The professional bodies supervising anti-money laundering enforcement amongst their members have been told by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) that improvements need to be made. While most Professional Body Supervisors (PBSs) comply with the regulatory requirements, "pockets of ineffectiveness remain".
It is OPBAS's fifth report into Anti-Money Laundering (AML) and follows a 'Sourcebook' it published in January 2023 to help PBSs improve their supervision, governance and enforcement of the rules. As a result, OPBAS said it expected PBSs to have fully embedded sourcebook changes, and it was intervening more forcefully to address concerns.
OPBAS supervises the 22 PBSs across the accountancy and legal sectors (plus three who have delegated their regulatory functions), with the key objectives of:
- Ensuring a robust and consistently high standard of supervision by the PBSs overseeing the legal and accountancy sectors.
- Facilitating collaboration and information and intelligence sharing between PBSs, statutory AML supervisors and law enforcement agencies.
The report makes for uncomfortable reading for the sector concluding that while most PBSs can demonstrate compliance with their obligations under the Money Laundering Regulations (MLR), there remains a lack of full and consistent effectiveness, with none yet fully effective in all OPBAS sourcebook areas.
The report focused on highlighting the areas in which PBSs most need to improve and includes both overall sector reviews and the OPBAS assessments of nine PBSs.
The key findings from the latest round of supervisory assessments of nine unidentified PBSs:
- OPBAS has not seen any material improvement in PBS’s effectiveness in the core areas of supervision, risk-based approach, enforcement, and information and intelligence sharing.
- Of the nine assessed, most had marginally declined or remained static in overall effectiveness, with incremental improvements observed in just three PBSs.
- OPBAS intervention was required to address material ineffectiveness and compliance concerns at two PBSs.
- There were problems in applying a Risk-based approach which reduced the effectiveness of supervision. Many PBSs assessed could not clearly substantiate the risk profiles they had assigned to their members
- Weaknesses remain in AML supervision with a large proportion of the PBSs assessed as partially effective and the variety of approaches to assessing supervised populations made it difficult to compare like with like. More consistency was needed.
- There were continued gaps in enforcement approaches.
- The PBSs' commitment to consistent, proactive information and intelligence sharing continues to be a concern. While some PBSs have made efforts to improve in this area in the last year, there is still too much inconsistency.
- Not all PBSs are prioritising and resourcing their AML supervisory function appropriately.
- Outsourcing AML inspections. A significant proportion of the PBSs (at least six of the 22) do not conduct all their AML supervision or inspection activity in-house. The report identified instances of weaknesses in the oversight of outsourced supervisory activity, with subcontracted inspectors not fully aware of PBS’s policies, procedures and risk profiles.
- Limited AML resources. Individual annual AML returns for 2022/23 submitted by PBSs to the Treasury indicate their annual AML expenditure per supervised population varied from as little as £73 to over £1,000. While resources should be proportionate to the size and risk of supervised populations, in our view some PBSs are not sufficiently resourcing their AML supervisory function which reduces effectiveness.
The OPBAS said it would continue its supervisory oversight in the coming year and would take robust, proactive actions to address identified shortcomings and drive further improvements in the consistency and effectiveness of PBS’s AML supervision.
Useful guides on this topic
AML: Risk Assessment (Accountants)
A checklist for Anti-Money Laundering (AML) purposes to assist with risk assessing prospective clients operating in the Accountancy sector. For use by non-credit/financial institutions and non-FCA-regulated firms.
AML: Money Laundering Regulations: Accountants' Registration
Money Laundering Regulations: if you provide accountancy services, book-keeping, tax advice or trust and company formation services and you are not already a member of a Supervisory body recognised under the regulations you must register your business with HMRC.
External links
The Office for Professional Body Anti-Money Laundering Supervision (OPBAS): Anti-Money Laundering Supervision by the Legal and Accountancy Professional Body Supervisors: Progress and themes from our 2023/2024 supervisory work
HM Government: Economic Crime Plan 2 2023-2026
OPBAS: Sourcebook for professional body anti‑money laundering supervisors
