Professional accountancy bodies will have to fund a new Treasury supervisory anti-money laundering regime. But the crackdown to impose consistent standards across the profession will impose extra charges that will filter down to practitioners' subs.
The government plans to create the Office for Professional Body AML Supervision (OPBAS) under the auspices of the Financial Conduct Authority to enforce the new Money Laundering Regulations 2017. OPBAS will open for business by the start of 2018.
Professional bodies fund regime
According to the consultation document, OPBAS will be funded by an FRC levy on professional bodies. But Malcolm Trotter, the chief executive of the International Association of Bookkeepers, said the arragement was not “morally right" because professional bodies would pass on the fee to firms.
“You are making people pay who are not the beneficiaries of the AML regime,” Trotter told AccountingWEB. “Professional bodies are not for profit organisations, there is no way they can absorb this so they will have to pass it on.”
Trotter said his views was shared by other professional bodies: “It doesn't make sense because you are trying to foster commitment and goodwill from the profession, but to then impose a further charge when they are already paying for AML supervision, it doesn't sit right.”
Number of professional bodies ‘risks inconsistencies’
The Treasury explained that OPBAS would strengthen and coordinate the current inconsistent approach to MLR compliance: accountancy and legal services, for example, make up 23 supervisors and 22 of these are professional bodies.
“The number of professional body supervisors in some sectors risks inconsistencies of approach. And data is not yet shared between supervisors freely or frequently enough, which exposes some supervised sectors to risk where there are overlaps in supervision,” wrote the Treasury.
However, Trotter said that it's “hard to see the justification” for the office because the accountancy and legal sectors already attend quarterly AML supervisory forums led by the Treasury.
The Treasury expects the supervisory board will stop the £24bn lost to serious and organised crime each year through inconsistent regulation. The new watchdog will advise the Treasury if it thinks a professional body sould be removed as an AML supervisor. OPBAS will monitor how the bodies are performing and impose penalties where they are considered 'poor'.
Simon Kirby, economic secretary to the Treasury, said the new money laundering regulations and OPBAS will “bring the UK’s anti-money laundering regime into line with the latest international standards, and ensure consistently high standards of supervision across all sectors, sending a strong message that money laundering and terrorist financing should not and will not be tolerated”.
OPBAS emerged from the government’s cutting red tape review, which ran alongside a separate consultation on the supervisory AML regime.
The supervisory regime is one of the morsels of new features included in the draft regulation which contained repeats of existing regulations.
While practitioners may take the brunt of the professional bodies’ fee, David Winch, AccountingWEB’s resident money laundering reporting expert, said: “[The government’s response] may be more attractive (or less unattractive) to practitioners than an alternative approach such as putting all supervision in the hands of HMRC or some other government body.”
Launching the consultation on 15 March, the government said it was looking for clarity on the new body's mandate and powers. Respondents have until 26 April to respond.
About Richard Hattersley
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