Regulatory weaknesses on money laundering

In its fifth report, published this week, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) found most professional body supervisors (PBSs) were complying with the regulations but none of them were fully effective in all areas.

OPBAS oversees 25 supervisors for AML purposes in the legal and accountancy sectors. It criticised PBSs as inconsistently sharing information and intelligence, and highlighted weaknesses in the use of enforcement powers and tools, with the number and value of fines issued declining on the previous year.

Its report states: ‘We saw weaknesses in the design of supervisory approaches, lacking clearly defined methodology, selection criteria for inspections or formalised supervisory cycles, with many PBSs in the legal sector not performing well in this area.

‘For example, one PBS in the legal sector had not implemented timescales for supervisory action in its remediation framework.’

It highlights that the volume of suspicious activity reports has increased slightly in the accountancy sector but declined in the legal sector, and is ‘lower than we might expect from an underlying population exceeding 42,000 across sectors’.

One legal PBS ‘did not provide regular AML training to its staff in specialist AML roles’ because it considered its supervisees low risk, OPBAS said.

Moreover, it found that PBSs for advocates and barristers ‘did not appear to sufficiently prioritise AML supervision on a par with other regulatory obligations, with relatively low AML resource (staffing) levels and low expenditure dedicated to AML’.

Andrea Bowe, director, specialists at FCA, said: ‘The FCA is committed to playing a leading role in reducing and preventing financial crime.’