During July, the SRA published the latest Risk Outlook 2015/16 with an overview of their risk priorities. The identified risks fell neatly into either an internal risk: such as service standards, acting with integrity and standards of service; or external risk: notably bogus law firms, money laundering and cybercrime.
In August, we asked you what you perceived to be the major risks as identified in the latest SRA report. The findings were startlingly clear as the chart below shows.
Internal risks
There is no obvious concern with any of the SRA’s ‘internal’ risks, with firms confident in the way they conduct themselves and act with clients, which is probably to be expected. After all it is unlikely that any of these issues would be aired publically in a survey!
External risks
Of the external risks, the primary concern was money laundering, followed by bogus law firms, and lastly cybercrime and security. Perhaps money laundering, or should I say the prevention of it, may well have a higher profile at the moment on the back of the SRA’s focus on this during the first half of the year.
Bogus law firms
‘Bogus law firms’ has been identified as a high risk area for around two years now and was identified in SRA Risk Review in 2014. The number of reports to the SRA about bogus law firms continues to increase and so does the number of scam alerts, with 183 issued in 2014 which is up from 97 in 2013 and only 19 in 2012. A worrying trend.
Cybercrime & information security
The final issue of cybercrime and security is perhaps the glue that joins these other issues up. Firms holding client accounts are vulnerable to the risk of theft of confidential data which could lead to the theft of client money held in these accounts. The most common types of cybercrime in the legal sector are ‘phishing’ emails, cloned websites and the interception of solicitor-client emails.
So rather than viewing these three issues separately, perhaps they can be seen as one with a secure IT system supported by strong processes being the key? Without all three being addressed there will always be a weakness to be exploited.
With cybercrime and fraud on the rise and increasingly sophisticated being used it can feel like conveyancers are in the eye of an increasingly worsening storm. However there are some simple steps and a lot of excellent information readily available to help with these risks.
Practical steps to take
SRA
http://www.sra.org.uk/risk/risk.page
http://www.sra.org.uk/risk/resources/risks-associated-bogus-firms.page
http://www.sra.org.uk/risk/resources/risk-money-laundering.page
The Law Society
The Law Society has published a Practice Note in August, providing advice on what to do should a firm fall victim to a scam.
Searches
To assist firms in complying with the legal and regulatory requirements there are some inexpensive searches available for them to include as part of their conveyancing service, which includes:
