Anti-money laundering and counter-terrorist financing: supervision report 2017 to 2018

The Treasury has just published its annual report for 2017-18 on the effectiveness of anti-money laundering (AML) and counter-terrorist finance (CTF) supervision in the accountancy and legal services sectors. The UK’s AML and CTF supervisory regime is comprehensive but the results of supervision have proved inconsistent across the supervisors.

The Money Laundering Regulations 2017 require supervisors to ensure that regulated firms who contravene relevant requirements are liable to effective, proportionate and dissuasive measures. Supervisors may use enforcement measures and sanctions such as fines, public censure, suspension or withdrawal of the right to provide services.

In the accountancy and legal services sectors, the Treasury report criticises the supervisory functions of all but three entities: the FCA, HMRC and the Gambling Commission, each of which is said to have a stronger understanding of the ML/TF risks than the other 22 supervising professional bodies. However, the Treasury report does not distinguish between the different types of work and the consequent likelihood of failings amongst those supervised. For example, the Bar Council of England and Wales has not sanctioned anyone for AML/TF breaches in 2017/18, but barristers do not normally handle client funds so the possibility of them being used to launder money is far lower than, for example, solicitors who are supervised by the Law Society. Weaknesses in supervision and sanctions are a significant issue leading also to a reduction in the quality of intelligence. According to the report, the UK has put (unspecified) steps in place to address these issues.

Amanda Pinto QC
33 Chancery Lane

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