The Solicitors Regulation Authority (SRA) has called on the government to make it the sole supervisor of anti-money laundering activity (AML) by all lawyers.
It also backed the Legal Services Board’s (LSB) proposal that the oversight regulator should take on the role currently held by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) in relation to the legal profession.
The SRA’s response to HM Treasury’s consultation on the future of AML supervision argued that the current system was “fragmented and would benefit from rationalisation”.
It backed the option of consolidating supervision in the legal sector in a single regulator, which “balances reducing inconsistencies through reducing the number of supervisors with maintaining specialism in legal supervision”.
It went on: “We believe that the effectiveness of this option would be maximised if we were selected as the consolidated supervisor. We are a multi-disciplinary regulator.
“We have expertise in all areas of legal practice, including those specialist areas supervised by other legal regulators such as the Council for Licensed Conveyancers, Bar Standards Board and the Faculty Office.
Under the current regime, OPBAS oversees nine legal and 13 accountancy AML supervisors, including the law societies and bar councils of the three UK jurisdictions, called professional body supervisors (PBSs)
HM Treasury set out four options for reform of AML regulation in a consultation this summer, without expressing a preference.
The first was ‘OPBAS+’, with greater powers, including to levy fines, the second consolidated professional body supervision under a single legal sector supervisor. The third was to create a new organisation, probably a public body, to undertake the task for both lawyers and accountants, while the fourth would expand this body to include other regulated sectors.
The Law Society of Scotland made clear its opposition to Scottish solicitors being subject to an AML supervisor from south of the border but the SRA said it was prepared to take on the whole UK, or just England and Wales.
It said it currently oversaw 83% of legal sector beneficial owners, officers and managers across the UK, and 95% in England & Wales, along with 76% of firms across the UK and 88% in England & Wales.
Further, it already regulated 77% of notaries public as they were also solicitors and 75% of chartered legal executives, “as well as many barristers and licensed conveyancers”.
The size of the SRA – including 34 staff dedicated to AML work – meant it has “the capacity and capability to take on other regulated populations with appropriate adjustment to our existing resources”. The SRA’s AML-specific annual budget is just over £3m.
It said the move would also “improve system co-ordination between supervisors, law enforcement and oversight regulators”, have the least impact on the costs of regulation and therefore on the consumers of legal services, and “yield the biggest benefit for the prevention and detection of money laundering across the legal service sector”.
Though replacing OPBAS as oversight regulator for the legal sector was not canvassed in the consultation, the LSB proposed it and the SRA response said the LSB “would be well placed” to do the job.
“The reduced number of PBSs removes the need for an oversight regulator to ensure consistency amongst PBS and would make it more efficient and economical to have a single oversight regulator, rather than both OPBAS and the LSB.
“This would also ensure a streamlined and consistent approach across money laundering and other areas of legal regulation…
“Further, in light of its role overseeing the existing PBS in their capacity as legal regulators, the LSB would also be well-placed to ensure that the consolidated PBS and other regulators had clear standards and agreements for investigating matters with a combination of conduct and AML issues going forwards.”
The SRA said it should also take over from HM Revenue & Customs supervision of trust and company service providers that were not currently supervised.