Compliance: high cost as UK solicitors make 12,740 disclosures compared to 15 in Germany

A report by a European lawyers' organisation has exposed the 'stark contrast' between the 'harsh' implementation of anti-money laundering laws in the UK compared to the rest of Europe - with UK lawyers submitting thousands more reports to authorities than their European counterparts.


The report - exclusively revealed to the Gazette this week - comes as a separate survey of more than 350 lawyers, accountants, bankers and regulators reveals that the cost of compliance in the UK is significantly higher than in other countries.


The report by the Council of Bars and Law Societies of the European Union (CCBE) showed that solicitors in England and Wales made some 12,740 disclosures to authorities last year under the Proceeds of Crime Act 2002 (POCA). Only around 15 reports were made in Germany, with similarly low numbers throughout the rest of Europe.


The report revealed that five solicitors have been convicted under POCA in the UK. Most other countries had not seen any convictions against lawyers, while one lawyer has been convicted in Germany.


CCBE legal adviser Peter McNamee said: 'The [second] EU money laundering directive lays down minimum standards, and not all countries have gone to the same extreme as Britain has done with its implementation through the Proceeds of Crime Act 2002. For example, Greece has yet to implement either the first or the second money laundering directive, despite a deadline for implementation of June 2003. Solicitors in the UK are also being cautious and concerned in their approach to complying with the legislation.'


He added: 'These directives are going too far, too soon. We called for time for the dust to settle before the third directive is to be implemented, but our words have not had much impact.'


Law Society President Edward Nally said: 'The Society continues its campaign to make the reporting obligations under POCA more targeted and proportionate. Its intervention in the Bowman v Fels case brought some clarity for consumers and the legal profession in the UK and reduced the reporting burden on solicitors.'


Meanwhile, research commissioned by the City of London Corporation and the Institute of Chartered Accountants in England and Wales revealed that 84% of UK lawyers thought anti-money laundering legislation was 'too severe' in proportion to the risk of an offence taking place - compared to just one-third of international lawyers who thought their domestic legislation was too harsh.


More than 85% of UK lawyers rated the cost of compliance as 'high' or 'very high', compared to just 22% of foreign lawyers. The survey concluded that the UK economy is approaching a 'tipping point' where it is likely to become competitively disadvantaged because of the high cost of compliance with anti-money laundering legislation.