Legal Services Board guidance on the economic crime regulatory objective – Law Society response

The proposals

The oversight regulator for legal services, the LSB, is consulting on guidance for the new regulatory objective of “promoting the prevention and detection of economic crime” under ECCTA.

The LSB has proposed four outcomes for the guidance:

1. to understand the risks and issues
2. to ensure that authorised persons understand their duties
3. to monitor authorised persons’ compliance
4. to maintain active evaluation

Read the consultation on the LSB website (PDF 262 KB)

Our view

Careful consideration must be made to the existing regulatory framework, the role of regulators and practitioners, and the effectiveness of identifying and managing real risk.

Law Society president Richard Atkinson said: “ECCTA explicitly expands regulators’ role from supervising money laundering to actively preventing economic crime.

“Caution is required, particularly given the broad definition of economic crime under ECCTA, which risks distracting regulators from their current focus with regards to anti-money laundering (AML) and sanctions compliance.

“There is little evidence to suggest that other areas of economic crime are a substantive real risk for the legal sector.

“There is no justification for the introduction of new compliance requirements by regulators beyond the intention of ECCTA.

“It is essential that regulators engage with communities and practitioners to draft effective guidance and provide education and raise awareness on wider economic crime risks faced by the legal profession.”

We have concerns with the LSB’s proposed outcomes on monitoring and evaluation.

Nowhere in ECCTA does it say that regulators must ‘enforce’ or ‘implement’ rules or requirements.

The objective is focused on ‘promoting the prevention and detection of economic crime’.

We believe promoting the prevention and detection of economic crime should be the focus rather than overly focusing on compliance, which can lead to a tick-box exercise.

What this means for solicitors

Solicitors play an important role in preventing and mitigating economic crime.

The profession is fully committed to being proactive in identifying risks and complying with regulatory requirements to mitigate such risks.

This is demonstrated by the significant resources solicitors allocate to complying with their AML and financial crime obligations, resources which in turn result in a substantial public benefit.

Next steps

The consultation closed on 7 February 2025.

Read the consultation on the LSB website

Our members, including those who serve on specialist policy committees such as the Economic Crime Task Force, have shared their expertise for this consultation response.

As the professional body for solicitors, we would be pleased to provide further comments on matters that arise from our response.