The Law Society has warned that the case for creating a new office for anti-money laundering (AML) supervision, for which the profession will have to foot part of the bill, has not been made on the day the Financial Conduct Authority (FCA) published a consultation paper on the plan.
The FCA is implementing government proposals to introduce an Office for Professional Body Anti-Money Laundering Supervision (OPBAS). The office, which will be a new function within the FCA, will oversee the adequacy of supervisory arrangements at 22 professional bodies - including the Law Society and Solicitors Regulation Authority.
Each professional body will have a nominated senior manager or member of the board of directors who will have obligations for carrying out due diligence.
Each body will also be charged a fee to recover the office’s running costs. The consultation paper estimates the fee will be £2 million, shared by all 22 bodies. A further cost will be added on top of that to account for 'additional tasks'. The FCA estimates this to be £39,800 per organisation - though it stresses the estimate is only for the purposes of the consultation paper’s cost benefit analysis.
The FCA said it would consult on fees in due course.
Law Society president Joe Egan said the case for OPBAS had not yet been made effectively. ‘The costs associated with OPBAS might make it uneconomic for smaller AML supervisors to continue in their role,’ Egan said. He added that no new infrastructure should be put into place before the Financial Action Task Force has carried out its review of the UK’s AML regime next year.
The OPBAS’s approach, according to the FCA, will be to:
- Develop a sound understanding of the workings of the different bodies and sectors they supervise.
- Adopt a risk-based approach that concentrates its supervisory resources where the risk is greatest.
- Liaise with other bodies with oversight roles for the professions to share good practice and avoid supervisory conflicts.
Megan Butler, executive committee member at the FCA said: ‘The aim of OPBAS will be to ensure consistency and quality and to drive up standards across all professional body AML supervisors in the UK.’
The FCA said it expects the office to be functional by the beginning of next year. The consultation closes on 23 October.
This article was updated on 25 July to include additional information on the proposed cost of OPBAS.