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Posted on: July 7, 2023, 08:55h.
Last updated on: July 7, 2023, 08:55h.
The UK government has released plans that propose the consolidation of anti-money laundering (AML) responsibilities into a unified entity in the country. It presents four possible designs, and the final decision could have ramifications for the UK Gambling Commission (UKGC).
The UK government’s HM Treasury recently unveiled a new plan on June 30 that aims to overhaul the oversight of AML and counter-terrorist financing (CTF) in the country. The proposed changes primarily focus on regulating how businesses should address requirements, rather than modifying the requirements themselves. A separate review is scheduled to assess that possibility.
There are four possibilities that the treasury department has put on the table. It will now open the floor to feedback and comments, allowing input until the end of September.
Rewriting AML Oversight
Per the official document, a single body could ultimately manage the UK’s AML oversight. The entity would be public, but would answer directly to Parliament.
The report suggests that this singular supervisor offers advantages over private bodies. Not only does it centralize the oversight and create efficiency, but it makes it easier to maintain continuity if AML regulations change.
The change, should it come to pass, would only impact how current regulatory entities approach AML oversight. They would still be responsible for maintaining all other aspects of their guidance.
To prepare for this recommendation, HM Treasury conducted a comprehensive global analysis that examined the regulatory systems of other countries in the G7 and G20. These countries, it explained, have received praise from the Financial Action Task Force (FATF), and the UK wants to mirror their systems.
Per the perspective of HM Treasury, none of the AML systems currently in use in the UK satisfied the criteria. Therefore, the only conclusion is that a new system is necessary.
The study revealed a persistent occurrence of vulnerabilities in the AML supervision processes related to the non-financial sector in the UK. Additionally, it highlighted the absence of effective enforcement mechanisms by the authorities to address these shortcomings in the income section.
Four Scenarios On The Table
One of the models HM Treasury presented would require only a little tweaking to current policies. The newly-created Office for Professional Body Anti-Money Laundering Supervision (OPBAS) could receive additional powers that would allow it to more effectively oversee existing the UK’s existing professional body supervisors (PBS), a reference to the current regulators.
Another model would take a few of the PBSs, perhaps two or six, adn give them AML/CTF supervisory powers. The number chosen would depend on the final makeup of the model – there could be two overseeing all of the UK or six to cover each of its jurisdictions.
The third model suggests a single supervisor overseeing all legal and accountancy sector firms. HM Treasury explains that this would likely be an “independent public body with broad enforcement powers.”
The last model would introduce an entirely new supervisor to control all-things-AML. However, this is also the most problematic. Existing regulators, such as the UKGC and the Financial Conduct Authority, would retain the control they have now, absent AML oversight. As a result, there could be confusion and blurry lines regarding who is actually responsible for what.
It’s unclear which of the four the UKGC supports. It might like the idea of not having so much on its plate, but would also have to relinquish its authority of potential AML violations. Because that’s one of its constant go-to reasons for issuing huge fines, it probably doesn’t like the idea.
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