Unveiling the government’s industrial strategy back in June, HM Treasury promised ‘clearer and more proportionate’ anti-money laundering rules as part of plans to boost the professional services sector. AML is commonly perceived to be the biggest regulatory burden facing law firms.
That pledge was followed last month by the announcement that AML supervision of solicitors is to be streamlined, via its transfer from the SRA to the Financial Conduct Authority.
Representative bodies have already voiced fears that the compliance burden will actually become heavier in consequence. They are unlikely to be pacified by a Treasury consultation published last week. ‘A degree of dual regulation’ will follow when firms are overseen by two different regulators, with requirements to register and interact with both.
Important questions remain unanswered, not least about fees. As one might expect, the FCA states that it will recover the day-to-day costs of AML/counterterrorism supervision of professional services firms through charges to those it supervises. But we aren’t given any ballpark figures. Another consultation will follow ‘in due course’. It is, however, suggested that the charges could be based on ‘the number of premises from which a firm or connected person operates’.
Law firms will also be required to register with the FCA – for which they are likely to incur another fee.
I share the scepticism of one Gazette reader, who pointedly commented: ‘Of course, the amount of money we pay to the SRA each year will decrease to reflect the fact they are no longer the AML regulator (spoiler alert, it won’t!).’ Another observer, meanwhile, gloomily speculated that the SRA will end up sanctioning firms for professional misconduct after they have already been fined by the FCA for AML breaches – ‘as it has done in the past when solicitors have already been fined by the courts for motoring offences’.
Such hypotheticals will certainly not be tested for some time. Possibly years. The consultation foresees the eventual withering away of the FCA-housed Office for Professional Body Anti-Money Laundering Supervision (OPBAS), which supervises the 25 professional body supervisors in the legal and accountancy sectors. But in the meantime, says the Treasury, OPBAS may actually need new enforcement powers, including a new power to levy fines – presumably in case frontline supervisors prove insufficiently adroit amid the transition.
A bureaucratic imbroglio awaits.
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