Two Thirds Of CLC Firms Deemed Non-Compliant Following Inspections

Of the 51 on site inspections completed by the Council for Licensed Conveyancers (CLC) in 2019, 34 have been deemed non-compliant.

49 of the inspections were considered routine with two inspections targeted specifically at particular firms.

The statistics will be difficult reading for many CLC regulated firms considering only 29% or 15 firms were generally compliant with CLC regulations.

The majority of firms considered non-compliant struggled with anti-money laundering regulations and adhering to accounts codes.

In particular, many firms were struggling to adopt AML policies and procedures, implement risk assessments, keep adequate records of staff training and Money Laundering Reporting Officer (MLRO) enhanced training and documenting the source of funds.

The CLC confirmed that 24 of the non-compliant firms made the suggested changes, most within the 14-day time frame, and are now generally compliant with the regulator.

Although non-compliance is far from ideal, the CLC were quick to point out that many issues were minor, easily resolved and posed no immediate risk. However, rigorous standards are helping to ensure safeguards and the quality of legal services remains high.

A CLC spokesperson said:

“What matters is not that 34 of 51 practices were non-compliant, but that 34 practices were considered non-compliant at the time of inspection. The reason why the practices were rated as non-compliant is because the CLC takes a hard line approach to AML compliance and any practices that had any AML issues identified were automatically given an overall non-compliance rating.

“A practice being identified as non-compliant at an inspection is not always a matter of high concern as some issues that lead to a non-compliant rating can be comparatively minor and pose no immediate risk to the client or lender. It is how they respond to the issues identified that matters, as we firmly believe that working with the practice to bring them into compliance is the right approach.

“As the Regulatory Supervision Managers who spoke at the LSF conference explained, we seek to support firms in achieving compliance wherever possible before resorting to enforcement action, though we always reserve the right to enter into the formal disciplinary process. Indeed, of the 34 practices found to be non-compliant at the time of inspection, 24 are now compliant.

“This demonstrates that our practices want to be compliant and take the necessary action quickly in order to achieve compliance, most within the 14 day time frame.

“The main issues of non-compliance were an absence of enhanced MLRO training since the introduction of the Money Laundering Regulations 2017 or an appropriate practice-wide risk assessment. Following the identification of the need for enhanced training for MLROs, the CLC has developed material and a course is being rolled out over the coming weeks.

“Where, such as in these cases, issues are identified as being systemic, rather than particular to an individual practice, we use a wide range of approaches and tools to support compliance. This includes training workshops, roadshows and webinars along with support material and digital toolkits.

“Our primary role as a regulator is to protect the public and we monitor the performance of our regulated community closely and take swift action where necessary to protect clients, as can be seen from the two interventions that we carried out this year.”

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