AML: Inaccurate declarations distort the risk profile of the Bar, says BSB
Barristers are wrongly stating that their work is covered by the Money Laundering Regulations 2017 (MLRs) in their annual declarations to the Bar Standards Board (BSB), it has emerged.
The BSB said a spot check of self-employed barristers last year revealed that only two out of nine were correct in thinking they were working within the MLRs, and “a rolling programme of such spot checks” this year had yielded similar results.
The regulator said the “majority of barristers and BSB entities” did not engage in MLR work, because contentious litigation was generally not within scope and because they were not allowed to hold client money or manage clients’ affairs.
“The majority of instructions are referred by solicitors or other relevant persons under the MLRs, who are obliged to conduct their own customer due diligence and therefore provide a first line of defence in assessing risk.”
When renewing their practising certificates, 461 self-employed barristers said their work was covered by the MLRs in 2023-24, 17 fewer than the year before, but higher than the figure of 431 for 2021-22.
The BSB said the annual declaration that barristers and BSB entities made was important, because it showed “which barristers and entities are undertaking work that is within scope to enable us to comply with our obligations”.
The regulator has to report the data to the Treasury as part of an annual return that is used to produce an annual supervision report and the information was also used by the Office for Professional Body Anti-Money Laundering Supervision.
“Inaccurate declarations distort the risk profile of the Bar and have the potential to lead to additional regulatory costs and poorly targeted interventions.”
The BSB said: “We have devoted significant resources to promoting more accurate declarations, and this has led to improved accuracy consistency in the numbers being declared, but our rolling programme of spot checks continues to identify barristers who have made incorrect declarations based on misunderstanding.
“We encourage all barristers and BSB entities to carefully read our guidance before making their annual declaration.”
The BSB took regulatory action in four cases where potential breaches of the MLRs were reported, one more than the year before. No further action was taken in two cases.
Mark Neale, director general of the BSB, commented: “Our website is regularly updated and contains information to help barristers to comply with the regulations.
“In addition, we shall shortly be launching a new page for chambers, bringing together and clarifying our regulatory requirements of barristers’ practice management in chambers.”
I’ve been pointing out that 99% of our work doesn’t fall within money laundering regs for years, but people prefer to look at me as a simpleton. Barristers have always suffered from what I call “an overdose of ethics” – to the point that they may actually act unethically in hyper vigilant concern to be ethical, say with regards to client confidentiality. When I was taught ethics a Court of Appeal judge explained that more often than not it would be your duty to sail close to the wind ethically in order to “promote your clients interests to the best of your ability”. It’s that factor which makes ethics challenging, not a over exuberance to do the right thing…