The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) has raised concerns over inconsistent AML improvements.
- Legal regulators are urged to increase efforts in reducing illicit funds through more proactive measures.
- OPBAS’s report highlighted a lack of consistent effectiveness across legal and accountancy AML supervisors.
- Specific weaknesses were identified in the AML supervision of barristers and advocates.
- A deep dive revealed risks in conveyancing related to high-value property transactions.
The Office for Professional Body Anti-Money Laundering Supervision (OPBAS), part of the Financial Conduct Authority, has stressed the need for a unified endeavour among legal regulators to enhance their anti-money laundering (AML) supervision. Despite overseeing both legal and accountancy supervisors, OPBAS noted insufficient, consistent improvement in AML practices.
OPBAS underscored the necessity for these regulatory bodies to significantly bolster their AML supervisory roles. They should demonstrate this by actively reducing the risk of illicit finances within the UK through more assertive interventions. The report communicated that meeting this objective would require many regulators to substantially enhance their current methodologies.
The report, which evaluated nine legal supervisory bodies, indicated a pervasive shortfall in complete and consistent effectiveness. OPBAS reported that none of the evaluated entities fully aligned with its expectations. Notably, two regulators received supervisory directives due to these identified deficiencies, highlighting persistent gaps in supervisory capacity, risk-oriented approaches, and enforcement capabilities.
The investigation revealed that professional body supervisors (PBSs) in the accountancy sector generally performed better than their legal counterparts, although sector-wide gaps persisted. The legal sector lacked established criteria for inspections and had not systematised supervisory cycles. Moreover, one PBS had failed to classify any member as high-risk, notwithstanding the provision of high-risk trust and corporate services.
A noteworthy finding was the reluctance of some PBSs to prioritise AML supervisory duties with the same vigour as other regulatory responsibilities. This was particularly evident within the supervision of barristers and advocates, where staff and financial resources dedicated to AML were disproportionately low. While there was consensus that the risk of money laundering in this sphere is relatively low, OPBAS maintained that some level of risk remains.
Additionally, OPBAS conducted an in-depth analysis of conveyancing practices due to their inherent high money laundering risks. The investigation identified standard risk factors such as unexplained funding sources, misuse of client accounts, and the prominence of high-value property dealings, which may overshadow risks in lower-tier markets.
Andrea Bowe of the FCA reinforced that the fight against financial crime remains a top priority, urging OPBAS to heighten PBSs’ consistency and efficacy. Dr. Susan Hawley from Spotlight on Corruption echoed these sentiments, urging governmental reform in AML supervision and recommending the removal of failing supervisors from their monitoring roles.
The ongoing consultation by HM Treasury regarding the future of AML supervision, including potential consolidation under a singular legal sector regulator, underscores the complexity and urgency of these issues.
The pressing need for enhanced anti-money laundering supervision remains crucial for safeguarding the UK’s financial integrity.
