Treasury unveils reforms to anti-money laundering regulation

The UK government has announced a series of reforms to its anti-money laundering (AML) and counter-terrorism financing (CTF) regulatory and supervisory regime

Following a review of the state of AML law in 2022, the Treasury has launched a consultation on reform of the anti-money laundering and counter-terrorism financing (AML/CTF) supervisory system. The review concluded that, while improvements had been made, there are still weaknesses in the regime.

John Glen, the economic secretary to the Treasury, said, “We continue to make good progress, but economic crime cannot be fought by government alone. We rely on businesses, up and down the country, to be meticulous in their understanding of risk and the application of the regulations. I am grateful for all that the private sector does to prevent and detect economic crime, but it is apparent that there is more work to be done.”

The three-month consultation, which is set to close on September 30, will consider what structural reforms may need to be made to address previously identified issues in the current framework.

The review set out four possible models for a future AML/ CTF supervisory system. The proposals made in last year’s report was an expansion of the supervision conducted by the Financial Conduct Authority (FCA), the regulatory body in charge of monitoring financial institutions for money laundering activity.

Under the current regime, there are three statutory supervisors: HM Revenue and Customs (HMRC), the FCA and the Gambling Commission (GC) as well as 22 professional body supervisors that supervise the legal and accountancy sectors.

The reforms could impact fintech companies operating in the UK.

Money laundering systems have become increasingly significant to UK regulators with the growth of the country’s fintech sector. Amid the newly created economic opportunities are new potential avenues for financial crime.

Financial organisations that want to operate in the UK are required by the FCA to conduct AML checks. Failure to meet AML standards can prohibit a firm from being authorised by the financial watchdog.

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