Tax bodies respond on changes to anti-money laundering supervision

This is the long-awaited outcome of a 2023 consultation looking to reform AML supervision. While the timeline is as yet unspecified, it will in due course see HMRC and professional bodies (including ATT and CIOT), give up their AML supervision of the sector.

The government’s response states that it is seeking to simplify the regime within a single professional services supervisor. However the bodies have cautioned that significant investment and planning will be needed to move from supervisors with a commercial understanding of the work and effective processes already in place.

ATT and CIOT are calling for early clarity on the proposals, including a realistic timeline for the transition, keeping burdens on the supervised population proportionate, and ensuring the education and bespoke support currently provided to members remains available to them.

ATT and CIOT’s preferred model in response to the 2023 consultation was strengthened professional body supervision, overseen as now by an independent body (the Office for Professional Body Anti-Money Laundering Supervision, or OPBAS). The key benefits of this approach would have been the professional bodies’ expertise and knowledge of their members’ work, their ability to support firms into compliance with clear processes already in place, and efficiencies and simplicity through streamlining with other regulation of professional standards of their members.

Since OPBAS was established in 2018 there has been considerable improvement in AML regulation across the sector including greater information and intelligence sharing. It is important this is built on rather than lost in the transition while new processes are set up and the FCA seeks the skilled resource it will need for effective supervision.

Jane Ashton, Chief Executive of the ATT, said:

“This is a long-awaited decision following the consultation in 2023 and although not our preferred model we will work with the new single professional services supervisor, the Financial Conduct Authority, to ensure we transition our members as smoothly as possible.

“However, we caution that moving from a system overseen by professional bodies with commercial understanding and established processes will require significant investment and careful planning.

“Early clarity on proposals and a realistic timeline are crucial, as is ensuring that the current support and education for members is maintained, and the knowledge and effective compliance support developed since 2018, particularly under OPBAS, is not lost in transition.”

Ellen Milner, Director of Public Policy for the CIOT, said:

“We can see the logic of a single supervisor but it is not our preferred model – which was for strengthened supervision by professional bodies, overseen by the existing independent body, OPBAS.

“Our concerns raised in the consultation are yet to be addressed by the proposals. The investment needed, both in money and time, to transition the population and effectively police the regime with skilled personnel should not be underestimated.

“Effective supervision must include minimising burdens on the vast majority who are compliant with their AML requirements and providing education to assist firms to comply. Certainty around timelines and the substance of the new proposals is urgently needed for those whose supervision is moving so they can understand how to remain compliant with AML requirements both in the future and the interim.

“We will be doing all we can to support the FCA and our supervised firms with a smooth transition and the maintenance of effective, proportionate AML supervision for our members.”

Notes

1. Government announcement and consultation response are at: Reforming anti-money laundering and counter-terrorism financing supervision - GOV.UK
2. Reform of the AML and CTF Supervisory Regime ATT members' FAQ's