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:
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.
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