Treasury Considering New AML State Regulator

Stack of papers on a desk

HM Treasury is considering introducing a single state regulator to oversee the UK’s anti-money laundering and counter-terrorism financing (AML/CTF) responsibilities, under plans revealed by the Government at the end of June.

A single state regulator features in two of four proposals in the Government’s consultation document ‘Reform of the Anti-Money Laundering and Counter-Terrorism Financing Supervisory Regime’, published on 30 June 2023.

The consultation document outlines four potential models for reforming the UK’s anti-money laundering and counter-terrorism financing supervisory system.

The proposals come in response to a review of AML supervision undertaken last year, which found that “some weaknesses may need to be addressed through structural reform”.

Currently, the AML/CTF supervisory system in the UK is made up of three statutory supervisors: the Financial Conduct Authority (FCA), the Gambling Commission (GC) and HMRC, and 22 professional body supervisors (PBSs) who supervise the legal and accountancy sectors.

Supervisory bodies ensure firms and individuals comply with the Money Laundering Regulations (MLRs) and take enforcement action if MLRs are breached.

The PBSs are overseen by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). This oversight body is housed within the FCA and was established in 2017 “to ensure robust, consistent supervision” as well as good information-sharing between supervisors and law enforcement.

The consultation document reveals four potential models for reform of the regulatory system:

  • Model 1: OPBAS+. The first potential model would involve no structural change to the regime. Instead, OPBAS would be given enhanced powers to increase the effectiveness of supervision by the PBSs. This model would be the most immediately feasible, requiring no structural changes.
  • Model 2: PBS Consolidation. Model 2 would likely see either two or six PBSs retain AML/CTF supervision responsibility. There could be either one accountancy sector supervisor and one legal sector supervisor, both with UK-wide remits, or one accountancy sector supervisor and one legal sector supervisor within each jurisdiction: England and Wales, Scotland, and Northern Ireland.
  • Model 3: Single Professional Services Supervisor (SPSS). The third model would see a single body supervise all legal and accountancy sector firms for AML/CTF. It may also supervise some, or all, of the wider sectors currently supervised by HMRC. This body would most likely be a public body, unlike the PBSs. The body would be expected to be operationally independent of any ministerial department, but accountable to the Treasury. While the existing professional body supervisors would no longer be responsible for AML/CTF supervision, they could continue to supervise firms for other purposes.
  • Model 4: Single Anti-Money Laundering Supervisor (SAS). Under this model, a single public body would undertake all AML/CTF supervision in the UK. The major difference between this and previous options is that the FCA and GC would also stop supervising firms for AML/CTF compliance. While the existing supervisors would no longer be responsible for AML/CTF supervision, the FCA, GC and PBSs would continue to supervise firms for general regulatory conduct within their respective remits. An SAS would likely be operationally independent of any ministerial department, but accountable to the Treasury.

The three-month consultation into AML regulatory reform is set to close on 30 September. To read the full document, click here.

AML & Compliance Services for Businesses

Changes to the AML regime in the UK are fast-paced and regulated businesses must ensure they stay on top of all developments and continue to meet requirements.

We can help organisations of all shapes and sizes from across different sectors review their policies, controls, and procedures to ensure that they are compliant with AML regulations and therefore avoid any breaches.

A review of this nature provides valuable insight into a business when performed correctly. Along with an overview of risk, these crucial assessments also highlight issues within the business, so it is essential to undertake a proper review. All of a company’s building blocks must be considered, including its staff, clients, operations, and finances.

By working with AML & Compliance, a business can be assured that we will bring the required knowledge and expertise needed to perform the review, which adds value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that includes:

  • Consultancy.
  • Compliance Policies.
  • Training.
  • Handbooks.
  • Auditing.

Our services focus on businesses’ Anti-Money Laundering and Regulatory requirements through the implementation of effective policies, procedures, training, and consultancy. We also provide continued monitoring of staff and ongoing training to ensure that everyone within a business is aware of the latest requirements and complies with their responsibilities.

We offer a full range of services focused on ensuring businesses across all regulated sectors create, maintain and evidence their compliance with the requirements of their regulators and legislation. We work with businesses of all sizes, from the smaller high street or niche businesses to the large multi-office and multinationals.

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