In its efforts to crack down on money laundering, earlier this year, HM Treasury published the draft Money Laundering Regulations 2017 (MLR 2017) following a consultation period, and invited further comment on whether the draft regulations met the government’s policy aims. The legislation will transpose the EU’s Fourth Directive on Money Laundering (MLD4) and the accompanying Fund Transfer Regulation (FTR) into UK law. The new regulations, which were designed to optimise the anti-money laundering and counter terrorist financing (AML/CTF) regime, will come into effect from 26 June 2017.
MLR 2017 builds upon and closes gaps in the pre-existing Money Laundering Regulations 2007 (MLR 2007). While the changes between MLR 2007 and MLR 2017 are not transformative, some departures include widening the scope of those covered in the directive, introducing more stringent determinations of levels of due diligence, and implementing more prescriptive risk assessment and mitigation policies.
Complementing this legislation, the government expressed its intention to create a new Office for Professional Body Anti-Money Laundering Supervision (OPBAS) as part of the anti-money laundering supervisory regime, to be hosted within the Financial Conduct Authority (FCA).
AAG and AAT raise concerns
The Accountancy Affinity Group (AAG) published its response to the consultation last week, noting that certain aspects of MLR 2017 in fact go beyond the requirements of the MDL4, specifically relating to criminality testing, audit function and supervision.
While wholly supportive of the initiative, the AAG also expressed concern over the lack of detail on the cost and financing of OPBAS as well as the fact that OPBAS does not include supervision of individuals who are not members of the professional bodies. AAG contended that this would lead to glaring inconstancies in how the accountancy sector was supervised and the standards to which it was being held.
The Association of Accounting Technicians (AAT), which is a member of AAG, concurred with the comments made by AAG. They elaborated on concerns surrounding OPBAS, adding that the government had not appeared to have carried out any impact assessment. Furthermore, with the impending general election on June 8, the AAT questioned the viability of the proposed implementation timetable for OPBAS.
The AAT expressed support for these initiatives and welcomed aspects of MLR 2017, such as extending supervisors powers, increased clarity regarding customer due diligence and tipping-off interaction, and data protection. However, they expressed disappointment at the brevity of the consultation period given the substantial nature of the task.