Anti-money laundering (AML) supervisors across the UK legal sector have warned that a new report published by the Home Office and HM Treasury on the risks of money laundering and terrorist financing lacks balance and, by its own admission, is not backed up by robust intelligence.
Responding to the National Risk Assessment (NRA) - a government evaluation of money laundering risks in the UK - legal professionals across England, Scotland, Wales and Northern Ireland said the level of engagement with the legal sector by those charged with drafting the report was not as thorough as the government had hoped.
Anti-money laundering experts in the UK legal profession have called for better engagement between the government and the legal sector so that future versions of the NRA articulate a more balanced view of the professions, supervisors and law enforcement.
The services provided by lawyers involving high value transactions can expose them to money laundering risk. Legal professionals working on the coal face of money laundering prevention require law enforcement agencies to be more active in sharing intelligence so that they can keep abreast of ever-changing criminal scams to manage that risk and prevent attempts to abuse legal professional services for financial gain.
According to the National Crime Agency (NCA), the legal sector has made more information available to its members with respect to tackling money laundering than any other sector. However, representative bodies for lawyers are warning that spotting scams is a continual challenge.
Commenting on the NRA report, Law Society president Jonathan Smithers said:
'The UK Anti Money Laundering regime is one of the toughest in the world, offering clients high levels of protection. We are therefore disappointed that this misleading report has designated the legal sector as high risk. Shortcomings in the intelligence gathering in preparing this report has resulted in what we believe is a misleading assessment. We want to work with the intelligence agencies to address this. We also want to work with the government to ensure future versions of the National Risk Assessment represent a more balanced view of the professions, supervisors and law enforcement.'
'While the identification, arrest and prosecution of legal professionals complicit in money laundering is crucial, it is difficult to avoid the conclusion that the role of lawyers is overstated both in this report and in the government's Organised Crime Strategy. The claimed impact of 'professional enablers' is not supported by arrest or prosecution statistics.'
Scott Devine, chair of the Legal Sector Affinity Group of the UK AML Supervisors' Forum said:
'Our ability to keep our members well equipped to battle money laundering depends on quality and timely AML intelligence from law enforcement. We are therefore pleased that the NCA has agreed to implement our proposal of a 'Legal Sector Engagement Group' designed to discuss practical issues and coordination of Suspicious Activity Reporting related matters in the legal sector, as well as better sharing of money laundering typologies and intelligence with the sector.
'Constructive engagement with the NCA, HM Treasury, the Home Office and all other relevant government and law enforcement agencies is essential, as an Action Plan to address the genuine risks facing the legal sector is developed ahead of the FATF Mutual Evaluation Review of the UK's AML regime due to take place in 2017. '
Notes to editors:
HM Treasury is responsible for appointing AML/CFT supervisors and for the regulations which set out the role of the supervisors and gives them powers to effectively monitor their respective sectors.
There are 27 supervisors which oversee a range of firms including financial institutions, credit institutions, law firms, accountancy firms and casinos. The supervisors are a diverse group including large global professional bodies, smaller professional bodies, and a number of public sector organisations.
Supervisors attend the UK AML Supervisors Forum which meets three times a year. Supervisors also meet periodically in smaller affinity groups. There are three affinity groups; accountancy, legal and the public sector made up HM Revenue & Customs, Financial Conduct Authority, the Gambling Commission and the Insolvency Practitioners Service.
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