The Solicitors Regulation Authority (SRA) will make full use of the proposed new power to issue unlimited fines against solicitors and firms caught up in economic crime, its chief executive has warned.
Paul Philip also pointed to the wide range of offences that this will cover, as set out in the Economic Crime and Transparency Bill, which is currently going through Parliament.
Removing the £25,000 cap on fines the SRA can impose on traditional firms in cases of economic crime would allow it to sanction larger law firms properly, the government said when announcing the measure.
The regulator can already fine alternative business structures (ABSs) up to £250m, and £50m for individuals working in them.
The Law Society has spoken out against removing the cap.
The SRA’s newly published annual anti-money laundering (AML) report highlighted continuing high levels of non-compliance with various aspects of the regime.
Speaking yesterday to the media, Mr Philip described AML as a “quickly developing area of our work”. While most of the non-compliance was what solicitors (but not the regulator) would call “bureaucracy”, he suggested, the profession needed to “wake up”.
“I’m far, far more concerned that that level of sluggishness might allow criminals opportunities to pull the wool over solicitors’ eyes and they inadvertently launder the proceeds of crime.
“Should it come to pass that our fining powers go up to the level the government is suggesting, we will use those fining powers to full extent to make sure that there is compliance in the AML area.”
He added: “The ultimate test is enforcement action against people who either are persistently not complying or seriously derogate from their obligations.”
The definition of economic crime in the bill was “quite widely drafted”, Mr Philip noted, and had “caused a few eyebrows to be raised”. He stressed that the SRA had no input into this.
Schedule 8 of the bill lists the offences that fall within the definition: the common law offences of cheating the public revenue and conspiracy to defraud, and multiple statutory offences under the Theft Act 1968 – including theft and false accounting – the Financial Services and Markets Act 2000, the Proceeds of Crime Act 2002, the Companies Act 2006, the Fraud Act 2006 and the Bribery Act 2010, as well as several others.
Mr Philip said that while the recent increase in the SRA’s fining power from £2,000 to £25,000 was on the grounds of “efficacy, less stress, less delay and less cost”, removing the cap for economic crime was about “the deterrent effect of people realising there are consequences should they engage seriously in laundering money”.
The SRA has long argued that its fining power for traditional firms should be brought in line with ABSs, and Mr Philip said there was no logical reason to remove the cap only in relation to economic crime.
But he acknowledged that there did not appear to be government appetite at the moment to remove it entirely.