The government’s decision to appoint the FCA as the UK’s future Single Professional Services Supervisor (SPSS) will reshape how anti-money laundering compliance is overseen across professional services. Broadgate Search examine what the reforms mean and how firms can prepare.

One of the most significant changes to anti-money laundering supervision in decades will see legal service providers, accountancy firms and Trust and Company Service Providers (TCSPs) brought under a single supervisory model.

Following HM Treasury’s consultation response confirming the move to a Single Professional Services Supervisor (SPSS), the Financial Conduct Authority (FCA) has been selected to become the UK’s single anti-money laundering and counter-terrorist financing supervisor for those sectors, replacing today’s fragmented system of professional body supervision.

The reform forms part of HM Treasury’s wider review of the UK’s anti-money laundering and counter-terrorist financing supervisory regime. It follows longstanding concerns that oversight delivered through multiple professional body supervisors has produced inconsistent standards and uneven enforcement across sectors.

The FCA is already closely involved in that framework through the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), which oversees the anti-money laundering supervision carried out by professional bodies. During the transition period, OPBAS will continue that oversight before responsibility transfers to the FCA under the new supervisory model.

A more consistent supervisory model

For many firms, the reform does not introduce new anti-money laundering obligations. Legal service providers, accountancy firms and TCSPs are already subject to the Money Laundering Regulations, including requirements for customer due diligence, beneficial ownership checks, ongoing monitoring and suspicious activity reporting.

The reform instead changes how those obligations will be supervised. A single supervisor will be able to apply more consistent expectations across sectors, compare firms against common standards and take a more uniform approach to assessing governance, risk management and financial crime controls.

For organisations accustomed to supervision through professional bodies, that could represent a more detailed level of regulatory scrutiny than many have previously experienced.

Financial crime expectations continue to expand

The supervisory changes also arrive as financial crime compliance extends beyond traditional anti-money laundering controls. UK sanctions requirements, the Economic Crime and Corporate Transparency Act, and increasing attention on corporate transparency have expanded the responsibilities placed on regulated firms.

Financial crime governance now covers far more than client onboarding. Firms are expected to understand beneficial ownership, monitor ongoing client relationships, assess sanctions exposure and maintain governance arrangements that allow financial crime risks to be identified, challenged and escalated where appropriate.

Professional services firms play an important role within that framework. Lawyers, accountants and TCSPs are often involved in establishing, managing or advising on complex ownership structures and corporate transactions, making their controls an important part of the UK’s wider response to economic crime.

Preparing for closer regulatory scrutiny

Although implementation will take place over several years, the government’s decision confirms a clear direction of travel towards greater consistency in anti-money laundering supervision.

Professional services firms may therefore benefit from reviewing how financial crime responsibilities are allocated, whether governance structures provide sufficient oversight and whether senior management receives enough information to challenge control weaknesses effectively.

The transition will not change firms’ legal obligations overnight. It does, however, provide organisations with time to review governance, accountability and financial crime controls before the new supervisory model is fully implemented. Firms that begin that work early are likely to be better prepared as the new supervisory framework is introduced.

Broadgate works with many of the UK’s most highly regulated organisations to build teams across financial crime, compliance, risk, legal and governance. As anti-money laundering supervision evolves, organisations that assess their talent needs early are likely to be better positioned than those recruiting under regulatory pressure. If you’re reviewing your financial crime or compliance capability ahead of the FCA’s new supervisory framework, our specialist team can help you identify the skills and leadership your organisation will need. Contact Daniel Tapsell Directly to learn more: Daniel.Tapsell@broadgatesearch.com.  

References

  1. HM Treasury, Reforming the Anti-Money Laundering and Counter-Terrorism Financing Supervisory Regime: Consultation Response
  2. The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
  3. Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
  4. Economic Crime and Corporate Transparency Act 2023.