In June 2023, the government launched a consultation outlining four possible options for the future of anti-money laundering (AML) supervision in the accountancy and law sectors.
Currently, AML supervision of the accountancy sector is conducted by professional bodies and HMRC, under the oversight of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). While the first of the four proposals set out in the recent consultation would strengthen OPBAS (the OPBAS+ option) and allow economic crime to be better tackled, the other three proposals represent moves towards radical new processes and significant change.
The transition process alone is likely to result in severe disruption
The three radical proposals range from phasing out OPBAS and potentially having just one consolidated body for the whole accountancy sector, to removing all AML supervisors across all sectors (not just accountancy and legal) and replacing it with a new public sector regulator.
The proposals come at a time when the economy is recovering from the impacts of Brexit, the pandemic and instability within government. Both ACCA and AAT strongly feel that any drastic alteration to the current AML supervisory regime will risk having a significant negative impact on the UK’s drive to combat money laundering and terrorist financing. The transition process alone involved in moving away from the OPBAS regime represents a sizeable challenge that is likely to result in severe disruption to AML supervision and a subsequent increase in non-compliance.
Multiple negatives
There will be knock-on effects from the three radical options for AAT and ACCA members, and those of other professional bodies, as costs and administrative burdens will increase with the recruitment and training needs involved in setting up a new supervising body. These costs will inevitably fall on the supervised populations, with professional body members facing the prospect of higher fees paid to the new AML body.
Currently, membership subscriptions and fees for most professional bodies incorporate the costs of AML supervision. However, if one consolidated body were to take the reins, members would have to pay it a separate fee – in addition to their current membership fees for their own chosen professional body.
There would also be a lot of pressure on the consolidated body, which would inherit a workload that is currently spread across several supervisors. And it would need to replicate the expertise and knowledge that existing supervisors have in relation to their respective supervised populations.
The nuances in the professions are too complex to fit under one set of regulations
Given the complexity and breadth in variety of size and types of firm across the accountancy and legal sectors, such a change would inevitably lead to longer drawn-out investigations and a lack of consistency. That would potentially leave those members involved in investigations in a state of uncertainty for sustained periods of time.
If any of the consultation’s three radical options are followed through on, this risk of disruption and non-compliance during the transition period could have severe repercussions for members who fall victim to any ‘ironing out’ process through no fault of their own.
A single regulator for all sectors – whether an existing professional body stepping up to the role or a brand-new regulator – would be especially problematic. It would not have the expertise to supervise all the different parts of the professions, while the nuances in the professions and sectors would surely be too complex to fit under one set of regulations, and for common patterns of money laundering behaviour to be identified across such a vast variety of areas.
Objections
Glenn Collins, head of technical and strategic engagement at ACCA, says: ‘ACCA is clear in calling for proportionate regulation that should always be tailored to the risks it is aiming to protect against. Under the current regime, ACCA provides proportionate regulation – and greater support – for those practices that have to deal with the UK regime. A single regulator would increase costs for practitioners and not lead to improved outcomes in the ongoing fight against money laundering.’
‘There is little understanding of the professional bodies’ key role in AML’
According to AAT member Ann White, the preferred model is to retain regulation via the professional bodies with OPBAS+. She says: ‘A changing landscape in respect of the AML supervisory regime would disrupt communication and all that has been achieved since OPBAS was set up. Consideration has not been given to the financial impact on taxpayers or accountants and firms.
‘During the consultation process, it was evident that there is little understanding of the key role played by the professional bodies, not only in respect of AML supervision but in maintaining standards and providing support to members.’
One size doesn’t fit all
White adds that there are concerns about a single new body having a supervising role over a vast number of professions. ‘The consolidated body would not only supervise the accountancy profession, it would also be responsible for supervising other professions including legal and estate agencies. There is a mindset that one size fits all, but this just will not work. The supervisory bodies know their members best and have the best working knowledge of their sectors.
‘Overall, for three out of the four models, standards will drop and the effectiveness of AML measures already in place will suffer during the transition period. It could take a number of years to get back to where we are today. There is always room for improvement, and this is offered by one of the options: OPBAS+.’
In addition to the AAT response and ACCA response to the consultation, a letter signed by all 13 current supervising bodies has been sent to Baroness Penn, the Treasury Lords minister who is overseeing the consultation. It not only outlines some of the issues above, but also emphasises that OPBAS has made positive steps in its supervision role and should be given the opportunity to build on this without further disruption and an erasure of all the progress that has been made to date.
