Regulators such as the Solicitors Regulation Authority may be asked to ramp up their money laundering crackdown even further in new guidance on compliance.

Oversight regulator the Legal Services Board said yesterday it will consult on new requirements to be placed on frontline regulators in how they deal with firms they authorise.

The SRA has penalised dozens of firms in the past year for failing to meet money laundering regulations, with fines now routinely exceeding £10,000. But political pressure to take action shows no sign of relenting: this year’s Economic Crime and Corporate Transparency Act made explicit that the LSB and frontline regulators now have a duty to ‘promote the prevention and detection’ of economic crime.

The LSB’s consultation is effectively an attempt to show that duty is being met, and there may be even greater onus in future on bodies such as the SRA to show that it is taking sufficient action.

‘Consequences for improper conduct should exist to deter regulated persons from engaging in activities that diverge from established standards,’ said the LSB. ‘Based on supervision of existing regulatory arrangements, there is evidence that some regulated persons fail to comply with requirements and standards intended to prevent economic crime.’

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The proposed guidance identifies four outcomes that regulators should pursue: understand the risks and issues of economic crime; ensure that lawyers understand their duties; monitor compliance and maintain ‘active evaluation of any implemented standards and procedures’.

But on enforcement, the LSB backs an approach that provides for different tools to be used against different types and severity of non-compliance, ensuring that people are held to account ‘without being excessively punitive’.

The LSB cited research suggesting that while advances in regulation have helped reduce the role of lawyers in economic crime, some are still enabling it, either as unwitting or complicit participants.

The oversight regulator said a key component of new guidance will be providing lawyer with tools to maintain awareness of higher-risk activities, understand best practice in responding to risks and act in line with professional duties.

LSB chief executive Craig Westwood, said: ‘Our goal is to bring about a step change in efforts from legal services regulators to tackle economic crime. This is essential to securing a legal sector that benefits the public and is built on strong foundations that uphold the rule of law.’

Consultation on the guidance runs until 7 February.