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Piggy bank in washing machine | accountingweb | Accountancy bodies warn against disruptive AML reforms

Professional bodies oppose disruptive AML reforms


The accountancy bodies have raised concerns about the “disruption” of a single anti-money laundering regulator, arguing instead to give more powers to the current regulator.

9th Oct 2023
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A warning from the accountancy bodies came as Treasury consultation to reform the anti-money laundering (AML) supervisory system closed 30 September.

The consultation set out four potential models to beef up AML supervision, ranging from the creation of a new single AML regulator to single regulators for the accountancy and legal sectors or strengthening the supervisor of supervisors: the Office of Professional Body Anti-money Laundering Supervision (OPBAS). 

If the Treasury chooses the single new regulator model, professional bodies and HMRC will be stripped of their AML supervisory powers.

Michelle Giddings, ICAEW’s head of AML, argued that “removing professional bodies from AML supervision risks losing this valuable intelligence”. 

Worse outcomes

Meanwhile, Glenn Collins from the Association of Chartered Certified Accountants (ACCA) wrote recently on AccountingWEB that a single regulator would “increase costs for practitioners and not lead to improved outcomes in the ongoing fight against money laundering”.

Collins added that alongside possible increased costs, the new regulator would add further complexities for members of the professional body in having to deal with yet another regulator and would lead to increased costs “for no clear good purpose”. 

The Institute of Chartered Accountants in England and Wales (ICAEW) also warned that a single regulator would disrupt the already existing intelligence-sharing relationships, and could lead to a reduction in awareness and competency of AML risk. 

The accountancy body voiced fears that the new regulator could be understaffed if experts from the existing bodies didn’t move across and it would therefore lack the expertise to operate effectively. 

Least disruption

Instead, a number of the professional bodies have publicly backed the proposal to enhance the powers of OPBAS, which would carry the least disruption. ICAEW’s Giddings said OPBAS+ delivers “the most feasible and effective way to improve supervision by building on what works”. 

She added: “We are concerned that the other options proposed would weaken AML regulation, and risk leaving the door open for criminals to do business in the UK and cause wider damage to the economy.”

Robert Mudge, executive director of regulation at the Institute of Chartered Accountants of Scotland (ICAS), also preferred the OPBAS+ option over the other three models. He argued that it’s the only model that “doesn’t present significant risk to UK’s attempts to tackle financial crime”.

Listing the “dangers” associated with the other three models, Mudge said a new supervisor would take many years to create, which would lead to a “loss of momentum”; a risk of data loss as information from more than 40,000 supervised firms is transferred; increased costs; loss of knowledge; and there is “no guarantee that the chosen model would ultimately be a more effective supervisor for anti-money laundering/combating the financing of terrorism (AML/CFT)”.  

Legal sector

None of the accountancy bodies have publicly stepped forward and volunteered to be the single regulator for the sector. The same can’t be said in the legal sector, however. The Legal Services Board (LSB) in its response to the consultation said it would be well placed to act as the single AML supervisory body for the legal sector in the UK. 

The LSB claimed that since the economic crime and corporate transparency bill will place “explicit responsibility” on the legal professional body, “the government would be acting entirely consistently with its broader economic crime policy if it were to bring AML supervision for legal services within the auspices of the LSB.” 

The legal body went on to say that it supported OPBAS but added that there is an alternative option in “the transfer of those responsibilities to the LSB”. 

Reform the system

The consultation was launched following the government’s commitment to the Economic Crime Plan 2023–6 to reform the AML supervisory system. There are currently 22 professional body supervisors supervising across the accountancy and legal sector, alongside the Financial Conduct Authority, the Gambling Commission and HMRC. 

AML supervision has faced increased scrutiny as the government has continued to clamp down on money laundering, with professional bodies feeling the wrath of the OPBAS. The varying supervision across the supervisors was picked up by the supervisors of supervisors in its fourth report in April, where OPBAS told some professional bodies to “step up their efforts”. 

The consultation closed at the end of September after running since 30 June. The Treasury is currently reviewing the feedback before announcing the next step of the AML reform.

Replies (14)

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By Duggimon
10th Oct 2023 09:58

Currently, our professional body visit us in the office and check our money laundering processes are operating as they should. I have absolutely no doubt that a single central regulator responsible for all accountancy and legal firms would be completely underfunded and entirely unable to keep up with this and would replace it with something far easier to get around for those bad actors.

Why is the government's instinct in every single proposed reform to take a process that works but has a few issues and replace it with something that doesn't fix those issues but just makes more, bigger, different issues?

Thanks (8)
By johnjenkins
10th Oct 2023 10:04

Since AML started it has not made an iota of difference to scammers, drug barons et al.
All AML does is create more unnecessary costs and work for the Accountancy profession.
Ask yourself the question. Where does ML rear its ugly head? The answer is mainly at banks (certainly a bit of cash). So if you want to control ML, banks are the first port of call. Isn't it amazing how some people can't get bank accounts yet scammers have no difficulty.

Thanks (18)
By Ammie
10th Oct 2023 10:47

Another move to fee earning. Creating endless legislation poses no issue for those money laundering. I suspect they find it all amusing.

Thanks (12)
Replying to Ammie:
By Marlinman
11th Oct 2023 07:10

Yes, they are all aware of AML so just carry big wads of cash and spend it, avoiding those subject to AML laws.

Thanks (0)
By Simontax
10th Oct 2023 10:48

It would be nice if they opposed MTD too.

Thanks (9)
By Simontax
10th Oct 2023 10:48

It would be nice if they opposed MTD too.

Thanks (0)
By tedbuck
10th Oct 2023 11:05

This is all a Civil Service 'increase our staff and keep our jobs project'.
It is perfectly obvious to all of us that the Civil Servants are not competent to run big organisations. See HMRC, NHS and any others you can think of.
AML is for the most part a useless exercise - when reports are made few are acted upon - yet we all have to jump through hoops to prove we have ticked numerous boxes which are practically meaningless.
So what happens - productivity reduces - costs increase and little people cannot afford us so stumble on without help and probably increase HMRC's tax gap. Absolute crass stupidity and as has been said the banks,the centre of all this, won't open accounts for ordinary people but still manage to take on board the dodgy accounts.
The whole thing is a tickbox exercise (just like auditing these days and look what's happened there.) and 90% of the time is just a waste of time. Surely those amongst us who stumble over a dodgy client have enough intelligence to report it without all this ludicrous performance. Certainly the dodgy people, professionals or otherwise aren't going to bother to comply or report so AML won't help there and the inspections by the Professional bodies are there to cover their backs. The whole thing is a nonsense - when did making a new law stop criminals? They don't care a monkeys. The only way to stop it is to throw the book at the miscreants and give them years of hard labour as they used to do rather than stuff them in the hotels that prisons have become.
Yet another waste of taxpayers' money and I thought they were trying to cut Government expenditure.
As taxpayers are we going to put up with this c**p for ever - it's our money they are spending so they don't care how much it costs - it's just jobs for the boys - viva the Civil Serrvice club and its higly expensive pensions - or not! Exceedingly bad value for money.

Thanks (11)
By Self-Employed and Happy
10th Oct 2023 11:14

Honestly what is the issue here, this is so easy to sort.

Government themselves should be carrying out the AML check, easy as uploading personal details and ID / Utility bills to a portal, once complete the individual should be given an AML number that lasts for 3 years.

Then an Accountant / Solicitor etc should enter the number, followed by one security question about the client (like DoB), the government database should then confirm the person is cleared for AML and the Accountant / Solicitor is automatically emailed confirmation AML for that client is complete.

Thanks (10)
Replying to Self-Employed and Happy:
paddle steamer
10th Oct 2023 12:38

You really want to give HMG yet another database to lose bits from/get hacked/etc?????

Thanks (4)
Replying to Self-Employed and Happy:
Should Be Working ... not playing with the car
By should_be_working
11th Oct 2023 09:27

You appear to have a touching faith in the efficiency, effectiveness, incorruptibility (financial and political) and benevolence of government.

Thanks (2)
By Ian McTernan CTA
10th Oct 2023 15:05

Here's a radical idea: scrap all this pointless pencil pushing and endless cost increases, and turn it on it's head.

Incentivise reporting and make sure the public know. Payment of 20% of the tax recovered (tax free!), after succesful enquiry or prosecution as a result of a report. Penalty for falsifying a report.

Just employ enough people to action the deluge of reports that would follow, and the ret of us can just get on with our jobs without the piles of paperwork.

Thanks (8)
Ivor Windybottom
By Ivor Windybottom
10th Oct 2023 17:25

It's strange how the professional bodies are so up in arms about losing a major income stream, yet claim it's all about costs, complexity, blah, blah, and not about their income.

Compliance should not be driven by financial benefit to a bunch of jobsworth organisations.

Thanks (2)
By tedbuck
11th Oct 2023 15:56

I like the idea of it being done by HMG but as has been said they just aren't competent which is why we are expected to do their jobs for them now and with the pressure on reducing staff it won't get better until they get off their duffs and start attending the office. If they want to reduce the staff sack the WFH brigade.
I like the idea of success payments for MLRs but there would be a lot of false reporting as it would be an easy way to cause trouble but I suppose that you couldn't get a reward without giving your name so maybe......
Anything -almost - would be better than the crazy set-up we have now which just wastes everyone's time for no purpose at the small end of the market anyway. Still that's government for you lots of Civil Servants creating jobs for themselves by inventing even more bureaucracy. And, of course, they are aided by the PBs who create lots of rubbish which has to be included in your company's accounts. I saw a set the other day more than 250 pages long - what a waste of paper.

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By Arbitrary
11th Oct 2023 16:18

It seems important these days to lock up more people or at least make them guilty of an offence. This will make us all more compliant with current laws or whatever additional laws are made. Instead how about creating an offence of 'making too many offences'? But seriously, this AML stuff does not appear to be improving things much. Is there any actual evidence of its usefulness or effectiveness?

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