The Financial Conduct Authority will take on the task instead
The UK government has removed from the UK Solicitors Regulation Authority the power to oversee anti-money laundering matters involving law firms, reported the Law Society Gazette.
According to UK chancellor Rachel Reeves, the Financial Conduct Authority will shoulder the responsibility instead. The move is part of what was described as a “blitz on business bureaucracy” to bolster the government’s economic growth agenda, per a statement published by the Gazette.
The transfer of responsibility comes after a consultation initiated in 2023, with the FCA being designated the single professional services supervisor (SPSS) for AML. The watchdog will collaborate with the professional services sector, regulators, and law enforcement agencies.
The Law Society of England and Wales cautioned the government regarding the cost implications of switching to an SPSS model.
“In its new role, the FCA should have a greater focus on proportionate risk-based regulation, rather than blind compliance. There must also be a careful transition between the SRA and the FCA, so that cost and complexity risks are mitigated for our members and their clients. It is vital that representative bodies, such as the Law Society, continue to play a central role in shaping and contributing to legal sector-wide guidance,” president Mark Evans said in a statement published by the Gazette.
He added that while the Law Society would not have gone for the change, it would work together with the government and the FCA on the model’s implementation to ensure that members were not negatively affected by the regime changes.
The SRA was first tasked with overseeing AML compliance in 2007. Its authority was broadened considerably in 2017 under Money Laundering, Terrorist Financing and Transfer of Funds regulations, which required law firms conducting in-scope work to maintain an updated firm-wide risk assessment as well as to implement compliant AML policies, controls and procedures. By October 2023, the SRA had 34 staff dedicated to AML and a yearly budget exceeding £3 million.
