Firms need to have anti-money laundering measures in place before international enforcers take a fresh look at the UK legal profession, the chief executive of the Solicitors Regulation Authority said today.
Paul Philip said the Financial Action Task Force (FATF), an inter-governmental body created to investigate financial crime, will start scrutinising this country in 2016 - with the legal sector firmly in its sights.
Philip told today's Law Society Property Law Conference that FATF is concerned about the falling number of reports of financial impropriety coming into regulators. There are also fears that legal practices are prime targets for criminals involved in money laundering.
'They will look very carefully at law firms,' said Philip. 'We need to prepare the sector - we will speak to relationship managers about client due diligence and how to train staff.'
The taskforce covers 34 financial jurisdictions and monitors the progress of members in implementing measures to counter financial crime.
Its report on money laundering and terrorist financing in July 2013 said the legal profession was proving 'very attractive' to organised crime.
Philip said the SRA will revisit the issue of client accounts and discuss whether solicitors need to hold client funds or whether there is any 'viable alternative'.
He spoke as the oversight regulator, the Legal Services Board, revealed that all legal services regulators are to meet to identify 'effective business models' to avoid the holding of client money.
Around 9,000 firms hold client money and the SRA has already promised to review accounts rules ahead of proposed rule changes before April 2016.
The regulator is also increasingly concerned with the number of bogus firms taking the identity of law firms - particularly in conveyancing transactions.
Law Society council member Denis Cameron, an expert witness in cases where solicitors are changed with mortgage fraud, told the conference firms must 'at the very least' check the details of a seller's representative with Find a Solicitor and keep a written record of that check.