Barristers, chambers and BSB entities need to be aware of the risk of becoming involved in money laundering and/or terrorist financing and understand their obligations.
- If you undertake work that falls within the Money Laundering and Terrorist Financing Regulations, then you have specific obligations under the Regulations. These include the requirement to carry out a risk assessment, undertake Customer Due Diligence before acting, keep a record of your compliance with the Regulations and disclose suspicious activity to the authorities. You will need to be able to determine whether the service that you are providing to your client is subject to the Regulations. Read our guidance to help you understand whether the Regulations apply to your practice and your obligations.
- If you engage in work that falls under the Money Laundering Regulations, you must declare it when you obtain or renew your practising certificate. Read our guide to making your declaration.
- If you are a barrister acting in a matter that is not covered by the Regulations, you still have an obligation not to commit an offence within the Proceeds of Crime Act 2002 and Terrorism Act 2000. Read our guidance about your obligations.
- Sanctions are restrictive measures that can be put in place to fulfil a range of purposes. In the UK, these include complying with UN and other international obligations, supporting foreign policy and national security objectives, as well as maintaining international peace and security, and preventing terrorism. The prohibitions and requirements in these Regulations apply to conduct by all UK persons, including all barristers and BSB entities. Read more information here about your obligations.
The BSB is responsible for the supervision of barristers and BSB entities under the Money Laundering Regulations. Regulation 46 requires us to:
- Adopt a risk-based approach (regulation 17).
- Approve self-employed barristers and owners and managers of BSB entities to carry out work under the Regulations (regulation 26).
- Publish an Annual Report containing information about supervision activity undertaken to encourage the reporting of actual or potential breaches of the Regulations and measures carried out to monitor, and enforce, compliance by barristers and BSB entities with their obligations (regulation 46A).
- Make a Suspicious Activity Report to the National Crime Agency if there is a suspicion of money laundering or terrorist financing (regulation 46(5))
- Provide information and guidance (regulation 47).
- Appoint a responsible officer to monitor compliance with the Regulations (regulation 49(2)(b)).
- Co-operate with other supervisory authorities, HM Treasury and law enforcement authorities (regulation 50(1)).
- Provide a register of Trust and Company Service Providers to HMRC (regulation 54(2))
The BSB is subject to oversight regulation by the Office for Professional Body AML Supervision (OPBAS). OPBAS has published a Sourcebook on how the BSB and other professional body supervisors can meet their obligations in relation to ML/TF supervision.
The Economic Crime and Corporate Transparency Act 2023
The Act received Royal Assent on 26 October and introduces some significant changes.
- Section 1 of the Legal Services Act 2007 is amended to introduce a new Regulatory Objective for the legal sector regulators: “promoting the prevention and detection of economic crime”. We will be working with the Legal Service Board and other regulators to set out what this means for the BSB’s risk framework and business plan. Our work in relation to anti-money laundering and sanctions compliance means that this will align the Regulatory Objectives with the work already being done by regulators in this area.
- Long awaited reforms enable Companies House to verify the identities of company directors, remove fraudulent organisations from the company register and share information with criminal investigation agencies. This offers significant opportunities to improve the quality of information on the register and prevent criminals from using companies to facilitate money laundering and other economic crime. Legal sector regulators, including the BSB, have already begun to engage with the team at Companies House as they bring in these reforms.
- Legal reforms will allow the courts to dismiss spurious lawsuits which seek to stifle freedom of speech – so called “SLAPPs”.
- Law enforcement agencies will have greater powers to seize, freeze and recover cryptoassets.
- The creation of a criminal offence, failure to prevent fraud, means that prosecutors will be better able to hold large corporations accountable for malpractice.
Government consultation on structural reform of supervision
Over the summer, HM Treasury launched a consultation on reforming anti-money laundering (AML) supervision. This follows their 2022 Review of the UK’s regulatory and supervisory regime, which concluded that while there had been continued improvement to the regime, some weaknesses in supervision may need to be addressed through structural reform.
The objectives are:
- Increased effectiveness
- Better information sharing
- Feasibility and timely implementation.
The outcome of the consultation has important implications if AML supervision of the Bar is transferred to another body. Barristers that conduct work under the Money Laundering Regulations (MLRs) may be subject to another supervisor, which could be another legal sector regulator (such as the SRA) or a public body.
The consultation sets out four options:
- OPBAS+: no structural change but enhanced powers for OPBAS, the current oversight regulator for the legal and accountancy sector regulators.
- Professional Body Supervisor (PBS) consolidation: There could be either one accountancy sector supervisor and one legal sector supervisor, both with UK-wide remits, or one accountancy sector supervisor and one legal sector supervisor within each jurisdiction. Under this model, barristers could be supervised under the MLRs by another legal sector regulator such as the SRA.
- Single Professional Services Supervisor: A single body would supervise all legal and accountancy sector firms or sole practitioners, including barristers, under the MLRs. This would probably be a public body rather than a PBS.
- Single Anti-Money Laundering Supervisor: As above but also including the statutory regulators (HMRC, Gambling Commission and FCA)
Additionally, they are seeking views on whether to expand requirements on supervisors and their regulated populations relating to sanctions compliance.
Updated Joint legal sector guidance published 28 March 2023
The Legal Sector Affinity Group (LSAG) has published an update to its guidance on preventing money laundering in the legal sector. This reflects recent amendments to the Money Laundering Regulations in the following areas:
- Guidance on the new requirement to carry out proliferation financing risk assessments, either as part of your existing practice-wide risk assessment or as a standalone document.
- Changes to the duty to report discrepancies to company registries, which take effect from 1 April 2023.
Please see our guidance page for details.
LSAG has also produced some guidance on Chinese underground banking and funds from China. In some cases, funding from abroad for a transaction might have entered the legitimate economy through informal value transfer systems (IVTS) that do not use the normal banking system and/or have not complied with national currency controls. This is a particular issue in relation to funds coming from China. This guidance explores the key risks arising from the legal and illegal use of IVTS in the Chinese context, along with the circumvention of Chinese foreign currency controls. It also provides practical measures to help you mitigate these risks.
The Government has expedited legislation, the Economic Crime (Transparency and Enforcement Act) 2022, to crack down on money laundering through professional services and property by establishing a new Register of Overseas Entities Beneficial Ownership. The new register requires overseas companies owning or buying property in the UK to provide information about their true beneficial owners to Companies House.
If you engage in property work, or as a Trust or Company Service Provider, you should be aware of criminals seeking to evade the new requirements. The National Risk Assessment assesses that the property sector faces a high risk from money laundering due to the large amounts of money that can be moved by investing in property. The UK property market remains an attractive method to launder money, in particular through purchases made by corporate structures or trusts based in secrecy jurisdictions, due to the difficulties in determining ultimate beneficial owners. The register will help to improve transparency.
National Crime Agency and Suspicious Activity Reports
The National Crime Agency (NCA) has a range of resources on its website including podcasts, information about making a Suspicious Activity Report (SAR) and newsletters about action taken in response to SARs.
A new portal for making SARs has been launched. The aim of delivering this new platform is to make the portal more user friendly for those who need to make reports about suspicious activity under the Proceeds of Crime Act, which should lead to better quality information being collected and analysed. Whilst the National Crime Agency (NCA) has told us that it does not have particular concerns about the quality of SARs submitted by barristers, it continues to stress that the quality of a SAR, including as much detail possible, can affect their ability to prioritise and process the report. It can also affect the relevant agency’s decision or ability to investigate. You can read more about this, and how the NCA uses SARs, on their website.
If you require specific advice on making a SAR you can contact the Bar Council Ethical Enquiries Service for further assistance and guidance.
Protocol with the Bar Council
The General Council of the Bar is the designated Professional Body Supervisor under the Regulations. In line with our Protocol for ensuring regulatory independence, supervisory responsibility is delegated to the Bar Standards Board. We have a Protocol for Anti-Money Laundering and Counter-Terrorist Financing with the Bar Council which sets our respective roles under the Regulations.
Contacting us with a concern about Money Laundering
The BSB’s Money Laundering Hotline is a confidential service that anyone can use to report a concern to us about a person or an organisation we regulate, in connection with Money Laundering.
If you have any comments or questions about this page, please contact us.