The City of London’s network of lawyers, bookkeepers, and accountants lacks proper oversight, hindering efforts to stop dirty money flowing through the UK, the Financial Conduct Authority (FCA) warns.
A recent FCA Warns report raised concerns about the work of 25 professional bodies that oversee the UK’s accounting and legal sectors. Some bodies are spending as little as £73 annually on anti-money laundering supervision, while others outsource this responsibility.
The report also highlighted weaknesses in how these bodies use their powers. This has led to fewer fines for members who break the rules. Furthermore, the bodies are not sharing information with authorities in a proactive and consistent manner, which hampers efforts to reduce illicit funds in the UK.
Despite six years of urging professional bodies to improve, the situation hasn’t changed. This is the fifth report from the FCA’s Office for Professional Body Anti-Money Laundering Supervision (OPBAS), created in 2017 to oversee the work of these bodies. These organizations are expected to suspend or fine members who violate anti-money laundering regulations.
The Law Society, the Council for Licensed Conveyancers, and the Chartered Institute of Management Accountants are among the groups covered by the report. The FCA sampled the work of nine unnamed groups in the most recent report. These groups monitor firms at high risk of money laundering, including conveyance firms and trust and company service providers.
OPBAS helps identify weaknesses in regulation and works to reduce the UK’s reputation as a hub for dirty money. While OPBAS cannot impose fines, it can block professional bodies from certain work and recommend the removal of their anti-money laundering supervision role.
Andrea Bowe, a director at the FCA, stated, “We remain committed to reducing financial crime. Through OPBAS, we intervene where we find failings. However, we are not seeing the consistent improvement needed.”
Susan Hawley, executive director of Spotlight on Corruption, called for government intervention. She said, “Leaving the policing of money-laundering rules to professional bodies isn’t working. The Treasury must reform the AML supervisory system as soon as possible.”
Earlier this year, former deputy foreign secretary Andrew Mitchell expressed concern over illicit cash flows, stating that nearly 40% of the world’s dirty money passes through the City of London and UK crown dependencies.
The latest report sampled the work of nine unnamed bodies and found none were fully effective. The report pointed out weaknesses in the way these bodies use enforcement powers, with fines declining compared to the previous year.
In the 2022-2023 financial year, the bodies issued just £640,781 in fines, down from £940,728 the previous year. This was the lowest amount since £475,217 in 2019-2020. The FCA said this suggests the bodies are not using their powers effectively.
A Treasury spokesperson responded, “We are determined to crack down on money laundering by working with OPBAS and reforming the UK’s anti-money laundering and counter-terrorism financing regime.”
