Sanctions: Medium risk of barristers being used as breach enablers
Chambers need to have “mechanisms and guidance in place” to ensure their barristers are complying with UK sanctions, the Bar Standards Board (BSB) has said.
Its annual anti-money laundering (AML) report also said that some property and planning barristers “were not being consistent” as to whether some of their work fell within the money laundering regulations (MLRs).
With compliance to the fore in the wake of the sanctions imposed on Russia, the BSB said it assessed the current risk of the Bar being used to enable breaches as “medium”.
The report said it had “noted tension in delineating responsibility between chambers and barristers” when it came to compliance.
“Chambers felt there were practical difficulties due to confidentiality obligations as self-employed individuals and individual responsibility for compliance.
“Our view is that chambers’ management committees need to have mechanisms and guidance in place to assure themselves that risk is appropriately and consistently assessed, and compliance controls are consistently applied.”
The BSB said chambers were “keen to have the support of Bar Council guidance to help ensure consistency across the profession”, and the Bar Council had set up a working group to develop it.
Meanwhile, members of the Property Bar Association and the Planning and Environmental Bar Association “were concerned that they were not clear whether certain work that they do falls within the scope of the MLRs”.
The BSB said that, following the work it had been doing with chambers to improve the accuracy of declarations, the two associations “had identified that barristers were not being consistent in their declarations and sought clarity”.
The regulator said it had discussed the issue with one of its advisory panel experts and the Bar Council, which was preparing to issue updated guidance.
“Following release of this guidance, we will conduct some supervision reviews of relevant persons.”
Inaccurate declarations by both barristers and chambers were highlighted in last year’s AML report, which found that 11 chambers did not know whether their barristers had declared they were subject to the MLRs.
The BSB said that 478 self-employed barristers declared this year that they carried on work covered by the MLRs, up from 431 last year, along with eight BSB entities.
It took action on three potential MLR breaches in the financial year 2022-23 and assessed, but took no further action, on another three. Two cases remain under investigation.
Mark Neale, director general of the BSB, said the role of the legal sector regulators in relation to economic crime had been “clarified” by the Economic Crime and Corporate Transparency Act 2023, which received Royal Assent last week, introducing a new regulatory objective into the Legal Services Act 2007 to promote the prevention and detection of economic crime.
“There is already significant collaboration between the government, the regulators, the professions and law enforcement to tackle this threat. The Bar is playing its part.”
A separate BSB review of sanctions compliance, published in June, found commercial barristers generally aware of the risks of unwittingly engaging with a designated person without a licence and that they were taking a cautious approach to compliance.
