Accountancy bodies uncertain about AML watchdog fees

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Professional accountancy bodies are still uncertain about the additional fees the new Office for Professional Body Anti-Money Laundering Supervision (OPBAS) will require, despite the AML supervisory regime launching last month.

The OPBAS, which launched on 18 January as one of the key components in the government’s plans to reform the AML supervisory regime, will rely on the professional bodies it oversees to recover the regime’s costs.

But the lack of detailed information around the level of fees has left some professional bodies unable to plan for their impact, while concern still festers that the proposed regime will lead to destabilisation of the regulated sector. 

Fee proposals

As outlined in the FCA’s fee recovering consultation, the OPBAS plans to recover the projected set-up and operational costs over two years, projecting the rounded costs in 2018/19 as £2.5m, and from 2020/21 onwards as £2m.

In the consultation released in October 2017, the FCA proposed a structure to recover annual costs of supervision. The options explored in the consultation include:

  • a flat fee divided between all fee payers, but the consultation conceded that this would disproportionally affect smaller fee payers
  • apportion the fee based on professional body supervisors income
  • Tariff based; or
  • a minimum fee the smaller bodies should pay, while larger bodies would pay this plus a variable rate.

Professional bodies already listed as AML supervisors when the OPBAS regulation comes into force will not incur an application fee. Meanwhile, a moderately complex application from a new supervisor would be charged a one-off fee of £5,000, regardless of whether the application is successful or not.

But reactions from the professional accountancy bodies haven’t lessened since they first learned about the watchdog in March 2017. When AccountingWEB spoke with Malcolm Trotter from the International Association of Bookkeepers last year, he said the levy on the professional bodies wasn’t “morally right” because the fee would be passed on to their members.

The accountancy bodies react

This fear still holds: the AAT expects the regime to bring destabilisation to the regulated sector. Responding to the consultation, the professional body said the additional charges will likely be passed on to each body’s respective members, and in turn to members’ clients. This is likely to create an unfair advantage to unqualified, non-professionals who are not required to hold professional indemnity insurance, abide by a code of professional ethics and subject themselves to checks. 

"It is clearly not in the public interest if professional service providers leave their highly regulated membership body environments and/or their clients move to non-professional providers in order to avoid paying higher fees," the AAT wrote. 

Considering the watchdog commenced in early 2018, the AAT was also concerned that there are still elements that remain vague.

“[M]any bodies may have to seek to recover the additional costs of supervision from their membership, the absence of definitive detail at this stage puts undue pressure on the professional body supervisors to have to bear the initial burden of the increased costs without having sufficient time to either communicate or impose potential subsequent changes in membership fees to their respective supervised communities,” the AAT document said.

If the FRC decides to enforce the flat fee approach, smaller bodies would likely step down from their roles as professional supervisors and this, the AAT added, would put the wider AML framework at risk because it will affect those supervised by the smaller bodies.  

‘No strategic plans’

Meanwhile, the ACCA raised questions about the new body's strategic plans, which makes it difficult to comment on the recovery costs.

The ACCA has “fundamental concerns” about not just the lack of information but the estimated costs. “Such generous rounding raises serious concerns about the accuracy of the estimated costs, and also the ability of OPBAS to only incur costs with due regard to proportionality and the resources of the supervised populations,” ACCA said.

The ACCA also “strongly opposed” the setup costs being borne by the professional bodies.

The OPBAS will interact with HMRC as the default supervisor for the accountancy profession.

“However,” ACCA said, “it appears that the cost of those interactions will not be borne by HMRC. Therefore, the objective of fairness cannot be met in respect of such costs, which do not relate to oversight of the PBSs, and over which the [professional bodies] have no control.”

The FCA is set to publish feedback on the fees policy this month and the final fees and levy rates will be in a policy statement released in June/July. In March/April, the FCA will consult on periodic fee rates for the next financial year and any proposed changes to application fees.  

On the launch of the OPBAS, the economic secretary to the Treasury John Glen said the watchdog will send a “clear message to criminals and terrorists”. “This new watchdog will deepen the government’s partnership with the private sector as we work together to tackle illicit finance whilst minimising the burdens on legitimate businesses,” he said. 

About Richard Hattersley

Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.

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07th Feb 2018 09:48

In what world are we living in in which I am expected to pay for doing someone else job for them!!!

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07th Feb 2018 10:55

This whole AML thing seems like a massive cash cow for somebody, and it's not yer average practitioner. I've just been informed by CIMA that my AML declaration, which used to be a couple of pages, is now a form that requires a lot of my time, plus a payment of £25 for some DBS form, which I've never been asked for in my life, in addition to my Member in Practice fee, which increases every year without fail at a rate in excess of inflation. I'd like to know how many money launderers have actually been detected to justify all these costs...

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By Robbo
07th Feb 2018 11:20

HMRC pretends that there are no unlicensed practitioners, that the tax payer submits his or her own return.
If HMRC worked with agents & tried to identify the dodgy ones the whole industry would be a lot happier & HMRC would collect more tax.

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07th Feb 2018 15:39

I agree completely with the AAT's comments on the new regime. WHY didn't someone set up a supervisory body for all unqualified agents, so any agent would have to be with a supervisory body whether qualified or not? Anyone wanting to be agent would have to quote their registration number and supervisory body to become an HMRC agent. The new body could then charge a realistic fee for the QBE's and other agents, and the qualified agents who already pay their fees to their professional body would not have to meet the additional overhead. The public would be far better protected.

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14th Feb 2018 14:56

We could be back to the position when a lot of members regulated by his/her institute will decide to be regulated by HMRC because of cost. This in my mind would make it even easier for money launders.

Because of the large sums that are supposed to be raised why is this not a self-funding exercise.

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By kbrsf
05th Mar 2018 16:02

I have just received a renewal proposal for Prof Indemnity Insurance and its gone up more than 50% to £1200 I use Bell Insurance brokers. they said its a hard work to get any more cheaper.

I am surprised. which sector price index has gone up by over 50%?.

Regards
Kamlesh Rajput

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