Anti-money laundering

HM Treasury review of the Money Laundering Regulations 2017

The consultations

As part of its twin-track approach to reviewing the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), HM Treasury (HMT) sought views on:

Our view

The legal profession plays an important role in the fight against economic crime and takes its anti-money laundering responsibilities very seriously.

While we welcome HMT’s commitment to making the AML regime proportional and effective, the current regime does not promote a risk-based approach.

Instead, it drives ‘tick box’ compliance to satisfy overly prescriptive requirements, which is a particular challenge for small firms.

The current AML system is designed with the financial sector in mind, so any reforms must be evidence-based and address the different issues faced by the legal profession.

For example, enhancing the role of supervisors for suspicious activity reports (SARs) would need to:

  • take into account legal professional privilege weighed against the duty to report
  • consider the serious implications for confidentiality and data protection, as supervisors do not have the appropriate infrastructure to manage SAR-sensitive material

Read our response to the call for evidence on the AML regime

Read our response to the consultation on amendments to the MLRs

What we're doing

  • October 2021 – we called for a risk-based approach to be adopted in our responses to the statutory instrument consultation and the call for evidence
  • Summer 2021 – we took part in a series of targeted engagement sessions with HMT to represent the views of the profession and our members

Next steps

Both consultations closed on 14 October 2021.

HM Treasury is analysing the feedback and is committed to publishing a full review report by 26 June 2022.

We look forward to helping develop and apply a regime that is both proportionate and effective in tackling economic crime as well as being workable for members.

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