Reforming Anti-Money laundering and Counter-terrorism Financing Supervision

My noble friend the Treasury Lords Minister, Baroness Penn, made the following written statement on 30 June:

On 30 June 2023, HM Treasury published a consultation regarding the reform of the UK’s anti-money laundering and counter-terrorism financing (AML/CTF) supervisory regime.

Consulting on and implementing reform of the AML/CTF supervisory system is a key commitment in the Economic Crime Plan 2023 to 2026. It is expected to complement a number of other actions aimed at strengthening the UK’s anti-money laundering regime, and ensuring that businesses most vulnerable to abuse for money laundering or terrorism financing have robust and proportionate controls in place, and are subject to effective supervision.

The Treasury’s 2022 Review of the UK’s AML/CTF regulatory and supervisory regime concluded that, while further improvements should be made to the current regime, structural change may be needed to address certain weaknesses. This consultation outlines in more detail four potential models for the future of supervision and seeks to gather evidence on which will best deliver the reform objectives.

The first model, OPBAS+, would provide increased powers to the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). OPBAS was established in 2017 and has made significant progress against its aim of ensuring high and consistent supervisory standards among the 22 professional body supervisors (PBSs) which supervise the legal and accountancy sectors.

The second model would consolidate PBSs so that between two and six PBSs would retain responsibility for AML/CTF supervision.

The third model would see the creation of new public body. This could take over the AML/CTF supervision of the supervisory populations of PBSs, and potentially some additional sectors currently supervised by HMRC. Alternatively, it could be given responsibility for the AML/CTF supervision of all populations currently supervised by a PBS or by HMRC. This would create a system whereby either three or four public bodies carry out all AML/CTF supervision.

Finally, the fourth model would place the AML/CTF supervision of all sectors regulated under the Money Laundering Regulations under the remit of a single public body.

These four models represent a commitment to strengthen the UK’s defences against economic crime, responding to calls to address weaknesses in the current system made by stakeholders such as the international AML/CTF standard-setter, the Financial Action Taskforce. The consultation also seeks views on whether there is a case to increase requirements on supervisors and their regulated populations to further support compliance with sanctions.

The consultation will be open for three months, closing on the 30 September 2023. After this, the Government will make a policy decision by the end of Q1 2024 on the model which best achieves the reform objectives. Strengthening the effectiveness of the UK’s AML/CTF regime will also support wider public and private sector priorities set out in the Economic Crime Plan 202 to 2026, such as the reforms of Companies House legislated for through the Economic Crime and Corporate Transparency Bill. Taken together, these reforms will help to cut crime, protect our national security, and support the UK’s legitimate economic growth and competitiveness.