Changing the conversation: is it time to focus more on guidance and less on enforcement?
A recent survey conducted by Access Legal asked compliance officers what issues kept them awake at night. Highly prevalent for the conveyancing sector, anti-money laundering (AML) compliance came out on top, cited by 84 per cent of respondents, followed by SRA thematic reviews / questionnaires (34.5 per cent) and continuing competency changes (31.5 per cent).
These findings were discussed at a recent legal sector panel hosted by Access Legal, featuring frontline practitioners, as well as representatives from the SRA and the Legal Services Board. When talking about anti-money laundering compliance and what more could be done to help practitioners meet their obligations, an interesting question was raised – do we spend too much time focusing on enforcement as opposed to guidance and support?
One frontline head of compliance certainly thought that was the case. Pointing to ongoing high levels of stress and burnout amongst individuals across the industry, he questioned if the ongoing emphasis on enforcement surrounding AML compliance was the best option or if more publicity should surround positive guidance and support instead.
The observation regarding stress levels is, of course, an astute one, particularly within conveyancing in relation to the often extreme workloads that were driven by the Stamp Duty Holiday. In fact, the most recent study undertaken by the International Bar Association (IBA) highlighted that 46 per cent of legal sector employees feel under stress from competing demands, 44 percent were working long hours and 48 per cent faced unrealistic time pressures.
So, the question is, does a focus on enforcement when it comes to AML simply add to that pressure?
During the session, the SRA pointed to the fact that, as a regulator, its job is to take action when someone is not doing what they are supposed to, but that it also issues a great deal of resources that are not just enforcement focused. This includes guidance from the Legal Sector Affinity Group, advice for tax advisors, improvement advice as a result of firm visits, handy hints and tips and video guidance on its YouTube channel. It was also pointed out that The Law Society is robust at issuing guidance and supportive materials.
It is clear that the resources are out there, but for many frontline workers, the main takeaway messages seem to be very much about enforcement. So, maybe this whole debate comes down to a matter of perception? After all, it can often be very easy to focus on perceived negatives and additional ‘stress factors’ when you are already in a stressful mind-set.
The use of technology was discussed as a way of easing some of the pressure and it was agreed that although you cannot fully outsource AML compliance, there are tech providers who can certainly support firms in remaining compliant. Open banking and electronic systems for identifying and verifying clients
were cited as operational examples. There is a general agreement that technology has a place in the suite of tools that can be used to control AML risk, but firms really do need to take the time to understand what that tech is doing.
The use of technology around AML is certainly something that is set to be a keen focus for the SRA in the coming years as it looks to better support the adoption of innovative technology and provide firms with relevant information to make the right choices by actively testing prototypes and sharing that information on an open source basis.
It is evident from this discussion that support and guidance is out there for those working in conveyancing and there are plans to enhance those resources even further. However, with the increasing stresses and strains of the past few years, that message can sometimes get lost and all that can be seen is the more heavy-handed messaging on enforcement.
One final point from the panel discussion and where the solution to this problem may rest; The SRA pointed to the fact that this should not be a one-way street. The support and guidance is out there, but if some of those resources are not hitting the mark or people have ideas about useful subject matters, content or how things could be presented to make them more accessible, they would like to hear from you. And, of course, this should come from the wider firm and not just compliance managers as AML compliance is something that everyone has to both buy into and adhere to.
You can view the full panel discussion here.
Brian Rogers, Regulatory Director, Access Legal