SRA calls in consultants to vet foreign ABS owners

The SRA has brought in consultants to vet potential foreign owners of ABS firms, Solicitors Journal has learned.

John Withington, director of authorisation at the SRA, said the regulator had already been in touch with an organisation specialising in the 'international screening of individuals' and other 'high level' investigative work.

'This is not about outsourcing, it's about cases where we need specialist knowledge,' Withington said.

'It's one thing to investigate a person in this country and another to investigate anyone who could be anything in a foreign country.

'There are people with other going concerns who might be able to use ownership of law firms for their own ends.'

He said the SRA had received a number of ABS applications from Europe and beyond with private equity involvement.

'There could be a number of investors behind a private equity fund, including foreign individuals,' Withington said.

'There is a need to get clarity as to who really wields influence in an organisation. People have said you could get Russian oligarchs or sovereign wealth funds taking an interest in a law firm in this country.

'You could compare the situation to Premier League football clubs, but you are talking about law firms dealing with people in vulnerable situations or with control over their money.'

Withington said the SRA would also give 'parcels of work' to consultants specialising in forensic accountancy and investment banking, particularly where applications involved private equity funds or complex business structures.

He said the SRA was concerned by 'complexity and the potential lack of transparency' in foreign ownership.

Withington advised firms to get in touch with the SRA early and not to make the mistake of thinking that applying for an ABS licence was a form-filling exercise.

'In many cases we have to ask for a lot more information,' Withington said. 'We get incomplete answers or very simplistic replies. Our real focus is on getting quality information through early engagement and good cooperation.'

Withington said he was pleased by the 'range and volume' of interest in ABS licences.

'I'm disappointed about the difficulty of getting clarity from some firms on their structures and by their surprise that this is a complicated process.

'Investigations can be lengthy and far-reaching and sometimes it's hard work getting the information.'