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Young adult woman relaxing on a swing in a tropical paradise AccountingWEB - Summer of AML

The summer of anti-money laundering


The Treasury has suggested four options to overhaul anti-money laundering supervision, but Richard Hattersley has a fifth option for them to consider.

13th Jul 2023
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What a summer so far! Elton John played his final UK gig in a field in the West Country, Djokovic looks like he’s on his way to winning another Wimbledon championship, and anti-money laundering is set to undergo a massive shake-up. 

I mean, who here doesn’t want to pour a cool glass of Pimms, kick back on the sun lounger and think about customer due diligence and Know Your Client checks?

Growing AML pressure 

Since Russia invaded Ukraine, we've slowly seen anti-money laundering become more of a focus for the government, which has in turn cranked up the pressure on professional bodies to get tougher on supervision. However, rather than this trickling down to accountants, for some it’s felt like they’ve been blasted by a burst water pipe. Only firms aren’t knee-deep in sewage, but the bureaucratic nightmare of increasing AML compliance.

But for every 99 accountants that go to great lengths to ensure they comply with the rules, there is always one who shrugs at the thought of AML checks. Taylor Swift fans have jumped through more hoops and ticked more boxes to secure tour tickets than this offending minority has when putting together their AML processes and procedures.

A cursory glance at the monthly disciplinaries and you’ll see the same excuses: “Why does it matter if I don’t know my client’s address?”, “I have no high-profile clients - they’re only Chinese takeaways and restaurants”, “I don’t need to complete documentation to know my clients", or the classic “How was I supposed to know my client was a wrong ‘un? I was happy they were able to go on so many extravagant holidays and buy a souped-up sports car - especially with the tough times their business had been going through and… ah.”

Options on the table

It’s no wonder then that the Treasury is now set to turn supervision up to 11 and has proposed four models to tighten up AML.  

The first option is to beef up the current supervisor of the supervisors, the Office for Professional Body Anti-money Supervision (OPBAS). The working title for this model is OPBAS+, which makes it either sound like a vitamin shake or a washing detergent (The slogan writes itself - 'OPBAS+: Now with new powers to get the stains out of your anti-money laundering!'

The next option is to consolidate the professional bodies and have one entity that oversees accountancy and one that oversees the legal sector. This may be the favoured option by one lucky accountancy body but also has the potential to create a situation where accountants are in the middle of a professional body Royal Rumble, paying a fee to a regulator that isn’t theirs. Conspicuously, there isn’t an option for HMRC to pick up supervision for everyone - perhaps the acronym of Making AML Digital says it all.

The other two options are similar, with the idea of creating a single regulator: (with apologies to Tolkien fans) one supervisor to rule them all, one regulator to find the AML rule breakers, and in the darkness, give them a good telling off. This is the most extreme option on the table. It would involve setting up a whole new body from scratch, burning down the supervisors’ regulatory Hobbiton and stripping them and HMRC of their powers. 

The most likely option out of the four would be to give OPBAS more powers. But whatever option gets the green light, the unfortunate consequence for accountants is tougher supervision, more work and - since all of the options require more resources - higher fees.  

The fifth option

How about a fifth option? Why bother? 

That’s not to say the Treasury should adopt a Wild West, Enhanced Games-style approach to AML - and what would that look like anyway? The policies and procedures document would simply be a photo of the firm owner nailed to the practice’s door with the slogan ‘No funny business’. Sure, there would be no bureaucracy, but this would probably have the opposite effect in stamping out money laundering. And anyway, who wants to be representing a client up to no good? 

No, my fifth option can be summed up as 'don’t bother and just wait until the general election'. The Treasury is set to make a policy decision on the model for AML reform after the consultation closes in September and will then publish a response document detailing the decision by Q2 2024… which is probably not long before the general election anyway. If the current polling is correct, there is a strong chance we’ll have a new government and these changes might never even see the light of day. 

The last thing the accountancy sector needs is to spend more time consulting on another project which ultimately ends up being kicked into the long grass. 

There is a need to strengthen the effectiveness of AML measures and combat financial crimes, so why not take an 'evolution not revolution approach? The simple answer is just to let OPBAS be bitten by a radioactive regulatory spider, go ahead and give them their superpowers and be done with it. 

As for accountants, the message couldn't be clearer: don’t wait to be pushed by a new quango that might never happen, and start getting serious about your AML procedures and processes now. 

And if you’re struggling with the compliance, perhaps you can dupe some avid Taylor Swift fans to document your staff training and undertake your client risk assessments and claim it’s part of some elaborate Ticketmaster wheeze to qualify for the Eras tour pre-sale. It’s always worth a try.

Replies (3)

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By Hugo Fair
13th Jul 2023 19:04

Fun article, Richard, only slightly let down (in the suspense category) by discovering that the 5th option was exactly what I said a week ago ... in a reply to your previous AML article last week at (I'd been hoping for a jack-in-the-box revelation).

But do please suggest Making AML Digital to HMRC ... they're just (what's the word, ah nutty) enough to go for it!

Thanks (3)
By rbien1
14th Jul 2023 12:15

other EU coutries do not have so much ML bureaucracy, UK is going wrong way , more rules and regulation do not help anyone... The most coruppted coutries are the coutries with a lot of rules and regulations..... we are just killing small busnesess and our economy ....I am not suprised Poland ecinomy will overtake UK very soon.....

Thanks (2)
By victormccormicke
28th Jul 2023 12:24

I recommend checking reputable news sources, government websites, or financial publications for any recent updates or articles regarding the proposed options for anti-money laundering supervision and any additional suggestions made by Richard Hattersley. These sources will provide you with the most current and accurate information on the matter.

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