The roles of accountancy professional bodies, legal regulators and HMRC in anti-money laundering supervision are to be diminished as the government recently announced a major reform of the Anti-Money Laundering and Counter Terrorism Financing Supervision Regime.
On Tuesday 21 October, HM Treasury announced its response to the consultation on anti-money laundering (AML) and counter-terrorism financing (CTF) supervision which was launched in 2023. Of the four options being considered by HM Treasury, the decision has been reached to appoint the Financial Conduct Authority (FCA) as a Single Professional Services Supervisor (SPSS).
The FCA will be tasked with working with the professional services sector, other regulators and law enforcement agencies to improve the UK’s defences against money laundering. The FCA will supervise accountancy services, legal services and trust and company services providers under the new regime. This was thought to be the most effective approach due to the FCA’s existing expertise as it already supervises financial institutions on AML and CTF.
Parjinder Basra, Chair of the Institute of Chartered Accountants in England and Wales’ (ICAEW’s) Regulatory Board, expressed concern and disappointment, believing the decision will ‘only increase the regulatory burden and costs to firms, making business growth more challenging while creating greater confusion within the regulatory framework and leading to even more fragmentation in the way key information is held and maintained about the activities of professional services firms’.
‘We intend to continue to engage with ministers and the Treasury to ensure that all of the ramifications of this decision are understood, and to suggest alternative ways forward,’ he added.
A date has not been given for the change in supervision, with a separate consultation on the powers that the supervisor should have set to be published in November. The initial mood, however, is that there is the potential for the FCA to provide more detailed provisions, which will be more onerous.
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