The Law Society has called on the government to ensure the legal professions is not subject to “double regulation” when the responsibility for regulating anti-money laundering (AML) switches over to the Financial Conduct Authority.
Law Society president, Brett Dixon, said the organisation supported efforts to ensure robust and effective action against economic crime, adding the proposed reforms “represent a seismic change to law firms and the legal sector.”
Following the second reading of the Financial Services and Markets Bill in the House of Commons this week the Law Society is calling for greater clarity on how the proposed regulatory changes will work in practice.
“The new Bill, however, must not result in over regulation and should consider how legal services work in practice” said Brett, highlighting the risk of duplication of responsibilities when more than one regulator has an interest in the same issue, including where FCA supervision may overlap with legal sector regulation.
“This must include careful assessment regarding the Bill’s effect on law firm owners, managers and Money Laundering Reporting Officers, whose businesses and positions risk being the most affected by the changes.
“Implementing robust safeguards and conducting thorough assessments of how the changes will work in practice are essential to prevent regulatory duplication and protect the core principles of legal practice.”
In June of this year the government announced the FCA is to become the single professional services supervisor (SPSS) for AML by from late 2028 with a phased transition that aims to reach completion by 2030.
While detail to date has been light speaking at the Law Society’s Economic Crime Conference in October the FCA said it was “not looking to catch (firms) out” where firms are “ trying to do the right thing.”
What we know so far
To date the FCA has announced in relation to AML supervision, it will:
- maintain a public register of supervised firms
- require registration as a condition of carrying out AML-regulated activity
- gain powers to cancel registrations where firms are no longer undertaking regulated activity
- apply strengthened ‘fit and proper’ assessments (Regulation 58) across legal and accountancy sectors.
An emphasis on “strong collaboration” across the public and private sectors remains “essential” to protecting the UK from financial crime and strengthening the collective response to emerging threats, the FCA said.
