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Firms falling under the MLR 2017 are required to develop a comprehensive written firm-wide risk assessment (FWRA), also known as a practice-wide risk assessment (PWRA).

The obligation to create such an assessment is outlined in Regulation 18 of the MLR 2017. This risk assessment must be tailored to suit the scale and nature of the business, taking into consideration several key factors:

  • Your firm’s customers
  • The countries or geographic areas in which you operate
  • The products or services which your firm provides
  • Your firm’s transactions
  • How your firm’s products and services are delivered

The primary objective of implementing a FWRA/PWRA is identify money laundering risks that your firm currently faces or may encounter in the future. This assessment facilitates the consideration of strategies to mitigate these risks effectively, therefore enabling your firm to adopt a risk-based approach in its anti-money laundering efforts.

Having a comprehensive firm-wide risk assessment in place serves as a foundation for developing appropriate PCPs tailored to your firm’s specific risk profile. Fee earners within the firm may also need to consult this assessment when evaluating risks at the client and matter levels.

Your firm’s PWRA/FWRA is required to be reviewed, updated, and approved to ensure its relevance and effectiveness over time.

Additionally, under Regulation 18A of the MLR 2017, firms are obliged to assess the risk of proliferation financing to their business. This assessment can either be conducted separately or integrated into the firm-wide risk assessment.

Detailed guidance on conducting a proliferation financing risk assessment is available in the Legal Sector Affinity Group guidance document.

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