Anti-money laundering supervisory landscape: where are we now?

We consider how OPBAS has fared since its launch.

The UK’s Anti-Money Laundering (AML) regime has evolved over the years to keep up with the changing face of financial crime.

It underwent a major transformation in 2018 with the creation of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). The intention at the time was to create one supervisor to oversee the various ‘on the ground’ oversight bodies that work at the front line of AML. As a result, OPBAS now sits above 22 regulatory bodies within the accountancy and legal sectors with the aim to ensure a robust and high standard of supervision.

Calls for change

Not surprisingly, that number of supervisors has led some to conclude that the regime may need reform to improve efficiency, accountability and consistency. While AAT has enjoyed a constructive relationship with OPBAS and received consistently positive reports, OPBAS issued a report in April of this year indicating that improvements in effectiveness amongst the Professional Body Supervisors were not consistent in pace or scale, with some bodies demonstrating only partial effectiveness or ineffectiveness in key areas across the supervisory landscape.

With that in mind, the Government has indicated it will launch a consultation into the next stage of the UK’s AML supervisory regime. And early indications, outlined last year, suggest that the Government is considering a number of options to strengthen the regime going forward.

While it’s too soon to know exactly what each option will entail, one route the Government has indicated could be taken would see a development to the role fulfilled by OPBAS. Under this, the fundamental structure would remain unchanged, but OPBAS’s powers would be strengthened.

Consideration around any extension to OPBAS’s powers will give rise to necessary reflection around how it has fared since its launch. Evaluating what has worked well and where there have been challenges will help determine whether extended powers for OPBAS would improve compliance.

Difficult beginnings

It’s important to note that AAT was initially unconvinced of the need for OPBAS when it came into being five years ago. Our objections at the time included the lack of a clear rationale for its creation, confusion over its objectives and an opaque funding model. However, as is standard practice, we pledged to work constructively with the new body to give it the best chance of succeeding. Ultimately, OPBAS’s aim is to create and sustain a successful and efficient AML supervisory regime, and that requires bodies like ours to engage fully, working in good faith and in the public interest.

And the past five years have proved that, by and large, OPBAS has been a force for good in the AML space. OPBAS has grown into its role and has set about fulfilling its commitment to improving the landscape for all stakeholders.

AAT has continued to engage with OPBAS, the other Professional Body Supervisors and relevant authorities. For example, following the publication of the OPBAS report we compared our risk-based approach to the examples of effective practice within the revised OPBAS Sourcebook, which did not highlight any particular areas of concern.

We will conduct a review of the risk-based methodology in the coming months to ensure it remains fit for purpose.  We will also continue to look for ways to proactively engage with our supervised population to develop our understanding of the risks present in the accountancy sector. The oversight provided by OPBAS has been invaluable in helping us to improve our effectiveness and efficiency.   

Staying current

We certainly agree that a strengthened OPBAS would add real value, and having the powers to remove low-performing supervisors would be a positive development for the body. AML enforcement is one of the most dynamic and challenging areas of financial regulation, and there’s evidence that OPBAS is making real progress. Now that the system is working well, harnessing and strengthening that cooperation must surely be the priority going forward.

While we’re waiting for the Government to announce what options it will consider for reform, it would be counterproductive to shift in a dramatic direction away from the progress OPBAS has made in improving the supervisory landscape. Evolution, not revolution, is what is needed to ensure the integrity of AML supervision and avoid unnecessary transitionary risks that could damage the reputation of the UK as a leading nation in AML regulation.

Change is needed, but building on success is better than disruption. AAT is fully behind any efforts to improve compliance and regulation, but we firmly believe the achievements of OPBAS – and its proven ability to raise the bar – should be taken into account as its future is debated.

Adam Harper is AAT's Director of Professional Standards & Policy..