Neale: Bar expected to play its part in AML agenda
A significant number of chambers do not know whether their barristers have declared that they are subject to the money laundering regulations (MLRs), the Bar Standards Board (BSB) has warned.
The BSB said it was important that chambers knew whether their barristers were conducting work that fell within the MLRs so that clerks had “appropriate controls in place when engaging with clients”.
In its annual anti-money laundering report, the BSB said the majority of chambers it selected to complete regulatory returns said they did not fall within the MLRs, in line with its expectations.
Of the 247 chambers involved in the exercise, only 27 declared that they did relevant work.
However, 11 of them “did not have oversight of the declarations their barristers were making” about money laundering when completing their authorisation to practise forms.
“This group were set an action strongly encouraging them to monitor the declarations made by their barristers.”
For those chambers which said they did not undertake work within the MLRs, a “common theme” emerged that this position was “inconsistent with the declarations” made by their barristers.
“These chambers were set an action to review the definition in the regulations and check with their barristers to confirm whether their assessment was correct.”
The BSB said six chambers “declared work within the MLRs because their barristers engaged in public access work”.
Having been “signposted” by the BSB to the regulations and guidance, all six chambers confirmed that in fact they did not work within the MLRs.
The most common work areas of the chambers, two BSB entities and three sole practices that declared they did work within the regulations were tax law, property law and dealing with cases involving offshore trusts.
The BSB said it was important that chambers knew when barristers were conducting relevant work so that clerks could have “appropriate controls in place when engaging with clients, particularly in relation to conducting customer due diligence”.
Chambers management committees needed to be aware of the risks too, while training could be arranged both for barristers and staff.
The regulator said that, having predicted a total of around 290, it was “surprised to see” that 431 individual barristers said they carried out work within the MLRs during the authorisation process.
It noted that “barristers have not always been clear about when the MLRs apply to their work, resulting in a large number declaring that they do work under the MLRs when they do not”. As in previous years, the BSB is engaging with them to confirm their declaration is correct.
In the financial year 2021-22, it did not investigate or take any enforcement action over breaches of the MLRs. In three cases, it had taken supervisory action and it had assessed a further two cases but taken no action.
Following a risk assessment relating to the conduct of barristers and the UK government’s sanctions regime against Russia, the BSB said the risk here was assessed as “medium”.
This was partly because there was no national risk assessment on the subject and a lack of evidence about concerns regarding barristers. The BSB said it was in the process of assessing compliance, particularly among those who fell outside the MLRs.
Mark Neale, director general of the BSB, commented in his foreword to the report: “There has been a consistent focus by successive governments on the threat that illicit finance poses to society and to the reputation of the UK as an attractive place for global business, and we expect that to continue.”
Mr Neale said the “scale of the agenda” was significant, and the Bar was expected by the government to play its part.
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