Lack of clarity: government defends draft against criticism


Key points of the government's draft regulations adopting the third money laundering directive 'are so unclear that it will be impossible for practitioners to interpret them in practice', the Law Society warned this week.



The warning - contained in a letter to the Treasury - came after Ed Balls, the lead minister for financial crime, insisted that industry-led guidance approved by his department would be sufficient to help practitioners understand their obligations. Mr Balls added that whether a firm had followed such guidance would be a factor in court proceedings assessing compliance.



Calling for an early meeting between the Law Society and Treasury officials, President Fiona Woolf highlighted two areas of continuing concern for solicitors.



The first is the decision to transpose the definition of beneficial ownership of trusts contained in the directive into national law 'despite clear evidence of its un-workability in a common law context'.



The second major concern is the failure, in the Law Society's view, to transpose fully article 15 of the directive, which would allow UK firms to rely on identity checks carried out by a third party in another member state.



Ms Woolf said: 'In the interests of clarity, workability and the competitiveness of UK plc, the City of London and the legal profession the government must listen to practitioners and rewrite these regulations.'



Alison Matthews, money laundering reporting officer at national firm Irwin Mitchell, added: 'The emphasis in the directive is on a risk-based approach but in the UK we will not have that luxury.'



A Treasury spokesman said it welcomed comments from key stakeholders as part of the consultation.



Philip Hoult