Factsheet: new information request power for the Solicitors Regulation Authority in relation to economic crime
Updated 26 October 2023
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This publication is available at https://www.gov.uk/government/publications/economic-crime-and-corporate-transparency-bill-2022-factsheets/factsheet-new-information-request-power-for-the-solicitors-regulation-authority-in-relation-to-economic-crime
Why is the government acting?
Currently, the Solicitors Regulation Authority (SRA) is limited in its ability to proactively request information from its regulated community. Under section 44B of the Solicitors Act 1974, the SRA has the power to require specified information or documents to be provided only where it is necessary to do so for the purposes of an investigation, for example, into suspected professional misconduct by a solicitor or a failure to comply with a relevant requirement.
The SRA also has the power to proactively request information and documents from individuals or firms it supervises in its role as a “Professional Body Supervisor” under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. However, approximately 3,200 firms and sole practitioners are not covered by the MLRs, meaning that the SRA cannot effectively practise proactive checks, and therefore risk-based regulation, across the whole of its regulated community.
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 as at high risk of abuse for money laundering purposes [footnote 1]. The sector is exposed to further-reaching risks such as fraud or breaches of sanctions legislation. We need to ensure that legal services regulators have the powers they need to tackle economic crime.
What is the government going to do?
The government is introducing a new power to allow the SRA to proactively request information from all regulated individuals, licensed bodies and firms within its regulated community, in relation to economic crime.
This will ensure that the SRA has the necessary proactive information request powers to fulfil its obligations to effectively oversee the prevention and detection of economic crime. This will enable effective risk-based regulation and better targeting of the SRA’s monitoring and enforcement work in relation to economic crime.
Who will this apply to?
This information request power will allow the SRA to proactively request information in relation to economic crime. This will impact regulated individuals, licensed bodies, and firms within the SRA’s regulated community.
When will this come into effect?
Implementation will proceed following Royal Assent of the bill.