The UK plans to reform “time-consuming and costly” AML rules for the legal profession.

It has been reported that reform of “time-consuming and costly” anti-money laundering regulations is on the horizon as the legal profession has been hit with a glut of fines for breaching the rules.

Ministers have announced that they will unveil a package of reforms by the end of this year, with Treasury officials saying in a Whitehall industrial strategy paper that they will make the system “clearer and more proportionate”.

It is understood that ministers consulted with senior officials at the society over the industrial strategy amid concerns that complying with the existing rules is getting too expensive. A conservative estimate puts the cost to UK plc at about £34 billion.

The government’s strategy paper for legal services was not solely devoted to reforming the anti-money laundering rules. It also touched on funding technology at smaller firms, implementing an online dispute resolution process, and artificial intelligence-enabled case management.

Solicitors and their professional body are concerned that the legal profession is involved in only a small proportion of cases of actually washing dirty cash, but that lawyers are increasingly facing prosecution for relatively minor issues around noncompliance with the detail of the regulations.

To be fair to the watchdog, experts note that all regulators have been under pressure to tighten compliance. But law firms are at the front of the line of fire, with some understood to employ teams of more than 40 specialists to ensure adherence.

This explains the deep sigh of relief across the profession at the revelation that ministers appear to have heard the message that the rules are too onerous.

Colette Best, a regulation specialist at the firm Kingsley Napley said:-

• “Firms will be relieved to know the much-promised streamlining of anti-money laundering rules is coming soon,”

Best is also a former director at the SRA, where she specialised in the anti-money laundering regimen. She describes the present regulations as

• “Time-consuming and costly to comply”,
• Adding that “anything that clarifies and simplifies obligations will be welcome” across the solicitors’ profession.

But Best also sounds a warning note, arguing that “a tricky balance to strike” remains.

• The issue for ministers will be to meet the “basic global standards” for investor confidence and to ensure that businesses can continue to trade internationally.
• “It will be interesting to see whether the rhetoric on simplification and burden is achievable in reality,”

Best says

• “The changes will only prompt growth if they both reduce burden and still align with international rules — finding that sweet spot will be critical.”

The Law Society’s president Richard Atkinson says that solicitors and others.

• “Legal professionals are committed to fighting financial crime, but compliance measures must be proportionate, targeted and risk-based to be effective without stifling access to justice or placing undue strain and financial cost on firms and practitioners”.

Zulon Begum, a partner at CM Murray, notes that

• “Notable gaps” remain.
• “While the strategy supports AI adoption and international promotion of English law, it underplays the urgent need for significant funding and investment in the civil justice system,”  

She adds that

• “Delays and under-resourcing in the courts threaten the UK’s competitive edge.
• Without timely access to justice, the attractiveness of English law as a governing law and the UK as a litigation forum could diminish.”

SOURCE

https://www.thetimes.com/article/07a8eab4-d2e5-49aa-a971-6647682aeb2e

SRA FINES

• The Law Gazette, the website published by the Law Society, the solicitors’ professional body, reported this week that over the decade since a raft of regulations were implemented, “dozens of firms have been fined five-figure sums”.
• Just over the past fortnight, a smaller law firm in southeast London and Kent was clobbered with a £64,000 fine for failing to comply with the anti-money laundering regulations. The regulator said the fine, which included a 30 per cent reduction to take account of mitigating factors, equated to 1.6 per cent of the firm’s annual turnover.
• The Solicitors Regulation Authority has faced allegations of being overly zealous in its interpretation and enforcement of the rules, and the Gazette pointed out that some solicitors have branded the regulations as “too punitive” and imposing “a disproportionate burden”.