The Law Society has warned that government proposals to introduce an AML levy calculated on firms’ income could be harmful to the profession.
I response to the government consultation on the matter, the Law Society said the profession was already devoting resources to preventing the system from being abused by money launderers.
“The legal profession is fully committed to supporting the fight against economic crime and takes their anti-money laundering responsibilities very seriously,” said outgoing Law Society president Simon Davis (pictured).
“Law firms already play an important role in tackling money laundering, as demonstrated by the substantial costs and resources allocated by the profession to comply with its anti-money laundering (AML) and financial crime obligations.
Davis said the levy would amount to “a special tax on the legal profession” hampering the profession’s ability to compete, particularly in light of the added pressures it faces due to covid-19.
The Society also highlighted that basing any levy on income confuses it with the scale of the risks it is intended to protect.
If the levy is to go ahead, a calculation-based model based on the number of Suspicious Activity Reports (SARs) which a firm submitted the previous year would be simple, cheaper and fairer than a revenue-based levy, the Society has argued.
It has also called for an exemption for small firms with a revenue of under £10.2m a year. And said it is essential that the levy is based on domestic revenue generated by AML-related activity only.
“With the UK in recession, the predicted future state of the economy being so uncertain and the legal sector already struggling in so many areas, imposing a tax on the profession is an unjustified step too far,” added Davis.