Press release: Spotlight calls time on legal sector AML supervisors

In its latest detailed analysis of the performance of the professional bodies that police lawyers for money laundering, Spotlight on Corruption finds that a step change in effectiveness is needed to keep dirty money out of the UK.

The ‘Broken Record’ report – which reviewed the latest statutory reports on anti-money laundering from the nine legal sector supervisors – found that, despite some bright spots of best supervisory practice, long-standing and fundamental problems remain. These include:

• Ongoing high rates of non-compliance with AML rules, with non-compliance rates still sitting at roughly 30% among English solicitors and over 50% among Scottish solicitors assessed, with particularly alarming levels of non-compliance among high-risk firms working in conveyancing; 
• Inconsistencies in supervisors’ strategies, powers and sanctions resulting in huge discrepancies in enforcement outcomes, with the biggest fine of an English firm hitting £500k in 2023/24 while fines against Northern Ireland solicitors are capped at £3k; 
• Continuing reluctance by some supervisors to resort to tough sanctions for serious and recurring AML failings, with only two individuals being struck-off for AML failures across the legal sector in 2023/24;
• An inability by the Solicitors Regulation Authority to land major blows against the largest law firms despite almost doubling its enforcement actions and bringing in 771% more in fines over the last year.

With HM Treasury poised to determine how the UK’s AML supervisory regime should be reformed to show much-needed progress ahead of a crucial visit by the global financial crime watchdog FATF, root and branch reform is needed.

A single statutory AML supervisor for the non-financial professional services offers the best way forward to address the ongoing weaknesses in the legal sector. But consolidation must build on some of the incremental gains that have been made.

The report makes five key recommendations to inform the Treasury’s ongoing review of AML supervision:

1. Relieve failing professional body supervisors of their duties as an urgent priority within a carefully managed transition to consolidated AML supervision – including two that the Office for Professional Body AML Supervision (OPBAS) recently found clearly ineffective.
2. Establish best supervisory practice including granular risk assessments, better strategic targeting of high-risk areas, and more ambitious enforcement.
3. Retain, integrate and build sectoral and regional AML expertise in any new AML supervisory structure.
4. Work towards a consolidated public register of the regulated sector.
5. Expand thematic work and cross-sectoral information-sharing.

Dr Helen Taylor, Spotlight’s Senior Legal Researcher and author of the report, said: 

“After six years of listening to the same broken record, it is now clear that the UK’s current system of AML supervision of the legal sector is not up to the job, despite the best efforts of OPBAS. With a FATF review looming in 2027, now is the time for the government to call time on this fragmented system and consolidate AML supervision of the non-financial professional services.”