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UK Lawyers plead for temporary exemption from latest Money Laundering Regulations

It's pathetic: according to a report in The Law Society's Gazette, the official publication of the Law Society of England and Wales, "The Legal Sector Affinity Group, whose members include the Law Society and Solicitors Regulation Authority, has told the Treasury that a ‘sensible supervisory approach’ to the new regulations would give firms and individuals time to adjust to their new obligations." Apparently the membership body and the regulator haven't had time to prepare their Guidance. Too busy with finding new crazy obligations to impose on an already over-stretched profession, one might conclude.

Let's be clear: neither the Law Society nor the Solicitors (sic: it's too right-on to use the correct apostrophe) Regulation Authority have been taken by surprise by the Money Laundering Directive that came into force yesterday and affects the entire regulated sector.

After all: both bodies have consistently and persistently fought against the effective implementation of counter-money laundering laws and regulations in respect of lawyers since the the early 1990s, even going so far, in the case of the Law Society in the mid 1990s, as to (incorrectly) tell its members that the Regulations did not apply to them.

They have known for months exactly what the EU's Fourth Money Laundering Directive contained. Therefore, they also knew, bar the odd misplaced comma, etc. exactly what the latest version of the Money Laundering Regulations would say. True, it's got a new and immediately forgettable name (The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017) and there was a period in which the final draft was in limbo while Parliament was dissolved (for some reason the Publication failing to make the cut before the dissolution in May) but in truth nothing of any significance has changed. The official publication was last week, on the 23 June, as Parliament returned and the in-force date set by the EU Directive, the 26th June, has been met.

The new Regulations are a mess and are a reflection of a muddled thinking in legislative drafting that is common across many countries. Worse, they are now highly prescriptive, a bad thing on so many levels.

But they are what they are and if anyone should be able to understand them and to comply with them surely it should be lawyers.

But apparently, lawyers, are not equipped to read, comprehend and apply the Regulations without Guidance from their "club" and regulator.

This is simply stupid. The regulator spends time adopting trendy policies such as requiring (and threatening disciplinary action for failure) solicitors to file annual diversity statements. Yet diversity has failed the profession by encouraging recruitment and admission policies that do not apply the simple test of who is most suited for and best at the job in hand.

To now claim that they have not had sufficient time to produce a guidance that is, given the prescription in the Regulations, largely otiose, is disingenuous.

The process of reaching the Regulations is so convoluted, open and takes place over such a long period of time that there are only two reasons for asking for "a grace period for adjustment." The first is that it is a device to continue the delay that lawyers worldwide have been creating to avoid their obligations under primary law and the second is that the regulators, etc. simply failed to prepare for an event that was known many months in advance. Or it's both.

Readers can take their choice: the bottom line is this: HM Treasury should reject the request for more time and tell lawyers to read the law and regulation and comply with it because no intervention from any membership body or regulator is required and, from the 26th June, if they aren't doing it right, they are committing a criminal offence.

Then prosecutions should be brought against the large firms that are, undoubtedly, behind the continued attempts at delay and have not, in their UK and overseas offices, put the necessary measures in place. .

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Nigel Morris-Cotterill is a retired solicitor.
www.countermoneylaundering.com

Author: 
Nigel Morris-Co...

 


 

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