Harsher penalties and a ‘reshaping’ of the sector predicted when Financial Conduct Authority takes over as regulator
UK law firms are bracing themselves for a money-laundering crackdown as ministers race to improve the City’s 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 “sharper” penalties and ultimately reshape the industry.
The decision to consolidate regulation, which at present is spread across nine separate supervisors, is part of the government’s wider efforts to combat the UK’s reputation as a hub for “dirty money”. The National Crime Agency estimates that £100bn is being laundered through or within the UK every single year, with the help of enabling entities such as law firms.
The City’s 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’s anti-money laundering supervisions and called on the government to “strengthen” oversight, particularly across the accounting and legal sectors.
