The roots of this reform trace back to a HM Treasury consultation in 2023, outlining four potential models for AML supervisory reform:
- Option 1 – OPBAS+: This option strengthened OPBAS’s powers to enforce standards among the 22 professional body supervisors (PBSs), accelerating improvements without dismantling the existing framework.
- Option 2 – Consolidation: Reducing the number of PBSs to one or two for the accountancy and legal sectors.
- Option 3 – Single Professional Services Supervisor (SPSS): A new or existing statutory body, would oversee AML compliance for accountancy and legal sectors.
- Option 4 – Single AML Supervisor: A radical approach to create one supervisor for all regulated entities, from banks to estate agents, as well as accountants and lawyers.
ICAEW had advocated for the OPBAS+ model, viewing it as the most likely route to improving supervisory effectiveness across the sector. The OPBAS+ model was also broadly supported by most other accountancy and legal professional body supervisors, who had concerns about the loss of continuity and feasibility of implementing other options.
However, law enforcement agencies and other public sector organisations favoured a Single Professional Services Supervisor as they thought the OPBAS+ model would not go far enough in addressing system effectiveness.
On 21 October, HM Treasury confirmed it would proceed with Option 3: establishing a single professional services supervisor within the Financial Conduct Authority, which is the existing AML supervisor for the banking industry.
During the reform consultation, HM Treasury set out key policy objectives, with the principal goal of strengthening the effectiveness of anti-money laundering supervision within the professional services sectors.
Impact on ICAEW firms and the wider profession
There are a number of areas that are unclear in relation to the FCA’s likely approach to supervising accountancy firms, including:
- The frequency of monitoring visits to accountancy firms
- How information will be shared between the FCA and the professional bodies
- The likely AML guidance, resources and support to be provided by the FCA
- The fees to be paid to the FCA by accountancy firms for AML supervision
- How enforcement action for breaches may operate
The timeline for transfer of AML supervision to the FCA is also yet to be confirmed. Primary legislation will be required to effect the change, which is likely to take some time.
In the meantime, HM Treasury are considering the powers that the FCA will need to have in order to take on its broader role as AML supervisor for the accountancy and legal sectors.
Next Steps: Have Your Say
HM Treasury’s consultation on the FCA’s powers and duties is now live and will close on Wednesday 24 December. ICAEW urges firms to respond directly. This is a critical opportunity to influence how the new supervisory model will operate and to mitigate risks associated with transition.
Engagement is essential - not only to shape the regulatory framework but to ensure that the voice of small practices is heard. ICAEW will continue to provide updates and resources to support members through this period of change.