New Anti-money laundering supervisory measures will create 2-tier regime

Aug 17, 2017

Chartered Accountants Ireland (‘the Institute’) has today argued that new measures aimed at harmonising how professional bodies supervise compliance with anti-money laundering (AML) requirements represent only a “job half done”.

The UK Government is proposing the establishment of a new State supervisory body – OPBAS ( Office for Professional Body Anti-money laundering Supervision) - which will be tasked with supervising how the twenty two professional bodies, including the legal and conveyancing professions, referenced in new anti-money laundering legislation supervise how their members in public practice – accountants, lawyers, insolvency professionals – comply with the new UK AML regime which took effect from June of this year.

Commenting on the establishment of OPBAS, Aidan Lambe, Director, Professional Standards at Chartered Accountants Ireland said:

“The Institute, in common with all of the professional bodies within the scope of these new proposals, recognises the important role that our professions have in the fight against money laundering and terrorist financing. We are also supportive of the key purpose for the establishment of OPBAS as we believe strongly in a supervisory regime that is consistent, fair, proportionate and risk based, having regard to the public interest. 

However, the current approach is unlikely to achieve this, at least within the accountancy sector, as it ignores AML supervision of those ‘accountants’ who do not belong to a particular professional accountancy body. While such accountants are subject to supervision by HMRC for AML compliance, they are not required to comply with the same rigorous technical, ethical and general practice standards required by professional accountancy bodies.  And since HMRC supervision is outside the scope of OPBAS, there is a real risk of the emergence of regulatory arbitrage and supervision shopping. The potential for resulting inconsistencies in how the accounting profession is supervised and the standards to which its members are held defeats one of the original underlying reasons for the establishment of OPBAS in the first place. 

The Institute’s submission on the establishment of OPBAS also raises concerns on the absence of any detailed information on how its funding costs will be met and identifies further concerns expressed by smaller accounting firms in particular. Mr Lambe commented:

“The regulated accounting profession is being asked to fund a supervisory mechanism that is not fit for purpose and which will drive inconsistent supervision. Government therefore should give further thought to this and bring forward an alternative model that will address this concern.

“For the most part, we believe that the susceptibility of our practising firms to being used as a front for criminal activity is low.  However, we are concerned that the expectations of regulators such as OPBAS regarding the implementation and application of the new UK AML provisions may have a disproportionate impact on small accounting firms. It is incumbent on all supervisory and regulatory agencies to have regard to the proportionality provisions that exist within AML legislation.”

ENDS

REF:  Aidan Lambe, Director of Professional Standards, Chartered Accountants Ireland, M:  +353 87 2445102.

NOTE TO EDITORS:

Chartered Accountants Ireland is Ireland's largest and longest established professional body of accountants founded in 1888. The Institute currently represents 25,500 members around the world and over 4,000 members in Northern Ireland.