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Accountancy bodies strengthen AML supervision as fees spiral

Accountancy bodies have increased their AML governance as a result of the new supervisory governing body, but practitioners are beginning to feel the pinch as supervision fees skyrocket.

20th Apr 2020
Editor AccountingWEB
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When AccountingWEB reader Ian McTernan opened his professional body’s renewal notice, he had something other than the global pandemic on his mind: his AML fees had increased from £130 to £300 – a 130.77% price hike.

“Demanding it, and with such an increase, in the midst of Covid19, loss of fee income and shut down really shows a complete lack of sensitivity,” said McTernan.

The fee hike is the trickledown effect of accountancy bodies footing the bill of the newly formed AML supervisory body: the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). But along with increased fees, the accountancy bodies have also tightened their AML governance as a result of the supervisory watchdog attacking the widespread lack of MLR enforcement in the profession last year.  

One year on from the release of its excoriating report, OPBAS has seen strong improvements from the professional body supervisors (PBS), but as McTernan’s post shows, the need to carry out an increased number of supervision visits and checks comes at a cost.

OPBAS 2020 report

Last year, the director of specialist supervision at OPBAS took accountancy bodies to task for caring more about whether their memberships will walk than tightening MLR scrutiny.

The accountancy bodies have listened to Alison Barker’s call for higher supervision within the sector, with this year’s review showing a significant improvement in recording conflicts of interest. 

In 2018, 77% of accountancy bodies didn’t have an adequate conflict of interest policies in place, as Barker’s statement demonstrated, but by the end of last year the sector had completely turned this around, and all PBSs had clear accountability and oversight for AML supervision.  

Enforcement was another area Barker highlighted as lacking last year. At the time, OPBAS found that only 50% of professional bodies issued fines; a stat that prompted Barker to question: “Without enforcement, how can a professional body show it means business?”

As a result, the total number of fines in 2019 increased in the accountancy sector by 24% to £147,549, with 77% of accountancy bodies issuing AML fines.

Another blind spot the Watchdog pressed on the professional bodies to improve was risk-based supervision. At the time of last year’s report, 90% of PSBs hadn’t fully embraced this approach. In response to this, OPBAS highlighted this as a key focus in its supervisory workshops last summer and in January 2020.

By the end of 2019, the supervisors or supervisors had persuaded 86% to implement risk-based supervision and the remaining 14% have sights on driving this approach, too.

OPBAS also finds that professional bodies have moved away from cyclical supervision and have embraced a more proactive approach, where 100% of PSBs now utilise on-site visits as a supervisory tool. This is up from 2018 when 75% of accountancy PBSs conducted on-site visits.

Work still to be done

Yet some PBSs are performing better than others, and OPBAS emphasised that those lagging behind their peers “must raise their standards further”.

In particular, accountancy bodies trailed behind the legal sector in intelligence and information sharing. As a result, seven accountancy PBSs, including all the largest bodies, attended a working group which emphasised the need for sophisticated internal controls such as secure email systems security, vetted staff and secure storage of intelligence.

But, while encouraged by their improvement, the OPBAS report said: “It is questionable why these basic requirements for intelligence sharing were not already in place, particularly given the size of some of the bodies lacking these safeguards.”

However, 16% of PBSs still continue to question the value of intelligence-sharing systems, and the same percentage also lack a whistleblowing policy – although this number is significantly down from the 92% that lacked adequate measures to encourage individuals to report breaches in 2018.

That said, the supervisor of supervisors has been encouraged by the progress the PBSs have made over the course of 2019 but also recognise that there is significant work still to be done in implementing the risk-based processes.

Keep on top of your AML compliance with TaxCalc’s New Anti Money Laundering rules: What you need to know guide, which highlights the many and most recent changes to the AML regulations.

Replies (4)

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By Tickers
21st Apr 2020 21:53

Hopefully this puts further squeeze on non qualified accountants.

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Replying to Tickers:
David Winch
By David Winch
22nd Apr 2020 10:27

This refers to supervision by the various professional bodies. Non qualified accountants are - for obvious reasons - not supervised by the professional bodies. So OPBAS is not relevant to them.
David

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Julie Stacey
By Pingsquitch
22nd Apr 2020 16:33

I am not a qualified accountant, just a lowly bookkeeper with 6 clients but I still have to pay the exorbitant fees demanded!

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By Jim Ransley
28th Apr 2020 17:10

Ian McTernan should think himself a little lucky - I am supervised directly by HMRC and their charge for 2019/20 based on 1 premises and two persons (both Director status) was £480 - an increase of £365. In addition, with the advent of EDD, a further £190 in training fees (to strengthen my awareness and understanding of the precise specifications of the latest EU directive 15, plus additional costs in time and ensuring KYC / EDD fulfilment.
Jim Ransley
Lindfield, W.Sussex

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