New legislation to clamp down on money laundering could give the SRA unlimited powers to fine firms involved in facilitating economic crime.
The Economic Crime and Corporate Transparency Bill includes a measure to remove any limit on the fine that can be issued by the solicitors’ regulator for cases relating to economic crime like money laundering, fraud and breaches of international sanctions.
The bill would amend the Solicitors Act 1974 to omit the section which sets a limit on the amount of the penalty a person may have to pay, if the misconduct relates to ‘economic crime’.
The government only recently extended the SRA’s fining powers from £2,000 to £25,000 for a range of offences, but this legislation potentially extends those powers much further.
The SRA has its own guidance for setting fines which is subject to approval from the oversight regulator, the Legal Services Board. Any changes to this guidance would require consulting stakeholders.
Ministers are also introducing a new objective for legal services regulators to promote the prevention and detection of economic crime.
The government says the SRA will now have a ‘clear basis for monitoring legal professionals and carrying out disciplinary action if they are found to break the rules’.
In explanatory notes for the economic crime bill, the government said regulators have a duty to enforce compliance of economic crime rules, and it is important that they have the ‘right tools’, such as the ability to set and amend the levels of financial penalties in relation to economic crime.
The notes added: ‘The purpose of the measure is to put beyond doubt that it is the duty and within the remit of the frontline regulators to exercise the appropriate regulatory actions that are necessary to promote and maintain compliance with economic crime legislation and guidance.’
Announcing the plans, home secretary Suella Braverman said: ‘The UK is no home for dirty money. The government has taken unprecedented action to prevent kleptocrats and organised criminals from abusing our open economy, and this bill will go even further.’
Source: The Law Society Gazette, 22nd September 2022