FSA told to start money laundering checks on firms

The Financial Services Authority (FSA) should inspect law firms to ensure they are abiding by money laundering regulations, a hard-hitting report recommended this week.

The report published by Transparency International - a non-governmental organisation devoted to combating corruption - hit out at the allegedly low level of reporting of money laundering cases by solicitors.

It quoted David Lock, chairman of the National Criminal Intelligence Service's (NCIS) service authority - its governing body - from a speech he made last September, when he said: 'In our view, professional bodies representing accountants and lawyers need to do much more to ensure that those amongst their membership who do turn a blind eye are speedily detected and removed from the profession.'

The report said: 'A professional's duty to his or her client cannot be seen as an excuse for poor "know your client" assessments or for turning a blind eye to money laundering.'

It recommended that 'there should either be a programme of independent on-site visits (for example by the FSA) to lawyers' firms to review compliance with anti-money laundering requirements'.

Failing this, it said the FSA should have the power to 'approve the nature, rigour, and frequency' of inspections carried out by the Law Society.

Mr Lock said this week: 'I would hope that - prompted by this report - the Law Society will look very carefully at the rigour of its inspections.'

He refused to endorse FSA involvement in the inspection process, but added: 'This is as much an issue about the reputation of the legal profession as it is a compliance issue.'

A Law Society spokesman said: 'The Law Society is already expanding its programme of on-site visits to include all firms.

These visits are comprehensive and routinely include checks to ensure that money laundering reporting procedures are in place.'

Jeremy Fleming