\n<\/p>\n
UK law firms are bracing themselves for a money-laundering crackdown as ministers race to improve the City\u2019s reputation ahead of a fresh financial crime review.<\/p>\n
The Financial Conduct Authority (FCA) has been designated as the new anti-money laundering watchdog for the legal sector, in a move that experts warn could result in \u201csharper\u201d penalties and ultimately reshape the industry.<\/p>\n
The decision to consolidate regulation, which at present is spread across nine separate supervisors, is part of the government\u2019s wider efforts to combat the UK\u2019s reputation as a hub for \u201cdirty money\u201d. The National Crime Agency estimates that \u00a3100bn is being laundered through or within the UK every single year, with the help of enabling entities such as law firms.<\/p>\n
The City\u2019s poor reputation for money laundering came into focus in 2018, following an assessment by the Financial Action Task Force (FATF), the Paris-based global crime watchdog. Its report highlighted significant weaknesses in the UK\u2019s anti-money laundering supervisions and called on the government to \u201cstrengthen\u201d oversight, particularly across the accounting and legal sectors.<\/p>\n
The UK\u2019s national risk assessment on money laundering and terrorist financing has also classed the UK legal sector as \u201chigh risk\u201d for every one of its assessments since 2017.<\/p>\n
Now, with a fresh FATF review looming in August 2027, government reforms are being pushed into a high gear. \u201cThe timing of this shift is no coincidence,\u201d Priya Giuliani, a financial crime investigator and partner at the consultancy HKA, said.<\/p>\n
While there is currently no deadline for the changing of the guard, Giuliani said the \u201curgency is there for the UK to present a credible, consistent, and effective supervisory system to FATF by August 2027\u201d.<\/p>\n
The FCA\u2019s pending role as money-laundering supervisor for the professional services sector \u2013 which also includes accounting firms and trusts \u2013 follows a two-year government review that found inconsistent oversight, duplication across more than 20 regulators, and gaps in information shared with police. For the legal sector alone, the FCA will be taking over the responsibilities of nine supervisors, most notably the Solicitors Regulation Authority (SRA).<\/p>\n
Giuliani says that while the SRA has historically taken a more \u201ccollaborative, guidance-led approach\u201d, the FCA will have \u201csharper swords\u201d to punish wrongdoing. The SRA has limited powers, and a \u00a325,000 cap on fines, although larger fines can be imposed if the SRA refers firms to tribunal.<\/p>\n
In the year to April, the SRA issued 86 fines worth \u00a31.5m under its anti-money laundering powers, with penalties ranging from \u00a31,520 to \u00a3300,000. Its largest fine was on par with the FCA\u2019s smallest \u2013 the latter issued six anti-money laundering fines last year, ranging from \u00a3289,000 to \u00a339.3m and totalling \u00a382m.<\/p>\n
The FCA\u2019s takeover could also lead to law firms facing large hurdles to start operating in the UK, HKA said. Figures it has gathered show the FCA rejected 44% of the 275 applications it received in the 2023-24 financial year, while the SRA accepted all 218 firms that applied.<\/p>\n
\u201cThe FCA brings sharper scrutiny, broader powers, and a data-driven lens,\u201dGiuliani said. \u201cLegal firms must be ready.\u201d<\/p>\n
Steve Smart, the executive director of enforcement and market oversight at the FCA, said: \u201cFighting financial crime is a priority for the FCA and we have experience in anti-money laundering supervision which we will bring to bear. We intend to take a data-led and proportionate approach \u2013 with a focus on partnering with firms to identify and disrupt crime.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
UK law firms are bracing themselves for a money-laundering crackdown as ministers race to improve the City\u2019s reputation ahead of a fresh financial crime review. The Financial Conduct Authority (FCA) has been designated as the new anti-money laundering watchdog for the legal sector, in a move that experts warn could result in \u201csharper\u201d penalties and<\/p>\n","protected":false},"author":1,"featured_media":39920,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[56],"tags":[3095,1790,661,17840,175,2062,4737,1534],"class_list":{"0":"post-39919","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-crime-justice","8":"tag-crackdown","9":"tag-financial","10":"tag-firms","11":"tag-laundering","12":"tag-law","13":"tag-money","14":"tag-ready","15":"tag-sector"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/39919","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39919"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/39919\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/39920"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}