UK Regulator Warns Lawyers and Accountants Are Failing to Meet Money Laundering Standards

The UK's Financial Conduct Authority (FCA) has raised concerns that lawyers and accountants are falling short in meeting anti-money laundering (AML) standards. This warning comes after a recent assessment of ‘Professional Body Supervisors’ (PBS), the organizations responsible for setting and enforcing standards within their sectors, such as the Law Society of Scotland. The findings were stark: none of the 25 PBSs reviewed were found to be “fully effective in all areas” of their AML obligations.

The FCA's Office for Professional Body Anti-Money Laundering Supervision (OPBAS), tasked with overseeing PBSs, identified “weaknesses” in how these organizations use their enforcement powers when supervising members. A key concern was the decline in both the number and value of fines issued by PBSs in the past year.

“The number and value of fines issued declined in the previous year,” OPBAS stated, pointing out a significant drop in penalties imposed by both legal and accountancy groups.

Andrea Bowe, Director at the FCA’s Specialist Directorate, is calling for urgent improvements in AML standards across these sectors. Speaking ahead of her address at the ‘International Anti-Financial Crime Summit 2024’ in London on October 9, Bowe emphasized that, while the FCA has acted through OPBAS to address failures, there is still a long way to go.

“[We] have intervened to tackle failings where we have found them,” Bowe said, but added, “we are still not seeing the consistent, effective improvement we need.”

In the 2022–2023 financial year, legal PBSs issued only 33 fines to member companies, a drop from the 38 fines imposed the previous year. Accountancy PBSs, meanwhile, imposed 178 fines, a significant decline from the 278 recorded in 2021–2022.

Another area of concern for OPBAS involved a PBS that was using a technology platform for its AML supervision. The FCA found that the platform “had links” to senior management at the organization, raising potential conflict of interest concerns. While there was no allegation of wrongdoing, OPBAS noted that the arrangement was not clearly documented within the PBS’s conflicts of interest procedures. Following the FCA’s review, the PBS agreed to adopt a different AML software system.

Moving forward, the FCA plans to focus on enhancing the “consistency and effectiveness” of PBSs in their supervision of AML compliance. Despite recent interventions, Bowe stressed the need for continued improvements to ensure robust enforcement across the legal and accountancy sectors.

By fLEXI tEAM