Proposals to create a single anti-money laundering (AML) regulator could create disruption that would harm the UK financial system, the chartered accountancy body and AML supervisor ICAEW has warned.
In its response to HM Treasury’s AML supervisory consultation, ICAEW explained its preferred option was for the proposed OPBAS+ model. That would enhance the powers of OPBAS and increase the effectiveness of professional body supervision (PBS).
ICAEW said this would preserve and build on the investment already made in OPBAS, maintain the UK’s alignment with AML work in the rest of Europe, and reduce the risk of uncertainty posed by an upheaval which would be caused by the other options proposed. OPBAS+ was the option that could be implemented swiftly, building on the current system and requiring only minor changes to legislation. (To recap, the Office for Professional Body Anti-Money Laundering Supervision, set up in 2017 by UK Government, supervises the legal and accountancy sector on anti-money laundering; that model proposed by HM Treasury would see no structural changes to OPBAS, but new powers.)
The other proposals – consolidation of professional bodies; a single supervisor for professional services; and a single regulator – would bring with them a number of risks which could allow criminals to operate and do damage to the economy, the ICAEW suggested. It said that the other options would risk gaps in intelligence from the disruption in already-existing intelligence-sharing relationships.
There would also be a reduction in awareness and competency of AML risk as professional bodies would lose their incentive for creating educational material and running initiatives to boost knowledge, ICAEW said. It raised fears that a new regulator could be understaffed if employees at the existing bodies did not move across. In this case it would lack the expertise to operate effectively, which would weaken AML supervision.
Michelle Giddings, ICAEW’s Head of AML and Operations, said: “We take our role as an AML supervisor very seriously, but acknowledge there are areas where the system could benefit from reform.
“It’s vital that professional bodies like ICAEW continue to play a role in AML supervision. We gather a wealth of intelligence through our relationships with the firms we supervise, and removing professional bodies from AML supervision risks losing this valuable intelligence.
“In our view the OPBAS+ model will deliver the most feasible and effective way to improve supervision by building on what works. We are concerned that the other options proposed would weaken AML regulation, and risk leaving the door open for criminals to do business in the UK and cause wider damage to the economy.”
Background
An assessment of the UK by the Financial Action Task Force (FATF) identified inconsistencies and weaknesses in the UK’s supervisory system of AML.
HM Treasury stated that a 2022 Review of the UK’s AML/CTF (counter-terrorism financing) regulatory and supervisory regime concluded that while there had been continued improvement to the regime, some weaknesses in supervision may need to be addressed through structural reform. The consultation has closed.
