Barristers: No evidence of need for new regime
There is “absolutely no evidence” that barristers and other advocates need a new anti-money laundering (AML) and counter-terrorism financing regime, their UK representative bodies have argued.
The combined Bars said that, if a new regime had to be imposed, the “least disruptive option” should be chosen, which in this case would mean giving more powers to the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
Frontline regulators, such as the Bar Standards Board and Institute of Chartered Accountants in England and Wales, also backed a beefed-up version of OPBAS in their responses to a consultation launched this summer by HM Treasury on reform of the AML and counter-terrorism financing supervisory regime.
The Legal Services Board argued [1] that it should take over responsibility for AML supervision in legal services from OPBAS.
The four options put forward by the Treasury [2] were an OPBAS with greater powers, consolidated professional body supervision under a single legal sector supervisor, a new body to carry out the task for lawyers and accountants, and an expanded body that would also include financial services and other regulated sectors.
In a joint response, the Bar Council of England and Wales, the Faculty of Advocates in Scotland and the Bar Council of Northern Ireland said the consequences of the reforms could have “very serious implications” for the legal sector.
They should only be taken forward if there was “a principled basis for doing so, supported by clear and compelling evidence that such reforms will yield demonstrable and sustainable benefits” to the public and profession.
“There is absolutely no evidence to say that barristers and advocates now require different supervision in relation to AML, or that the public would benefit from doing so.”
The Bars called for a “risk-based approach” and said the government should “resist succumbing to fatigue or simplistic generalisations” about the challenges in implementing the approach across a diverse range of practitioners.
“There has been no change in the risk-profile of barristers and advocates nor the fundamental scope of the work they are performing.”
In the case of barristers and advocates, AML was an “integrated element of a much more complex and far-reaching regulatory and supervisory regime that is working effectively” because the professional body supervisors (PBSs) beneath OPBAS understood the nature of the work.
The Bars said it would be an “unjustifiable and retrograde step” for the Treasury either to adopt a single supervisor for the whole legal sector or a ‘one-size fits all’ supervisor across the professions.
In the absence of “compelling evidence for change”, the “least disruptive option” put forward by the Treasury should be selected, giving more powers to OPBAS, the ‘OPBAS+’ model.
“It is nevertheless essential not to squander the opportunity that this would create for necessary reform within OPBAS. There would be collective benefit if an expanded OPBAS was also an enhanced OPBAS.”
The Bars went on: “Reform could enable it to add improved value by being a more strategic, informed and accountable organisation which works in partnership rather than opposition. Structural change without this cultural change will regrettably fall short of the reform that is required.”
In its response, the Council for Licensed Conveyancers (CLC) backed the OPBAS+ option over the others, which it described as “detrimental to the regulation of legal services and to the success of AML in the legal sector”.
It argued that, by carving AML out of regulators’ responsibilities, a single supervisor would reduce regulators’ insight into and understanding of the individual firms and community they regulate. This would also require “new coordination and resource devoted to cooperation between the individual regulators and the single PBS”.
The OPBAS+ model could provide “some improvements” to supervisory effectiveness and co-ordination if there was “clear accountability” on how it carried out its expanded role – but it also urged the Treasury to consider retaining the status quo as another option.
“While there might be some regulators that need further advice and/or support to reach a particular standard in a particular year, we consider that this is an indication that the oversight system is working rather than a sign of failure.
“It shows that weaknesses or challenges are being identified and there is a clear route to address them. This is how the oversight regulators and the PBS progress together.”
The CLC said it did not believe its costs would “materially decrease” if it did not supervise AML, because a similar number of staff would be needed to perform other supervision duties.
“Separation of general legal regulation/supervision and AML supervision is likely to increase the burden on practices as they would then have two supervising bodies.
“It is likely to result in duplication, confusion and possibly gaps in supervision. It is almost certainly going to cost the regulated community more as they would need to fund a separate supervision body.”