Government’s plan to take £100m a-year from regulated entities, on top of AML fees, is a step too far, writes Phil Hall, AAT’s Head of Public Affairs & Public Policy.
The Government is proposing to raise approximately £100 million per year from entities regulated for Anti-Money Laundering (AML) purposes. This is in addition to the AML fees already being paid to the newly established Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
Let’s be clear; AAT is wholeheartedly committed to tackling money laundering and economic crime. And we have made a substantial investment in doing so.
AAT produces considerable guidance and template documents to support best practice in AML compliance by all AAT supervised firms and individuals. We also circulate a wealth of information to members via our Knowledge Hub portal, through AAT Comment and our members’ magazines.
Likewise, AAT regional branches frequently hold educational events, meetings and Q&A sessions on the subject.
We also ensure that at least 5% of AAT licensed accountants are subjected to a practice assurance review each year.
This process involves an AAT representative assessing a firm’s compliance with AAT’s standards, policies and regulations, and crucially their compliance with various statutory requirements, including Anti-Money Laundering legislation.
So, our opposition to the imposition of a new £100m annual Economic Crime Levy has nothing to do with a lack of commitment to fighting money laundering and other forms of economic crime. Nor does it show a reluctance to finance that fight – no matter what supporters of this new levy may suggest.
But the new levy is not the first economic crime cost that professional bodies have been asked to bear.
New annual AML costs were only recently imposed on all professional bodies in the accountancy/tax/legal and conveyancing sectors as a result of the establishment of OPBAS.
So far, the multi-million-pound funding costs of OPBAS have been met exclusively by professional bodies. They, in turn, are passing them on to their members. And members inevitably pass these bills on to their customers.
To add another layer of costs – to the tune of £100m a year – is simply unacceptable in the current climate, which sees businesses large and small having to contend with both the effects of the pandemic and Brexit.
There is also a disturbing lack of clarity from the Government about how it would calculate and collect such a levy fairly and reasonably, which makes the imposition of the levy highly contentious and, AAT would argue, grossly unfair.
There is considerable disagreement about how best to collect the levy. Most professional bodies, including AAT, believe the best way to do this is through a single public agency (ideally an existing body such as HMRC or OPBAS).
In contrast, the Government appears to favour imposing responsibility for collection on to professional bodies.
A model involving collection by AML supervisors would add disproportionate administrative burdens and costs on those bodies and risks a lack of consistency, yet the Government appears largely unconcerned.
With regard to the accountancy sector, this means unregulated practitioners – who make up a third of the sector – will yet again contribute nothing to the costs of preventing money-laundering. Instead, the burden will fall entirely on those that are regulated members of professional bodies.
As HMRC itself recently noted, those who promote tax-avoidance schemes are primarily from the unregulated sector. Likewise, those accountants and tax advisers involved in money laundering are most often unregulated, too.
But why should properly-regulated professionals, who are mostly well-behaved and considered low risk, be financially penalised?
And why should high-risk, unregulated agents be free to trade without any financial contribution towards the problems they help create?
The subject has also caught the attention of the Treasury Select Committee who are looking at issues relating to Economic Crime in general.
Decisions are unlikely before the 2021 Budget. However, the Government has earmarked the 2022-23 financial year for the first levy payments.
That means time for the Government to think again is very limited.
But think again, it must.
Phil Hall is AAT's Head of Public Affairs and Public Policy.