Lawyers face new anti-money laundering levy

Sunak: Money for HM Land Registry

Lawyers are to face a levy to help fund new government action to tackle money laundering and ensure delivery of its economic crime plan, Chancellor Rishi Sunak announced in yesterday’s Budget.

Overall, the Budget offered little directly for the legal profession, with the increase in the Ministry of Justice’s (MoJ) budget unlikely to allow much in the way of improved legal aid funding.

The economic crime levy will be paid by all firms subject to the Money Laundering Regulations and be additional to ongoing public sector funding. The Treasury said it would publish a consultation on the levy later this spring.

The economic crime plan, published last July, highlighted the danger of professional enablers and said “the criminal exploitation of accounting and legal professionals – particularly those involved with trust and company service provision – poses the greatest money laundering threat as these professionals can be used to set up corporate structures which enable high-end money laundering”.

It has 52 action points, including a ‘transformation programme’ for suspicious activity reports, which it estimated would cost £100-150m to implement. Lawyers have long been criticised for the relatively low number of reports they make.

Another action point is to strengthen the consistency of supervision by the professional bodies that handle anti-money laundering compliance and counter-terrorist financing (AML/CTF) work, such as the Solicitors Regulation Authority.

This is done by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), for which the 22 legal and accountancy regulators that it covers already pay through a levy.

The plan said that, by the end of 2019, OPBAS would ensure the supervisors have appropriate AML/CTF strategy plans in place to address areas of improvement it has identified.

“OPBAS will monitor how these strategies are implemented, including formally contacting professional body supervisors on a regular basis to ensure they meet the deadlines and follow up with them to ensure they are suitably addressing ongoing actions.

“Following this, OPBAS will continue to monitor the professional body supervisors to deliver more consistent AML/CTF supervision by March 2021.”

Mr Sunak also said the government would allocate £14m to Companies House “to enable it to continue with vital capital projects to help its work tackling economic crime and anti-money laundering”.

Law Society president Simon Davis responded: “Our sector already devotes substantial resources to fighting financial crime. Now plans for a levy, to be paid by firms subject to the Money Laundering Regulations, have been announced, I would urge ministers to ensure that any plans are evidence based, and do not inadvertently distract resources from the fight against economic crime.”

In other Budget announcements, HM Land Registry (HMLR) is to receive £392m to transition from a trading fund into part of central government.

The Budget ‘Red Book’ said: “This funding includes £350m that will be offset by HMLR returning its income to the Exchequer, and £42m of funding to allow HMLR to continue with its ongoing project to digitise land registration in England and Wales, and enable further innovation in the property market and the wider UK economy.”

There will be £3m to fund a Royal Commission on the criminal justice process so that work can “begin at pace over the next year”.

The MoJ’s budget is set to go up from £7.8bn to £8.3bn in 2020/21, £200m more than was in the then Chancellor Sajid Javid’s spending review last autumn.

In the wake of that boost, MoJ permanent secretary Sir Richard Heaton said the extra money would be spent on “keeping the lights on” and “a third of the extra stuff we need”, such as a new IT system.

Mr Davis said: “Austerity is not ending in the justice sector. While £23m has been made available for the ‘wider justice system’, including a £5m trial of specialist courts for domestic abuse cases, £15m to improve the government’s offer to victims and £3 million for the Royal Commission on criminal justice process, it is a drop in the ocean and does not come close to the hundreds of millions cut from legal aid.

“It is positive to see the recognition of the trauma experienced by those affected by domestic abuse and we welcome the commitment in the Budget to early intervention and rehabilitation measures for perpetrators.

“However, this needs to go hand in hand with proper investment in legal aid services. The 2012 legal aid cuts have left the legal aid system in crisis.”

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