“The Law Council is concerned about the impact increased regulatory costs will have on the viability of 93 per cent of Australia’s law practices, which are very small 1-4 partner law firms, especially those located in and supporting regional and remote communities,” warned Law Council of Australia President Greg McIntyre. This concern comes as the government introduces the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024, which is set to impose significant compliance costs on businesses, including law firms.
According to the story published yesterday on Lawyers Weekly, the bill aims to align Australia with international AML standards, but the projected $1.8 billion annual compliance cost over the next decade could disproportionately affect smaller firms. Many already face regulatory burdens and these additional costs could lead to higher legal service fees or even threaten the survival of practices in regional areas.
Mr McIntyre highlighted that there is a delicate balance to be struck between strengthening financial system protections and safeguarding the independent role of small law firms. Ensuring that these changes don't undermine access to legal services, particularly in remote communities, remains crucial.
The question remains: are the often touted additional costs and administrative burdens on small firms under Tranche 2 laws fact or fiction? A recent report from New Zealand’s Law Society, prepared by KPMG, found that AML compliance has become a significant operational challenge for small firms, with costs for sole practitioners increasing by 35.4% over the last three years and small firms seeing a 22.9% increase. While these figures highlight a considerable financial burden, what proportion of these increases can be attributed directly to AML compliance, and how much stems from broader operational pressures faced by legal practices?
Outsourcing to a provider like WhiteLight AML should be considered a viable alternative to in-house compliance, as it offers the potential to stabilize costs by locking in a fixed rate for the duration of the outsourcing contract, reducing the variability and year-on-year increases associated with managing AML compliance internally.
Read the full story here
Kommentare