The UK is not effectively supervising the legal and accountancy professions for money laundering risks, according to the latest assessment of the 22 supervisory authorities responsible for overseeing the sectors.
The report, published today by the Office of Professional Body AML Supervision (OPBAS), found that none of the Professional Body Supervisors that police the legal and accountancy sectors are “fully effective.”
Despite six years of urging professional bodies to pull up their socks, OPBAS reports that it “has not seen any material improvements in … effectiveness in the core areas of supervision, risk-based approach, enforcement, and information and intelligence sharing”.
On the contrary, the majority of the nine professional bodies on which OPBAS conducted a deep dive had declined or remained static in their overall effectiveness, while only three showed “incremental improvements”. OPBAS intervened to address serious problems at two of these bodies, but without ‘naming and shaming’ these failing supervisors they cannot effectively be held to account by the public or parliamentarians for their shoddy performance.
Enforcement remains a real Achilles’ heel for all bodies, with OPBAS finding that the majority of supervisors did not use their powers and tools effectively to act as a credible deterrent against money laundering. OPBAS highlights that the number and value of fines have declined in the 2022/23 financial year despite supervisors finding increased rates of non-compliance. Supervisors are still opting to use informal engagement rather than tougher enforcement.
OPBAS has also raised serious concern that professional bodies are failing to prioritise and resource their AML supervisory function properly, with almost a third outsourcing their inspections in a way that opened up new weaknesses into supervisory effectiveness.
Dr Susan Hawley, Executive Director of Spotlight on Corruption, said:
“Today’s report shows clearly that leaving the policing of money laundering rules to professional bodies for lawyers and accountants isn’t working and that things are getting worse. The Treasury urgently needs to take an ambitious approach and look at fundamental reform of AML supervision because the status quo is no longer tenable. Failing supervisors should for starters have their policing role removed from them as early as possible.”
