Law societies and the Bar Council oppose plans to shift AML supervision from legal regulators to the FCA
Law societies across England, Wales and Scotland have set out strong opposition to government plans to transfer anti-money laundering supervision from legal regulators to the Financial Conduct Authority, warning that the move would increase costs, create confusion and weaken sector-specific oversight.
The objections follow a consultation launched by HM Treasury after it announced in October that it intended to remove anti-money laundering and counter terrorist financing supervision from legal regulators and appoint the FCA as the single professional services supervisor.
Opposition has been voiced by the Law Society of England and Wales, the Law Society of Scotland, Birmingham Law Society and the Bar Council. In contrast, CILEx Regulation said it supported the proposal in principle.
The Law Society of England and Wales said transferring supervision to the FCA would create major operational and strategic risks while offering no proven benefits. It noted that no comparable European jurisdiction uses a financial regulator to supervise lawyers for anti-money laundering and counter terrorist financing purposes. The society warned that the UK risked becoming an outlier, which could drive work offshore and undermine competitiveness.
The society also pointed to the Economic Crime and Corporate Transparency Act 2023, which added a regulatory objective requiring legal regulators to promote the prevention and detection of economic crime. It said the government should consider repealing that objective if responsibility is removed from legal regulators.
Society president Mark Evans said the proposals risk greater fragmentation rather than simplification and could conflict with the government’s growth agenda. He also raised concerns about the speed of the consultation, given the scale of the proposed reforms.
Birmingham Law Society warned that dual regulation by both the FCA and existing legal regulators would confuse consumers and impose additional burdens on firms. It also expressed concern about the application of fit and proper person tests to a profession that is already highly regulated and trusted, as well as potential risks to legal professional privilege.
The Law Society of Scotland echoed concerns about increased costs and multiple supervisors. It highlighted that many Scottish firms are sole practitioners or small partnerships, often serving remote communities, and said the FCA lacked the specialist knowledge needed to supervise Scottish legal practice effectively.
The Bar Council said the proposals risked losing sector-specific expertise while increasing costs and imposing a disproportionate burden on barristers. It noted that only 2.5 percent of nearly 18,000 practising barristers undertake work within the scope of the money laundering regulations and that most barristers are supervised as individuals rather than firms.
By contrast, CILEx Regulation said it welcomed the move towards a single public sector supervisor, provided the new regime remained proportionate, risk based and coherent with the existing legal services framework.