Legal Eye Independent AML Audit Scheme Assist CQS Firms

Leading risk and compliance consultancy Legal Eye, has been assisting firms across England and Wales further to CQS changes that were published in February of 2022.

Effective from May 1st, 2022, the CQS has integrated the Anti-Money Laundering (AML) audit into a firm’s Practice Wide Risk Assessment, imposing a new obligation for CQS firms to demonstrate an AML risk assessment.

The structural modifications to the CQS framework, implemented in February 2022, expanded the sections from six to seven. Notable additions include the incorporation of “Structure and Strategy” and “People Management,” while “Supervision and operational risk management” was removed. A comprehensive glossary now precedes the seven numbered sections, offering clarity and guidance.

Since then there have been more revised requirements, effective from July 2023, under Section 3 – Regulatory Matters, which necessitate a documented individual AML risk assessment on every file, a documented fraud risk assessment on every file, and enhanced stipulations in high-risk fraud scenarios. Additionally, a Practice Wide Risk Assessment (PWRA) for AML purposes, audited within the last 15 months, is mandated.

Conducting an independent AML audit has been highlighted as a critical necessity for compliance. However, firms may encounter challenges in executing internal audits due to time constraints, lack of expertise, and the risk of producing inefficient audit reports inviting further scrutiny from regulators.

An Independent AML Audit, as conducted by Legal Eye, encompasses essential components:

• Review of AML policies, controls, training records, suspicious activity reports, and risk assessments.
• Evaluation of the efficacy of existing AML procedures and their application.
• Analysis of automated systems utilised by the firm.
• Staff interviews and file reviews.
• Recommendations for procedural improvements and the creation of an audit report.
• Post-audit review to ensure the implementation of recommendations.

Legal Eye steps in to provide expert assistance in compliance with AML regulations. Through a meticulous audit process spanning a minimum of 2.5 days, our team scrutinises your firm’s AML policies and controls. Pinpointing areas needing enhancement, the team propose actionable changes, and identify any non-compliance with regulations and internal procedures.

Moreover, Legal Eye offers a certification demonstrating your firm’s commitment to compliance, ensuring a robust defence against regulatory scrutiny.