Law Society urges ministers to pause plans that could expose law firms to dual AML regulation
Solicitors could face increased costs and administrative strain under government plans to overhaul anti-money laundering supervision, the Law Society has warned, calling on ministers to pause the proposals.
The warning comes in response to a Treasury consultation on creating a single professional services supervisor for anti-money laundering and counter-terrorist financing. Under the proposals, responsibility for supervising legal sector compliance would move from the Solicitors Regulation Authority to the Financial Conduct Authority.
The Law Society said the government has failed to demonstrate how the new model would avoid adding an extra layer of regulation for law firms. It warned that, in practice, solicitors could end up subject to dual oversight, increasing complexity rather than simplifying compliance.
In a statement issued today, the Society said the proposals pose “major operational and strategic risks for the profession” while offering no clear or proven benefits. It added that the suggested framework does not reflect how legal practices operate and risks imposing unnecessary burdens on firms of all sizes.
Society president Mark Evans said the reforms could undermine the government’s stated ambition to support economic growth. He warned that the changes risk creating greater fragmentation across the regulatory landscape, rather than delivering meaningful simplification.
Mr Evans also raised concerns about the pace of the consultation, saying the speed at which the reforms are being pursued is troubling given their potential impact. He said the proposals would fundamentally reshape how anti-money laundering and counter-terrorist financing oversight operates across professional services.
While stressing that solicitors remain committed to effective and proportionate reform, the Society said the profession is concerned about how the changes would be implemented in practice. It highlighted specific risks around client confidentiality, warning that transferring oversight could compromise the integrity of suspicious activity reports and weaken whistleblowing protections.
The Society’s response to the Treasury also questioned how duplicate regulation would be avoided. It said the consultation lacks sufficient detail on transition arrangements, leaving uncertainty about how firms would move from one supervisory regime to another without disruption.
Mr Evans said the proposals, as currently drafted, fall short of delivering meaningful reform and risk adding complexity without improving outcomes. He urged the Treasury to consider extending the consultation period to allow supervisors, professional bodies and practitioners more time to contribute.
The Law Society has called for a further round of engagement before any final decisions are taken, arguing that a more measured approach is needed to ensure reforms are workable, proportionate and aligned with the realities of legal practice.