‘Double jeopardy’ warning over FCA money laundering switch


FCA: Needs to be under duty to share evidence with SRA

The Financial Conduct Authority (FCA) taking over the supervision of anti-money laundering (AML) activity risks delay and double jeopardy, the Solicitors Disciplinary Tribunal (SDT) has warned.

It recommended that the FCA be placed under a binding duty to share evidence promptly with the Solicitors Regulation Authority (SRA) where other conduct issues arise in a case.

Responding to the Treasury consultation on implementing the shift to the FCA – which has already attracted a host of negative responses from other legal bodies – the SDT said it did not seek to dispute the underlying policy decision and was instead concerned to ensure the move was workable.

It cautioned that conduct issues were often “multi-factorial”, meaning that an alleged breach of the AML rules sat alongside other breaches not covered by the FCA, such as prohibited banking practices and misuse of client accounts, and conflicts of interest, recklessness or dishonesty arising tangentially from AML failings.

The switch to the FCA “should not slow down” referrals of such conduct to the SRA, the tribunal said. It was concerned about delay, particularly if the FCA “investigates first but material is not then shared promptly with the SRA”.

The SDT said: “A statutory or otherwise binding duty to share evidence promptly with the SRA, where conduct issues may arise, would minimise delay and protect the efficiency and fairness of SDT proceedings.”

It added: “In designing any new framework, it is essential that legal professional privilege and client confidentiality are fully protected and that the integrity of the SRA accounts rules regime is preserved.”

The FCA’s new role also risked “double jeopardy, where the same conduct is considered by the FCA, SRA and SDT without coordination”, the response went on, as well as duplicative fact-finding, leading to inconsistent outcomes.

There should be a statutory prohibition or equivalent clear rule against “duplicative investigative action where an SRA/SDT proceeding is already underway involving the same factual matrix, supported by primacy/coordination principles”.

There needed also to be clear delineation between supervisory breaches (FCA) and professional misconduct (SRA/SDT), as well as joint guidance clarifying referral criteria and pathways for enforcement and information-sharing.




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