Financial Crime World

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Law Firms Must Adopt Robust AML/ CFT Programs to Mitigate Money Laundering and Terrorism Financing Risks

Port Louis, Mauritius - The Attorney General’s Office (AGO) has emphasized the importance of law firms adopting a robust Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) program to mitigate the risks of money laundering and terrorism financing.

According to guidance issued by the AGO, law firms must establish policies, controls, and procedures to identify and manage effectively the risks of money laundering and terrorism financing. This includes conducting a risk assessment to determine the adequacy of their systems, controls, and processes, as well as regularly reviewing and updating their AML/CFT program.

Key Elements for Effective Risk Management

To ensure effective risk management, law firms must implement the following key elements:

  • Appointment of Key Officers: Designate a compliance officer (CO) at senior management level, responsible for implementing and monitoring the firm’s internal controls and regulatory requirements.
  • Screening of Employees: Implement screening procedures to ensure high standards are maintained when hiring employees, including verification against the UN sanctions list.
  • Ongoing Training: Have an ongoing training program for directors, officers, and employees to raise awareness of laws and regulations related to money laundering and terrorism financing.
  • Independent Audit: Conduct an independent audit on a yearly basis to assess the effectiveness of their AML/CFT measures.

Customer Due Diligence (CDD) Measures

Law firms must also undertake CDD measures by identifying and verifying the true identity of their clients using reliable sources. This includes:

  • Obtaining information on beneficial owners for corporate vehicles, which are susceptible to misuse for money laundering or facilitating money laundering.
  • Verifying the identity of clients using reliable sources.

Importance of a Robust AML/CFT Program

The AGO guidance emphasizes that a robust AML/CFT program is essential for law firms to comply with regulatory requirements and mitigate the risks of money laundering and terrorism financing.

Source: Guidance on the risk-based approach to the anti-money laundering and terrorism financing framework for law firms, foreign law firms, joint law ventures and foreign lawyers. (AGO 2022)