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Treasury consults on AML/CTF supervisory system

Author: ICAEW Insights

Published: 21 Aug 2023

ICAEW will respond to HM Treasury’s consultation on reform of the anti-money laundering and counter-terrorism financing supervisory system, published in June 2023 in line with a commitment in the Economic Crime Plan 2023-26.

ICAEW is responding to an HM Treasury (HMT)  consultation on reform of the anti-money laundering and counter-terrorism financing (AML/CTF) supervisory system after a 2022 review put forward four potential models for a future system.

The AML/CTF supervisory system is currently made up of three statutory supervisors – the Financial Conduct Authority, the Gambling Commission and HMRC. There are 22 professional body supervisors (PBSs) who supervise the legal and accountancy sectors, including ICAEW, which is the largest of the accountancy PBSs. 

These supervisors ensure firms and individuals comply with Money Laundering Regulations (MLRs). They take enforcement actions if MLRs are breached and ensure only fit and competent individuals hold management roles in regulated businesses.

Following a commitment in the 2016 AML/CTF Action Plan, the government created the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) in 2017, which seeks to ensure robust, consistent supervision across PBSs, as well as good information sharing between supervisors and with law enforcement. OPBAS has delivered substantial improvements in PBS supervision.

The 2022 Review of the UK’s AML/CTF 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 Review set out four possible models for a future AML/ CTF supervisory system, which are OPBAS+, PBS Consolidation, a Single Professional Services Supervisor (SPSS) or a Single Anti-Money Laundering Supervisor (SAS). This consultation further develops these four models, assessing them against three consultation objectives:

  • Supervisory effectiveness: leading to better outcomes in line with the priorities identified in HM Treasury’s recent review of the AML/CTF regime – risk-based supervision that ensures both consistent and proportionate compliance with the regulations across the AML/CTF-regulated population and increased effectiveness of these preventative measures in protecting the UK economy from illicit finance.
  • Improved system coordination: more effective collaboration and accountability across the AML/CTF regime. This includes information sharing among supervisors and between supervisors and law enforcement, and coherence with wider regulatory regimes.
  • Feasibility: ensuring that the chosen model is practically feasible, with suitable funding and governance structures.

Mike Miller, Economic Crime Manager at ICAEW, said: “As a PBS, ICAEW will be contributing an in-depth response to the consultation from a regulatory perspective. We are also seeking input from a range of membership groups to present a diverse range of members’ views in order that HMT receives a cross-sectoral perspective. 

“HMT is actively encouraging contributions from stakeholders across the economy and we would encourage individual member firms to respond to the consultation should they have a particular view on the supervisory arrangements and how they may evolve.”

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