Proposals to hand over anti-money laundering regulation to the Financial Conduct Authority should be put on hold, the Law Society has urged.

The representative body said today the government had not showed how the introduction of a ’single professional services supervisor’ would avoid adding extra cost and administrative burden onto the legal sector.

The Society said the new model ‘poses major operational and strategic risks for the profession while offering no proven benefits’.

The creation of a single supervisor to oversee AML regulation would effectively transfer this responsibility from the Solicitors Regulation Authority to the FCA. That would be law firms would be subject to dual regulation and the Society says the proposal does not reflect the realities of legal practice.

Society president Mark Evans, said: ‘The AML reforms risk greater fragmentation, not simplification, and fly in the face of the government’s own growth agenda. The speed at which the government is consulting on the reforms is a concern, as these changes will fundamentally reshape AML/CTF oversight across all sectors.’

Mark Evans

Evans: 'Reforms risk greater fragmentation'

Source: Darren Filkins

Evans added that solicitors are committed to delivering effective, proportionate sustainable reform but will be concerned about how these changes would be implemented.

In particular, the Society has highlighted potential issues around the protection of client confidentiality, compromising and weakening the confidentiality and integrity of suspicious activity reports and whistleblowing protections.

It also points out in its response to the Treasury’s consultation that potential duplicate regulation is not addressed, while more detail is needed about the transition arrangements.

Evans added: ‘The AML proposals currently fall short and risk adding complexity without delivering meaningful reform. We urge the Treasury to consider whether a further period of consultation is warranted allowing supervisors, professional bodies and practitioners to contribute before any final decision is made.’

 

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