UK solicitors are unfairly burdened by anti-money laundering regulations compared with many of their European counterparts, the Law Society has warned.

In its submission to the House of Lords Inquiry into Money Laundering and the Financing of Terrorism, Chancery Lane also calls for a Europe-wide investigation into whether the benefits of the anti-money laundering regime outweigh the burdens.

Three EU member states have so far failed to implement the latest EU legislation on anti-money laundering, while other member states have decided not to extend their anti-money laundering regimes to include lawyers. In the UK, solicitors face criminal sanctions for failure to comply with anti-money laundering laws.

The Society says that firms in ‘strict compliance’ countries – such as the UK – are effectively subsidising efforts elsewhere, as their intelligence is disseminated to less strictly compliant countries. Differing levels of implementation also harm the competitiveness of firms in strict compliance countries, the Society argues.

Mark Stobbs, director of policy at the Law Society, said: ‘The big issue in the UK is the breadth of the offences and the use of criminal sanctions. Most other countries have only civil sanctions.

‘The government, EU and Financial Action Task Force need to look at the issues of how anti-money laundering regulations meet the challenges they are meant to, and whether they are proportionate.’

The Home Affairs sub-committee of the House of Lords select committee on the EU is conducting the inquiry.