Office for Professional Body Anti-Money Laundering Supervision - Regulation for regulation’s sake?
27 July 2017
As detailed in our blog on 3 April 2017 the Government announced that a new Office for Professional Body Anti-Money Laundering Supervision (OPBAS) would be established within the Financial Conduct Authority (FCA) by early 2018 to supervise the existing 25 anti-money laundering (AML) supervisors in the UK.
The Money Laundering Regulations 2017 (MLRs) set standards for supervisory authorities, including professional body supervisors such as the Institute of Chartered Accountants in England and Wales, the Law Society of England & Wales and the Solicitors (PBS). OPBAS will be given the duties and powers to make sure PBSs meet these standards through the Oversight of Professional Body Anti-Money Laundering Supervision Regulations 2017 (Draft Regulations). These were released on 20 July 2017 and the Government is seeking industry and professional input on the Draft Regulations by 16 August 2017.
The Draft Regulations propose that OPBAS will have the following formal supervisory powers:
- Information gathering powers (regulation 7)
- Powers to commission a skilled person to produce an independent report (regulation 13). This would allow OPBAS to require a PBS to commission a third party to produce a report on a specific topic (e.g. whether a body’s risk assessment methodology is in line with supervisory good-practice), with the professional body bearing the cost; and
- Direction issuing powers (regulation 14). OPBAS may give directions in writing to PBSs for the purpose of ensuring compliance with, or, remedying a failure to comply with the MLRs.
The Government is specifically seeking responses to the following questions:
- Do the draft regulations deliver the Government’s intention that OPBAS ensure that PBSs comply with their obligations in the MLRs?; and
- What directions should be included in a specialist sourcebook for PBSs?
The aim of OPBAS is to focus resources in areas where the risk is greatest, but it is unknown at this stage where the Government think this risk is. What PBSs will make of OPBAS and its aims and purpose will be revealed once the consultation period ends in August. Interestingly, in the Draft Regulations, OPBAS will only have powers to issue public censures, rather than imposing financial penalties for failings to comply with a supervision requirement. Whether this will fall short of giving OPBAS tangible power is yet to be seen.