Tearing up AML supervision could lead to huge rise in economic crime

The Government must proceed with great caution while reforming anti-money laundering processes and regulation, warns AAT.

The Government today (30 June) launched a two-month consultation offering input on four proposed forms of anti-money laundering (AML) supervision before they will decide on a route of reform.

Currently, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) oversees anti-money laundering efforts. The body consists of supervisors from different professional bodies, overseeing and regulating their members in collaboration with one another.

The Government is considering the following alternatives:

– Removing OPBAS and replacing it with a single private-sector professional body.

– Transforming the current landscape by replacing OPBAS with a new regulator covering accounting and law.

– Establishing a new regulator overseeing every profession.

– OPBAS + which would retain OPBAS and enhance its powers to regulate supervisors tackling money-laundering crimes.

According to Treasury data from 2020, Serious and Organised Crime, much of which is made up of economic crime, costs the UK economy approximately £37 billion per year. AAT has outlined how this figure could rise if high-risk transitional options are opted for, as the crossover period alone could see a drop in compliance and supervision. The accounting sector can be particularly vulnerable to professional money launderers as businesses can be exploited and used to legitimize techniques.

AAT’s Director of Professional Standards and Policy, Adam Harper said:

“In this economic climate, the Government cannot afford to take high risks with anti-money laundering, yet most of the newly outlined proposals could see a dramatic rise in economic crime.

“Consolidating supervision to just one private sector body could see a catastrophic collapse in supervision and dramatically elevate the risk of regulatory failure. Options for a cumbersome and potentially enormous regulator also carry with them significant transition risks, large costs to set up, and will take years to implement effectively.

“OPBAS + is not only the most sensible solution but the most effective – enabling OPBAS to remove supervisors will improve compliance and address many of the government’s prior concerns. We recognize the need for change in AML regulation, but that should involve improving and evolving what we have built – not dismantling it all and starting again.”

AAT strongly recommends OPBAS + out of the four options in order to maintain order and give the regulation process the chance to evolve and improve based on learnings so far.

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.