suspicious Activity Reports passed to the Financial Conduct Authority remains low when compared with the size of the industry and the nature of its activities. The SRA indicated that the National Crime Agency also reported similar findings. As a result of its thematic review, the SRA said that generally firms have effective processes, procedures and controls in place but reminded firms that they must keep these policies up to date.

The SRA also reminded solicitors and firms that they have obligations under the Money Laundering Regulations 2007, Proceeds of Crime Act 2002, Terrorism Act 2000 and SRA Handbook 2011. It encouraged firms to take a risk-based approach to anti-money laundering (AML) policies and controls and also provided examples of how firms can implement such procedures cost-effectively. For example, by using online resources (such as the SRA's website) they can research the warning signs they should look out for to prevent money laundering.

The SRA explained that the UK Government's Action Plan on AML and counter-terrorist financing and the introduction of the Fourth EU AML Directive is likely to put further pressure on the legal sector. The SRA also highlighted the consequences of failing to check or report possible money laundering activities by referring to the findings of the Solicitors Disciplinary Tribunal in which solicitors were struck off or fined as a result of failing to prevent or report possible incidents of money laundering.