Recent findings reveal that a significant number of barristers inaccurately declare their compliance with Money Laundering Regulations (MLRs) to the Bar Standards Board (BSB), leading to potential regulatory challenges.
A recent spot check conducted by the Bar Standards Board (BSB) exposed a considerable misunderstanding among barristers regarding their work’s compliance with the Money Laundering Regulations 2017 (MLRs). Only two out of nine self-employed barristers were correct in their belief that their work fell within the MLRs. Similar patterns have been observed in ongoing checks this year.
The core issue arises from the fact that most barristers and entities under the BSB do not engage in work covered by the MLRs. Contentious litigation, typically outside the scope of these regulations, is a significant part of their duties. Furthermore, barristers are not permitted to manage client funds or affairs directly, further negating their involvement in MLR-compliant activities.
Interestingly, the instructions barristers receive usually come from solicitors or other individuals who are obliged to conduct their own customer due diligence under the MLRs, offering a preliminary layer of risk assessment. Despite this, 461 self-employed barristers reported their work as MLR-covered in the 2023-24 period, a slight decrease from the previous year’s 478 but still higher than the 431 recorded in 2021-22.
The annual declarations prepared by barristers and BSB entities are vital. They indicate which professionals undertake work requiring compliance with the MLRs, enabling the BSB to meet its obligations. This data is essential for reporting to the Treasury and forms part of an annual supervision report, also used by the Office for Professional Body Anti-Money Laundering Supervision.
Inaccurate declarations significantly distort the Bar’s risk profile. They may lead to higher regulatory costs and ineffective interventions. The BSB has been actively promoting more precise declarations, resulting in improved accuracy, though ongoing checks still uncover errors due to misunderstandings.
Regulatory actions were taken in four cases of potential MLR breaches, an increase from the previous year. However, two cases warranted no further action. Mark Neale, the BSB’s director general, indicated that the BSB will soon launch a new resource page for chambers, aiming to clarify regulatory requirements related to practice management.
The BSB continues to devote resources to educating barristers about accurate declarations. Barristers are urged to carefully consult the BSB’s guidance before completing their annual declarations to ensure compliance and reduce unnecessary regulatory complications.
The persistent issue of inaccurate MLR declarations among barristers highlights the need for continued education and awareness. The BSB’s ongoing initiatives aim to resolve these misunderstandings and ensure that barristers accurately represent their work within the regulatory framework.
