Policy background Legal services – regulatory objective for regulators to promote adherence to economic crime rules and legislation
The crisis in Ukraine has shone a light on the exposure of professional services sectors to economic crime. The legal services sector was assessed in HMT’s National Risk Assessment of money laundering and terrorist financing 1 (2020) as at high risk of abuse for money laundering purposes. The sector is also exposed to further-reaching risks such as fraud or breaches of sanctions legislation.
	Legal professionals are already held to high standards with regards to their anti-money laundering obligations, and it is evident that they should not be facilitating economic crime.
	While it is the Government’s view that the vast majority of the legal services sector complies with their economic crime duties, it is important to ensure that regulators have the right tools to effectively promote compliance within their regulated communities.
	It can already be inferred from existing objectives, such as the objective to maintain adherence to professional principles and the objective to promote the public interest, that regulators should promote compliance with economic crime rules set out in relevant guidance and legislation.
	The duty of legal services regulators to promote adherence to economic crime rules and legislation is not explicitly set out in legislation. As a result, there are differing views on the roles and responsibilities of regulators relating to economic crime. The measures in this part of the Act seek to address this by adding a regulatory objective to section 1 of the Legal Services Act 2007 which focuses on promoting the prevention and detection of economic crime.
	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.