AML Registration Process

**Update June 2020 - Disclosure Scotland are now processing all applications again (see above for more detail)**

Due to the Covid-19 crisis, the Disclosure Scotland service is currently only processing applications for people working on sectors deemed vital at this time (Healthcare, Pharmaceutical,  Childcare, Social work etc.). Legal firms are therefore currently unable to fulfil the criminal record checking and disclosures required of them by the MLRs.

It is important that firms retain the ability to appoint BOOMs during this period.

We have therefore highlighted this issue to HM Treasury, and they are content that, on a temporary basis while Disclosure Scotland are operating under these restrictions, firms or new sole practitioners can provide a statutory declaration that the BOOM(s) does not have a relevant criminal conviction as part of the application. Checks must then be sought as soon as reasonably practicable once Disclosure Scotland are able to process applications.

The statutory declaration is available here. This should be signed by the BOOM concerned, scanned and then uploaded to the AML Registration portal in the Members Area by the MLRO/designated officer in lieu of the Disclosure Scotland Certificate when undertaking the registration work

If you or your practice unit offers any services that are subject to the 2017 Money Laundering Regulations, your firm's MLRO or designated person (for firms with 10 or more partners) will need to keep the firm’s AML registration up-to-date, complete with Disclosure Scotland Certificates or DBS (If your work in England) for each existing beneficial owner, manager or officer (BOOM). Please see Q3 for definitions. 

The MLRO should use their own solicitor ID and password (these are the same credentials used to renew their practicing certificate each year) to complete the registration. Those services subject to the Regulations are listed below:-

• The buying and selling of real property or business entities
• The managing of client money, securities or other assets
• The opening or management of bank, savings and securities accounts
• The organisation of contributions necessary for the creation, operation or management of companies
• The creation, operation or management of trusts, companies, foundations or similar structures
• Forming companies or other legal persons
• Acting or arranging for another persion to act;
• as a director or secretary of a company
• as a partner of a partnership; or
• in a similar capacity in relation to other legal persons
• Providing a registered office, business address, correspondence or administrative address or other related services for a company, partnership or any other legal person or legal agreement
• Acting or arranging for another person to act, as;
• a trustee of an express trust or similar legal arrangement; or
• a nominee shareholder for a person other than a company whose securities are listed on a regulated market

If your firm does not offer any of the services listed in Question 1 or changes its business to the extent that it does not or will not offer any of these services, it may be that you do not need to complete the AML registration process.

You will need to satisfy yourself on the legal position. Individual firms are responsible for deciding whether they are operating outwith the scope of the regulations having read through and applied R.12 to their business activities

Please contact us at [email protected], as we may need a formal confirmation of this.

Yes. Please use our online registration portal (accessed through the sign in at the top of the page) to update us if any beneficial owners, officers and managers leave or join your firm or if an existing member of staff take up a BOOM position. Firms are reminded that this process must be completed prior to a new BOOM being appointed, as per the requirements of r.26

You will be required to use the portal to upload the individual's full details.  Under normal circumstances this includes a valid Disclosure Scotland/DBS certificate/interim statutory declaration. 

However, due to the Covid-19 crisis, the Disclosure Scotland service is currently only processing applications for people working in sectors deemed vital at this time. Legal firms are therefore currently unable to fulfil the criminal record checking and disclosures required of them by the Money Laundering Regulations.

It is important that firms retain the ability to appoint BOOMs during this period.

We have therefore highlighted this issue to HM Treasury, and they are content that, on a temporary basis, firms or new sole practitioners can provide a statutory declaration that the BOOM(s) does not have a relevant criminal conviction as part of the application. Checks must then be sought as soon as reasonably practicable once Disclosure Scotland are able to process applications.

The statutory declaration and further information are available here.

If your practice unit has any individuals that under the 2017 Regulations are considered a beneficial owner, officer or manager of the practice unit, the MLRO of the firm needs to keep their details up-to-date through the online portal.

Please note that for those individuals occupying more than one role - i.e. a beneficial owner who is also an officer - those individual's details need only be provided once.

These definitions will help you decide who in the practice unit is a beneficial owner, officer and manager contained in the Regulations.

Where appropriate, with regard to the size and nature of your business, you may need to appoint a board level person with overall responsibility for compliance with these Regulations. Please also provide details of that individual via the appropriate drop down within the online form.

While we want to assist you in interpreting the UK Government regulations, you will need to satisfy yourself on the legal position of your firm and if it is operating within the scope of the Regulations. If having read this guidance you are still unsure, you should consider obtaining specialist advice on your position.

Beneficial owner

If you are a ‘body corporate’, ie a company (not listed) or a limited liability partnership (LLP):

A beneficial owner is:

1. any individual who exercises ultimate control over the management of the body corporate

This would mean an individual who, regardless of their position as director, shareholder or member is able to exercise control over the management of the body corporate in the sense of being able to control the composition and/or voting of the board of directors and the decision they take.

1. any individual who ultimately owns or controls (in each case whether directly or indirectly), including through bearer share holdings or by other means, more than 25% of the voting rights in the body corporate

This means an individual who owns 25% or more of the voting rights in the body corporate. They could hold these rights directly, in their own name, or indirectly, for example, via a relative or a company.

1. an individual who controls the body corporate.

A person will control the body corporate if they qualify as a Person of Significant Control in accordance with the Companies Act 2006, or if the person was an undertaking, the body corporate would be its subsidiary.

If you are a partnership:

A beneficial owner means any individual who:-

1. ultimately is entitled to or controls (in each case whether directly or indirectly) more than a 25% share of the capital or profits of the partnership or more than 25% of the voting rights in the partnership.
2. satisfies one or more of the conditions set out in Part 1 of Schedule 1 to the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (references to people with significant control over an eligible Scottish partnership); or
3. otherwise exercises ultimate control over the management of the partnership.

Please note that salaried partners and equity partners below the 25% threshold are likely to be required to seek approval in their capacity as an officer or manager of the practice unit. As above, you will of course need to satisfy yourself on the legal position.

Officer

The definition of ‘officer’ in the Money Laundering Regulations is wider than those individuals who are legal officers of the company. We set out some guidance below, however we would stress that the question of who is an officer in your practice unit is dependent on the individual management structure of each practice unit.

We cannot provide a list of job titles that would meet the definition of ‘officer’ under the regulations, as it is a question of fact as to whether an individual exercises control, or purports to exercise control. In our view, an individual would not be purporting to have control simply by their job title, there would need to be some element of control.

If you are a company (not listed) or LLP:

An officer includes director, secretary, chief executive, member of the committee of management, or a person purporting to act in such a capacity, or an individual who is a controller of the body, or a person purporting to act as a controller.

If you have any directors, a company secretary or a chief executive that are not already approved, they will need approval and to be included in your application. You must also have approval for those who sit on either the most senior decision-making committee in your business (such as a board, an executive committee or an executive board in each case where there is no higher committee or board to defer to or seek approval from) or a committee that has been given the authority to make decisions on behalf of the board/senior decision-making committee.

An officer under this definition may consist of lawyer and non-lawyer employees such as HR and/or finance directors. In terms of who would have 'control' of the body, the persons of significant control guidance found above in relation to beneficial owners.

If you are a partnership:

This means a partner, and any manager, secretary or similar officer of the partnership, or a person purporting to act in such a capacity.

You must consider the MLR definition above and satisfy yourself as to whether anyone else in your practice unit is a manager, secretary or person purporting to act in such a capacity not already approved by us.

Manager

It appears that the definition of manager in the Regulations is intended to be wider than the definition of ‘officer’. Again, each practice unit will need to consider their own management structure against the definition below.

In relation to a practice unit, it means a person who has control, authority or responsibility for managing the business of that practice unit, and includes a nominated officer.

This would include any person who has sufficient authority to take decisions and who exercises control over the management of the business. it includes your Money Laundering Reporting Officer (MLRO) and any others who have sufficient knowledge of your practice unit's money laundering and terrorist financing risk exposure and has the authority to take decisions around this.

Board Level Person

Dependent upon the size and nature of your business you may need to appoint a board level person with overall responsibility for your practice unit's AML compliance. That individual will need to be part of the senior management of your business, who has at least part of the responsibility for practice unit wide business development, strategy and governance. Please note that this individual may be the same person as the MLRO. We anticipate that many practice units in Scotland will not need to make this appointment.

Yes, all firms that we authorise are required to register. However, as long as all legal services are being provided through the main entity, the MLRO or designated person can declare that you are not carrying out any of the activities covered by the money laundering regulations and you will not need to appoint any of the relevant individuals.

All joiners, movers or leavers’ details must be submitted with a current Disclosure Scotland Certificate or DBS (If your work in England or Wales) for them. For those joining from a BOOM position in another firm, we will accept certificates dated within six months of the date of the application.

Approval to act as a BOOM of a practice unit is not valid if the person in question has been convicted of a relevant offence. A 'relevant offence' is determined by reference to a list of offences in Schedule 3 of the Regulations.

HM Treasury has advised that any self-declaration provided by a BOOM stating that they do not have a relevant unspent criminal conviction is NOT sufficient to satisfy the requirements on the supervisory authorities in terms of the Regulations. A basic disclosure certificate will be required. If you have such a certificate for another purpose, that will be acceptable provided it is dated to within six months of date of the application for approval.

If you are living or working in England or Wales, you will need to decide whether you require a DBS certificate - visit the Gov.uk Disclosure and Barring service for more information

Please complete the form, confirming to us that such a conviction has been identified and upload a copy of the Disclosure Scotland Certificate. We will then review your application and contact you in due course.

The practice unit's MLRO is responsible for this ongoing requirement. MLRO's are encouraged to thoroughly review the information prior to submission. Please note that for practice units with 10 or more partners it is possible to nominate an assistant to the MLRO as the firm’s ‘designated person’ who can complete the data entry. The MLRO remains fully responsible for any errors, inaccuracies, or omissions on the form.

There is no fee for completion of the application for ongoing approval under the Regulations. You will need to pay for the cost of the basic Disclosure Scotland Certificate for any new benefifical owners, officers or managers who do not hold a current certificate - currently £25 per application.

We will contact you as soon as possible about approval. Please continue to operate your business in the normal way prior to any contact.