Guidance on new economic crime offence requires careful consideration

The Law Society emphasised that careful consideration must be made to the existing regulatory framework, the role of regulators and practitioners, and the effectiveness of identifying and managing real risk.

Law Society president Richard Atkinson said that The Act explicitly expands regulators’ role from supervising money laundering to actively preventing economic crime. Caution is required, particularly given the broad definition of economic crime under the Act, which risks distracting regulators from their current focus with regards to anti-money laundering and sanctions compliance. There is little evidence to suggest that other areas of economic crime are a substantive real risk for the legal sector. As such, there is no justification for the introduction of new compliance requirements by regulators beyond the intention of the Act. It is essential that regulators engage with communities and practitioners to draft effective guidance and provide education and raise awareness on wider economic crime risks faced by the legal profession.

The LSB has proposed four outcomes of the guidance – to understand the risks and issues, ensure that authorised persons understand their duties, monitor authorised persons’ compliance and maintain active evaluation. The Law Society has concerns with respect to the latter two.

Law Society president Richard Atkinson added that nowhere in the Act does it say that regulators must ‘enforce’ or ‘implement’ rules or requirements. The primary objective is ‘promoting the prevention and detection of economic crime’ and this should be the focus, rather than concentrating on compliance which can lead to a tick box exercise.