Government announces major shake-up of AML supervision

The government has published its response to the 2023 consultation on ‘Reform of the Anti-Money Laundering and Counter-Terrorism Financing Supervision Regime’ confirming its intention to create a Single Professional Services Supervisor (SPSS) which will take over the supervisory functions currently exercised by 22 professional body supervisors, including ICAS.

Key points from the government’s announcement 

• AML/CTF supervisory functions will transfer from the professional body supervisors to the Financial Conduct Authority (FCA). 
• The FCA will have oversight of approximately 60,000 regulated firms, including Legal Service Providers (LSPs), Accountancy Service Providers (ASPs), and Trust and Company Service Providers (TCSPs).
• Primary legislation will be required to give the FCA the relevant powers, with timescales dependent on the availability parliamentary time. 
•  In the meantime, the FCA intends to engage with relevant stakeholders to produce a detailed delivery plan, with a public consultation expected in November. 

While more information will be needed – particularly around timescales – it’s clear that these changes would likely have a big impact on firms currently supervised by ICAS, as well as CAs working in firms supervised by other professional bodies. 

ICAS’ position

Chief Executive Bruce Cartwright commented: “We are surprised that the government has decided to transfer AML/CTF supervisory functions to the FCA. ICAS, alongside other professional bodies, has made a significant investment in supervision over recent years, with evidence to support a corresponding increase in effectiveness. As set out in our response to the consultation, while we agree that the current approach could be improved, we believe that the better course of action would be to maintain progress through evolution of the existing supervisory framework”.

Robert Mudge, Executive Director of Professional Standards emphasises the need for swift action in response to the announcement: “There is a real risk here that a period of uncertainty could have a detrimental impact on the UK’s ability to combat financial crime. Government reform proposals in other areas remain outstanding many years after they were announced – if the same happens here then the outcomes could be extremely serious from a public interest perspective”. 

Message to supervised firms

Until such time as the government progresses its intended course of action, ICAS remains the AML/CTF supervisor for relevant ICAS firms. Crucially, firms continue to be required to meet the legal obligations under the Money Laundering Regulations and associated legislation.