3 October 2023, London – The Legal Services Board (LSB) has advocated for assuming responsibility for the supervision of anti-money laundering (AML) in the legal sector, currently overseen by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). This move has sparked a debate among legal regulators, including the Bar Standards Board (BSB) and the Institute of Chartered Accountants in England and Wales (ICAEW), who argue in favour of bolstering OPBAS’s powers.

The Current Landscape

OPBAS currently exercises oversight over nine legal and 13 accountancy AML supervisors, including the law societies and bar councils across the three UK jurisdictions.

Proposed Models for Reform

In a consultation initiated this summer by HM Treasury, four potential reform models were presented, with no stated preference. These options include:

-Enhancing OPBAS with increased powers, including the ability to levy fines.

-Consolidating professional body supervision under a single legal sector supervisor.

-Establishing a new organisation, likely a public body, to oversee AML for both lawyers and accountants.

-Expanding this supervisory body to include financial services, gambling, estate agency, and other regulated sectors.

LSB’s Argument for Expanded Role

The LSB’s response to the consultation emphasised that the Economic Crime and Corporate Transparency Bill, currently in its final parliamentary stages, introduces a new regulatory objective to the Legal Services Act – detecting and preventing economic crime. The LSB contends that this development necessitates legal services regulators to actively take steps to prevent and detect economic crime and places this responsibility within the LSB’s purview.

The Legal Sector’s Uniqueness

The LSB acknowledges its support for OPBAS but highlights that certain proposed additional powers for OPBAS may not align with the legal regulatory framework. Therefore, the LSB suggests transferring the supervisory role to ensure greater consistency in AML supervision across legal services.

Legal Regulators’ Perspective

However, legal regulators, including the BSB, ICAEW, Society of Trust and Estate Practitioners (STEP), and the Law Society for Scotland, argue in favour of empowering OPBAS.

-The BSB asserts that strong evidence is needed to justify radical change and supports the OPBAS+ scenario to maintain progress.

-ICAEW advocates for OPBAS+ to preserve previous investments, align with European AML efforts, and minimise upheaval.

-STEP emphasises feasibility and cost-effectiveness, suggesting that enhanced OPBAS powers, such as fines and assessment capabilities, would improve the current regime’s effectiveness.

-The Law Society of Scotland opposes a single UK-wide AML supervisor, favouring devolved supervision over a one-size-fits-all approach.

The Ongoing Importance of AML Compliance in Legal Practice

This debate reinforces the critical role of AML compliance in the legal sector. Regardless of the supervisory structure, lawyers must remain vigilant in their efforts to prevent and detect money laundering and economic crime. The outcome of this discussion will have a lasting impact on legal professionals’ AML obligations and the measures in place to uphold compliance standards.