The England and Wales Law Society and Bar Council have raised significant objections to the UK government’s proposed reforms to anti-money laundering (AML) and counter-terrorism financing (CTF) supervision, warning that the plans risk increasing regulatory burdens while offering little demonstrable benefit.
In response to HM Treasury’s consultation on reforming the AML/CTF supervisory regime, which closes on 24 December, the two professional bodies criticised proposals to create a Single Professional Services Supervisor (SPSS), under which responsibility for legal-sector AML oversight would transfer from existing regulators to the Financial Conduct Authority (FCA).
The Law Society said the proposed SPSS model poses “major operational and strategic risks” for the legal profession and fails to resolve problems arising from dual regulation.
Law Society president Mark Evans said the proposals “risk greater fragmentation, not simplification, and fly in the face of the government’s own growth agenda”, adding that “meaningful reform cannot be achieved through undue haste”.
The society said several safeguards must be addressed before reforms proceed.
These include ensuring that the FCA’s information-sharing powers protect client confidentiality, avoid duplication and are supported by clear, sector-specific guidance. Concern was also raised about the potential weakening of protections around suspicious activity reports and whistleblowing.
Andrew Pavlovic, a partner at London firm CM Murray who specialises in SRA professional discipline and regulatory investigations, said the Law Society’s response reflected widespread concern that the proposals, announced as part of a “blitz on business bureaucracy”, would in practice increase administrative burdens.
He pointed to the prospect of concurrent investigations by the FCA and the SRA, particularly where alleged AML breaches could engage broader professional conduct issues or the SRA Accounts Rules. While the consultation acknowledges that some dual regulation will remain, Pavlovic said clear dividing lines are needed to provide clarity.
He also questioned the proposal to conduct fitness and propriety assessments for regulated individuals, saying it appeared to add administrative burden without a clear benefit, given existing SRA approval and suitability requirements. Pavlovic said the society was right to call on the government to ensure any transition avoids unnecessary duplication and cost.
Regulating barristers
Similar concerns were raised by the Bar Council, which said the move to a single supervisory model for all professional services firms risks the loss of sector-specific expertise and could reduce the effectiveness of AML supervision.
Under the current system, the Bar Council delegates regulatory and AML/CTF supervisory functions to the Bar Standards Board (BSB), which it said operates effectively.
While the Bar Council said it would work with the BSB, HM Treasury and the FCA to help ensure the new regime is “effective, proportionate and risk-based”, it raised concerns about costs and funding. It said there had been limited consideration of fees and no explicit reference to levying fees in a way that reflects sector-specific risk profiles or the level of FCA regulatory activity required.
Barbara Mills KC, chair of the Bar Council, noted that only a small number of barristers practise in specialist areas that may fall within the AML scope, such as tax advice or Chancery work, and that they were typically instructed by other professionals who are already obliged to address AML issues. Mills said these differing roles and risk profiles “should influence the shape of the new regime”.
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