Banks, lawyers and accountants are experiencing a feeling of deja vu. Another raft of European legislation descends, new domestic implementing law is published and the UK is once again at the forefront of increased anti-money laundering regulation.

When the draft 2007 Money Laundering Regulations were published in January, the economic secretary to the Treasury, Ed Balls, said: "These regulations will strengthen further the UK's defences against money laundering and terrorist finance… at the same time our regulations will ensure that businesses and consumers in low-risk situations face fewer burdens than previously."

So is this more gold-plating of European law that will reduce our competitiveness? Or are they proportionate and effective measures which further cement the private sector's partnership with Government in tackling organised and terrorist crime?

The stated purpose of the directive is to bring member states in line with the Financial Action Taskforce's (FATF's) Forty Recommendations. But how do banks and professionals perceive the new provisions? And how do trust and company service providers feel about having to trace the ultimate beneficial owner of their client?

The main provisions imposed by the directive include the risk-based approach; enhanced due diligence for high-risk customers such as politically-exposed pensions; reduced due diligence for low-risk customers; reliance on third parties; and identifying ultimate beneficial owners (including taking steps to understand customers' or clients' ownership and control structure).

The regulations also propose a new supervision scheme for, among others, unregulated accountants, estate agents and unsecured lenders. The new supervisors include the Office of Fair Trading and HM Revenue & Customs (HMRC); some eyebrows have been raised about the potential conflict in HMRC supervising unregistered tax accountants. For the first time, trust and company service providers will be supervised, and will have to pass the 'fit and proper' test in order to run their businesses.

For UK members of the regulated sector the risk-based approach and provisions on due diligence have already been in play through the Joint Money Laundering Steering Group and other professional guidance. What is different now is that what has previously been guidance becomes hard law, which some would say reduces flexibility. Those who will be subject to the new supervisory regime will be concerned about compulsory questioning and other enforcement powers.

So what about lawyers? The European Bars, through the Council of Bars and Law Societies of Europe, still maintain that lawyers should not have any reporting obligations at all. Challenges to the Second Directive have been made by the French, Polish and Belgian Bars, and recently the French Bar has issued a petition against the Third Directive asking that lawyers be excluded.

The Law Society has devoted much time and energy to the European Union consultation on the directive and Treasury's consultation on the regulations but is unhappy with the outcome, particularly in relation to private equity and trust lawyers and the new beneficial ownership test. It has launched a campaign which has received widespread support from City firms. There is strong concern that private equity clients will simply move their business to the US.

The 2007 regulations form part of the Government's new anti-money laundering and terrorist finance strategy, which was issued on 28 February. The regulated sector should note that the strategy includes a consultation on changes to consent and tipping-off rules and "fresh action at the international level including through the UK's presidency of the FATF from July 2007″. This Government certainly gives no impression of reversing any of its anti-money laundering reforms.

Louise Delahunty is a partner at Simmons & Simmons.