The Solicitors Disciplinary Tribunal has warned that law firms could face the prospect of ‘double jeopardy’ as anti-money laundering supervision transfers from the Solicitors Regulation Authority to the Financial Conduct Authority.
Background To The Consultation
The government announced in October 2025 that they have “taken the decision that AML/CTF supervisory responsibilities for some professional services sectors will, going forward, be undertaken by the Financial Conduct Authority (FCA)”. Following this, HM Treasury published a consultation document in November 2025 setting out proposals for the key duties, powers and accountability mechanisms that the FCA will need.
The government acknowledged in the consultation document that “once the FCA is operational in its expanded remit, some firms may experience a degree of dual regulation with requirements to register and interact with both their professional body or regulator for non-AML/CTF related matters and the FCA for AML/CTF related matters”.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, stated, “…These changes will simplify the supervision of professional services, ensure more consistent oversight and help us identify and disrupt crime. …The new regime will create enhanced opportunities for collaboration with key partners, including law enforcement, to tackle money laundering. The FCA operates nationwide, and we anticipate having a significant presence for this new regime in our offices outside of London”.
SDT’s Concerns
In its consultation response, the SDT outlined a number of concerns:
- The potential for dual regulation, stating that the introduction of a new supervisory body for the solicitors’ profession creates potential for “double jeopardy, where the same conduct is considered by the FCA, SRA and SDT without coordination”. The tribunal also warned of “duplicative fact-finding, leading to inconsistent outcomes” and “delay, particularly if the FCA investigates first but material is not then shared promptly with the SRA”.
- The FCA’s new enforcement powers may give rise to long consecutive prosecutions and investigations, where professional conduct, particularly multi-factorial matters arising from the same facts, loses its significance by virtue of delay in bringing parallel enforcement proceedings. Examples include prohibited banking practices and misuse of client accounts, failures in due diligence linked to breaches of fiduciary or integrity obligations, and conflicts of interest, recklessness or dishonesty arising tangentially from AML failings.
- The transfer of AML supervision to the FCA must not cause delayed referral of multi-issue cases through the SRA to the SDT where appropriate.
- Clear, timely and enforceable information-sharing mechanisms are indispensable to avoid duplication, delay and double jeopardy.
- In designing any new framework, it is essential that legal professional privilege and client confidentiality are fully protected and that the integrity of the Suspicious Activity Report regime is preserved.
SDT’s Proposals
In its response, the SDT made the following proposals:
- A binding duty to share evidence promptly with the SRA – “A statutory or otherwise binding duty to share evidence promptly with the SRA, where conduct issues may arise, would minimise delay and protect the efficiency and fairness of SDT proceedings”.
- Multi-factorial cases, where AML breaches form part of a wider pattern of professional misconduct, must continue to be referred to the SRA.
- Clear delineation between supervisory breaches handled by the FCA and professional misconduct dealt with by the SRA and SDT.
- The practical mechanisms for how this will work must be discussed, agreed and reflected in clear protocols, including primacy and coordination rules and evidence-sharing timeframes.
- Joint training and handover procedures so investigators understand which matters are AML-only and which are multi-factorial.
Final Words
The SDT’s submission to HM Treasury identifies the potential for regulatory overlap and duplicative action. The practical details of the protocols between the FCA, SRA and SDT remains to be finalised and the protections do not yet exist in statute. The consultation period has closed, and implementation details are now being decided. We will keep you informed of the changes as they are made.
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