Who watches the watchmen? A new supra-regulator for Anti-Money Laundering in the UK

On 15 March 2017, the UK Government announced it is setting up a new watchdog, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). OPBAS, which will sit within the Financial Conduct Authority (FCA), is being created to oversee and streamline the UK’s various anti-money laundering (AML) regulators’ work as part of the wider effort to tackle financial crime and terrorist financing.

But why is OPBAS being set up? The implementation and supervision of the AML regime in the UK is complicated. In addition to HMRC, the FCA and the Gambling Commission, there are a 22 bodies that supervise and issue rules to combat money laundering across various sectors. Each body produces its own guidance on compliance with the myriad of legislation and regulation containing the requirements of the UK AML regime (including the Proceeds of Crime Act 2002, Money Laundering Regulations 2007, the Terrorism Act 2000 (as amended) and of course the Fourth Money Laundering Directive (4MLD)  which “goes live” on 26 June 2017). The UK Government is concerned that the volume of guidance issued by different regulatory bodies creates a material risk of conflicts and loopholes which may create inconsistencies to be exploited by criminals. OPBAS’ introduction is with a view to mitigating this risk and is part of a wider scrutiny of the UK regulator’s ability to fight economic crime.

Only time will tell what the OPBAS will look like in operational form. At this stage, it is reported that OPBAS will:

  • Set out standards on how AML regulators should comply with their obligations;
  • Have the power to financially penalise regulators for breaches;
  • Be funded through a fee paid for by the professional bodies it supervises; and
  • Be operational by the beginning of next year.

It remains to be seen whether the creation of a supra-regulator will be effective in streamlining the approach to AML in the UK. Sceptics argue that if individual regulators cannot be relied upon to properly enforce a universal approach to AML there is a more fundamental issue which will not be solved by the creation of OPBAS. If the UK Government has a genuine concern about tackling AML, perhaps the time and financial resources consumed by OPBAS would be better spent properly reforming, empowering and resourcing existing regulatory bodies.  

Keily Blair                                                                                            Jo Barnwell

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