ICAS urges caution to HMT in anti-money laundering review
ICAS has urged caution to HM Treasury in its review of the supervisory model for AML/CTF compliance, with three of the models listed in the consultation putting recent progress in improving compliance rates at risk.
We welcome the opportunity to give our views on the consultation on reform of the anti-money laundering and counter-terrorism financing (AML/CTF) supervisory system, published by HM Treasury in June 2023, in line with a commitment in the Economic Crime Plan 2023-6.
Currently, the AML/CTF supervisory system is made up of three statutory supervisors – the Financial Conduct Authority (FCA), the Gambling Commission and HMRC – and 22 professional body supervisors (PBSs, including ICAS) who supervise the legal and accountancy sectors.
Robert Mudge, Executive Director Regulation, said: “We believe that great care should be exercised when contemplating changes in the supervisory model. Our response identifies the improvements in AML/CTF compliance which have been achieved in recent years, with reason to believe that this positive trajectory will continue in the future, under the supervision of OPBAS.”
The HMT review sets out four possible models for a future supervisory system:
The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) – established in 2018 and housed within the FCA – would be given enhanced powers to increase the effectiveness of supervision undertaken by the professional body supervisors.
Professional body supervisor consolidation
A decrease in the number of professional body supervisors, with the possibility of one supervisor for the accountancy profession.
Single professional services supervisor
A new body would be created to supervise all firms in the legal and accountancy sectors.
Single anti-money laundering supervision
All AML/CTF supervision in the UK would be undertaken by a single public body (including the functions of the Financial Conduct Authority, the Gambling Commission and HMRC).
Robert added: “We believe that OPBAS+ is the only model proposed that doesn’t present significant risk to UK’s attempts to tackle financial crime. Our response to the consultation sets out in detail the dangers associated with the other three models and we would urge HMT to consider these carefully”.
The risks identified in ICAS’ response include:
- Loss of momentum as the new supervisor will inevitably take many years to create, during which period the drive towards more effective AML/CTF compliance risks derailment.
- Loss of expertise as current PBS employees who leave the PBSs would be more likely to move into private practice than join the new supervisor.
- Loss of knowledge as the new supervisor would take significant time to match the PBS’s understanding of their supervised populations (if, indeed, it ever gets to the same level), taking account of the important differences in these populations.
- Risk of data loss, as information in relation to more than 40,000 supervised firms is transferred to a new supervisor(s).
- Increased costs to stakeholders and the taxpayer, as there are few if any grounds to believe that any of the new models would be cheaper than the present arrangements/OPBAS+.
- No guarantee that the chosen model would ultimately be a more effective supervisor.
The consultation closed on 30 September 2023.
Read our full response to the consultation.
The HMT consultation can be found on their website: Reforming anti-money laundering and counter-terrorism financing supervision.