The anti-money laundering (AML) reporting regime should be relaxed for solicitors and others in the private sector, a House of Lords committee concluded today.

Failure to report a suspicious transaction which is based on a minor criminal offence should not be prosecuted, according to the House of Lords Home Affairs Sub-Committee of the European Union Committee, publishing its report on money laundering and the financing of terrorism. The Proceeds of Crime Act 2002 should be amended so that such a transaction would not need to be reported, the committee said.

The committee urged the Serious Organised Crime Agency (SOCA) to calculate the costs and benefits of the suspicious activity reports (SARs) regime, and give more feedback to the private sector when a SAR has led to a successful operation.

The committee also urged the government to improve international cooperation to stop money laundering. Five EU member states have failed to implement the latest AML directive, while a bilateral agreement between the EU and US has not been ratified despite negotiations concluding more than six years ago.

Law Society chief executive Desmond Hudson claimed a victory for Chancery Lane, and said he was ‘pleased that the committee has adopted our view’. The Society gave oral, written and supplementary evidence to the committee.

‘We have appreciated the commitment from SOCA and other government agencies in recent years to improve the AML regime, but still see there is scope for making it more effective and proportionate,’ he said. ‘We are pleased that the committee has encouraged government to take steps to more fully assess the costs of compliance and adequately demonstrate the benefits obtained.

‘The Law Society remains committed to working with government agencies to develop effective law reform which is appropriate for the whole regulated sector on this issue.’