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The UK government is considering significant changes to its anti-money laundering (AML) supervision system, with the possibility of creating a new super-agency called the Single Anti-Money Laundering Supervisor (SAS). In a consultative paper launched by HM Treasury, four potential models for AML supervision are outlined.
The current system involves the Financial Conduct Authority (FCA), Gambling Commission (GC), and HM Revenue Commission sharing AML roles across the financial services sector. However, under the proposed SAS model, these bodies would be stripped of their AML responsibilities, which would be transferred to the super-agency. The goal is to consolidate AML and counter-terrorism financing supervision under one entity.
The first proposed model, OPBAS+, suggests enhancing the powers of the existing Office for Professional Body Anti-Money Laundering Supervision (OPBAS) without making structural changes. This would build on the improvements brought about by OPBAS since its establishment.
The second model, PBS Consolidation, aims to reduce complexity and inconsistency by retaining either two or six professional body supervisors responsible for AML supervision. Options include having one accountancy sector supervisor and one legal sector supervisor with UK-wide remits, or having them within each jurisdiction: England and Wales, Scotland, and Northern Ireland. Accountancy firms currently supervised by HMRC could potentially be transferred to the consolidated professional body supervisor.
The third model, Single Professional Services Supervisor (SPSS), suggests a single body supervising all legal and accountancy sector firms for AML purposes. It might also supervise some or all of the sectors currently supervised by HMRC. Unlike the current private body supervisors, the SPSS would likely be a public body with potential benefits in terms of holding broad enforcement powers and adaptability to changes in regulated sectors.
The fourth and most radical model is the creation of a Single Anti-Money Laundering Supervisor (SAS), where all AML supervision in the UK would be consolidated under a single public body. The FCA and GC would no longer supervise firms for AML compliance under this model, focusing instead on general regulatory conduct. Similar to the SPSS, the SAS would be operationally independent of any ministerial department but accountable to the Treasury.
The consultation paper also addresses the need for improved sanctions supervision, especially with the increase in sanctions complexity following the Russian invasion of Ukraine in 2022. It suggests that supervisors could play a crucial role in communicating sanctions risks to businesses and overseeing effective compliance controls.
The Treasury aims to gather evidence on the need for a more formalized system of sanctions supervision and how it could interact with the four proposed reform models.
The consultation period will last for three months, allowing stakeholders such as fincrime and banking professionals, as well as representative groups, to contribute their insights until September 30.
The UK government's review of the AML regime in 2022 identified significant weaknesses in the current supervision framework, prompting the call for further reform. While OPBAS has made substantial improvements in professional body supervision, the review also proposed specific regulatory amendments to support a more proportionate and risk-based approach, with consultation on these amendments planned for the fourth quarter of 2023.
Overall, the potential changes in AML supervision reflect the UK government's commitment to strengthening its AML/CTF regime, protecting the economy from illicit finance, and ensuring consistency and effectiveness in compliance across regulated sectors. The consultation process will provide an opportunity for stakeholders to shape the future of AML supervision in the UK.
By fLEXI tEAM