The UK government has finalised its plans to transfer the responsibility for anti-money laundering (AML) and counter-terrorist financing (CTF) supervision of professional services firms to the Financial Conduct Authority (FCA). This decision, which follows a consultation period from November to December 2023, aims to centralise and enhance the oversight of sectors deemed crucial in the fight against financial crime, including legal, accountancy, and trust and company service providers.
The move comes as part of a broader effort to strengthen the UK's regulatory framework against illicit financial activities. Previously, supervision in these sectors was more fragmented, with various professional bodies holding different levels of responsibility. The government's response to the consultation, titled "Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) Supervision Reform: Duties, Powers, and Accountability," outlines the final policy positions after considering feedback from stakeholders.
Key areas addressed in the new framework include the FCA's duties and powers regarding registration and 'gatekeeping' – controlling who can operate in these regulated sectors. It also details the supervisory powers the FCA will wield, the guidance it will provide, mechanisms for information sharing between authorities, and the enforcement tools available to tackle non-compliance. Furthermore, the response covers funding arrangements for the new supervisory model, transitional arrangements for firms, and accountability measures for the FCA itself.
The government's document summarises the feedback received during the consultation and explains how stakeholder views have influenced the final proposals, noting where changes have been made from the original ideas. The objective is to ensure the FCA is adequately equipped to be an effective AML/CTF supervisor, bringing a consistent and robust approach to these vital sectors.
Next steps for implementation will involve necessary legislative changes to enact these reforms. The government has also indicated further engagement with existing supervisors and other stakeholders will take place to ensure a smooth transition to the new supervisory model. This comprehensive reform seeks to plug potential gaps in the current system and present a more unified front against money laundering and terrorist financing across professional services.
The transfer of these responsibilities to the FCA signifies a significant shift in the UK's approach to combating financial crime, emphasising a more consolidated and potentially more stringent regulatory environment for firms operating within these professional service areas.