The UK Treasury is considering a structural overhaul of anti-money laundering and counter-terrorism financing (AML/CTF) regulation and supervision, potentially reappropriating the related mandates from the Financial Conduct Authority (FCA) and other regulators to one 'mega supervisor.'
In its current state, UK AML/CTF oversight is fragmented among many disparate authorities, which can lead to inconsistent enforcement and gaps in coverage. The Treasury has proposed four options to address these shortcomings:
- Leave the current structure in place, but give enhanced powers to the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), which was created in 2017 to ensure supervision is robust and consistent across Professional Body Supervisors (PBSs) — private bodies that oversee legal and accountancy firms;
- Consolidate the 22 PBSs into between two and six bodies to reduce complexity and inconsistency;
- Replace the PBSs with a single, public body to be operationally independent but accountable to the Treasury; or
- Create a single body to undertake all UK AML/CTF regulation and supervision, commandeering this responsibility from the FCA, PBSs, and the Gambling Commission (GC).
Under the fourth proposal, which some have referred to as the "nuclear option," the FCA and several other bodies would retain their supervision of firms' conduct within their respective remit, but lose their statutory mandate relating to AML/CTF.
The success of the chosen model would depend on its powers, independence, resources, expertise, and accountability. The transition would impact banks, potentially causing uncertainty as they adapt. However, the short-term challenges are likely to be outweighed by the innovation and improved outcomes stricter supervision would spur.