Supervision under the UK’s anti-money laundering (AML) regime is undergoing a landmark transformation which, when implemented, is set to have a significant impact on businesses and professional services that currently fall under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and The Money Laundering and Terrorist Financing (Amendment) Regulations.
It has been confirmed that the Financial Conduct Authority (FCA) will become the single professional services supervisor for anti-money laundering and counter-terrorism financing (AML-CTF). The supervision change will affect a wide range of professional services and regulated businesses, including:
- Accountants and tax advisors
- Trust and company service providers (TCSPs)
- Estate agents and letting agencies
- High-value dealers and Art Market Participants
- Solicitors and Independent Legal Professionals
AML Supervision Change – FCA to Become the Single Professional Services Supervisor
Traditionally, the responsibility for AML supervision in the UK has been divided between various professional body supervisors (PBSs), including, amongst others, the Solicitors Regulation Authority (SRA), the Institute of Chartered Accountants in England and Wales (ICAEW), the Law Society of Scotland, and HMRC. The fragmented regulatory approach has previously drawn criticism for inconsistency and weak enforcement, and following a 2023 Treasury consultation into reforming AML-CTF supervision, the UK government has confirmed the FCA will assume sole AML supervisory responsibility for professional services by 2026.
Responding to the decision, Steve Smart, joint executive director of enforcement and market oversight at the FCA, said:
“We recognise the benefits of an improved regime for anti-money laundering supervision. These changes will simplify the supervision of professional services, ensure more consistent oversight and help us identify and disrupt crime.
“The FCA will work closely with the Government, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), Professional Body Supervisors, HMRC, the firms we will be supervising and others, as we work together to equip the UK to better fight financial crime. We can draw on our extensive expertise in this area to facilitate a smooth transition and ensure effective regulation.
“The new regime will create enhanced opportunities for collaboration with key partners, including law enforcement, to tackle money laundering.
“The FCA operates nationwide and we anticipate having a significant presence for this new regime in our offices outside of London.”
Read more here: Reforming Anti-Money Laundering and Counter-Terrorism Financing Supervision.
What Does FCA Regulatory Oversight Mean for Accountants and Other Professionals?
It will likely be some time before any significant changes take effect, and the transition to the FCA oversight will need to be phased through legislation. However, regulated businesses and professional services should take this time to prepare for potential changes, which may include:
- A more rigorous approach to AML audits and inspections
- A stricter expectation around risk assessments and customer due diligence (CDD)
- Increased penalties for non-compliance
It is essential that professional services and regulated businesses move beyond tick-box compliance and ensure that they can demonstrate a deep understanding of their obligations. Professional service firms and regulated businesses that act now, by strengthening their AML systems, will be best positioned to lessen the impact of supervision changes and any new regulatory expectations under the watchful eye of the FCA.
How RACO Can Help Firms with a Seamless Transition to FCA Supervision
At the Regulation and Compliance Office (RACO), we support numerous professional service businesses across various sectors, including clients already regulated by the FCA. Therefore, we are well-acquainted with its regime and understand its regulatory approach. You can view the Financial Crimes Guide by clicking the link below. Although this does not refer to all professional service providers, it is expected to be updated to encompass the required approach. RACO will be ready to embrace the change, and we will work with our firms to ensure a smooth transition to the new supervisor.
We can help businesses:
- Review AML policies and procedures to ensure they align with FCA expectations, especially around risk assessments and customer due diligence.
- Train your team to ensure staff understand the FCA’s approach to their obligations, including suspicious activity and reporting.
- Provide outsourced compliance services, including our Regulation and Compliance Service Inc., Risk management, which provides a cost-effective but essential solution for law firms to ensure they achieve a compliant environment. Find out more about these services below.
Until the change takes place, businesses are highly recommended and expected to follow the guidance of their current supervisor to continue to ensure they meet all obligations and guidance provided.
There is clearly a lot of work still to be done to affect the new arrangements, and any changes are unlikely to happen soon.
If you have any concerns about anything raised in this article or you are concerned about your business’s compliance with the MLRs 2017, you can contact us via the details below.
Our Compliance Services
At the Regulation & Compliance Office (RACO),we help regulated businesses undertake a review of their policies, controls, and procedures to ensure that they are compliant with AML regulations and, therefore, avoid any breaches.
By working with RACO, a business can be assured that we will bring the required level of knowledge and expertise needed to perform the review, which adds value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that include:
- Consultancy.
- Compliance Policies.
- Training.
- Handbooks.
- Auditing.
Our services focus on businesses’ anti-money laundering and regulatory requirements through the implementation of effective policies, procedures, training, and consultancy. We also provide continued monitoring of staff and ongoing training to ensure that everyone within a business is aware of the latest requirements and complies with their responsibilities.
We offer a full range of services focused on ensuring businesses across all regulated sectors create, maintain and evidence their compliance with the requirements of their regulators and legislation. We work with businesses of all sizes, from the smaller high street or niche businesses to the large multi-office and multinationals.
- MLR 2017 (AML) Compliance
- GDPR and Data Protection
- Investigations
- Complaint Management
- The Bribery Act 2010
- Treating Customers Fairly
- Employment Regulation
- General Compliance
Contact Us
If you would like to discuss our services in more detail, contact us at 0203 985 8550 or email us at info@regulationandcomplianceoffice.co.uk
