When the National Crime Agency recently reiterated its 2016 claim that solicitors are ‘professional enablers’ of financial crime, the profession was predictably irked. ‘Lazy and populist’ was one of the more polite retorts.
But does the watchdog have a point? In 2018, when the number of SARs filed to the agency climbed 10% to a record 464,000, lawyers submitted just 2,660. A red flag in its own right, surely?
In fact, it is rather more complicated than that. Calling for more targeted anti-money laundering laws, the Law Commission noted last July that investigations are being distracted by the flood of low-level reports, amid evidence in some quarters of defensive reporting.
The commission also found that while the legal sector does not produce the same volume of SARs as, for example, banks, those which are submitted may be more complex. ‘The amount of resources required to conduct due diligence and lodge these disclosures may not be proportionate to the value of the criminal property involved or the seriousness of the crime in every case,’ it added.
Indeed, looked at in the round, the annual figures surely underline the need for a sweeping overhaul of the regime. Red flags concerning suspected money laundering led to just 40 arrests across 28 cases last year. This prompted the Law Society to note that the large volume of total reports with limited or zero intelligence value is the key challenge to overcome.
The SARs reform programme has been running for more than a year and will be a key area of focus for the government’s new Economic Crime Strategic Board, of which the Society is a member. While that is welcome solicitors remain beholden to the present regime despite its evident flaws. To that end, the government has this month reinvigorated its Flag it Up campaign, which points lawyers toward advice and a powerful set of tools to help them make SARs of the requisite quality.
Encouragingly, in a poll conducted as part of the campaign, the vast majority of law firms said anti-money laundering was their top priority in 2019, ahead of boosting revenue and retaining clients. Those with more to do can access support through the Society’s own helpline and AML resources.