Call for evidence: UK AML regulatory and supervisory regime – Law Society response
The proposals
HM Treasury (HMT) is assessing the overall effectiveness of the UK’s anti-money laundering (AML) and counter-terrorist financing (CTF) regulatory and supervisory regimes.
HMT called for evidence so that the current regulations can be examined to:
- make sure they are operating as intended
- determine whether the professional body supervisory structure could be improved
The consultation sits alongside a consultation on a 2022 statutory instrument to amend the Money Laundering Regulations 2017.
Read our consultation response
Our view
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. This is a particular challenge for small firms.
The current AML regime places disproportionate compliance obligation on the legal profession, requiring activity that does little to prevent money laundering, the cost of which is ultimately passed on to consumers.
The AML system is designed with the financial sector in mind, so any reforms must address the different issues faced by the legal profession and they must be evidence-based.
The current regime’s ‘tick box’ method undermines the effectiveness and proportionality of the measures and drives up costs for legal services consumers.
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 our members.
Next steps
The consultation closed on 14 October.
HM Treasury is analysing the feedback and has committed to publishing a full review report by 26 June 2022.