AML: Practitioners back beefed-up OPBAS
The Legal Services Board (LSB) has argued that it should take over responsibility for anti-money laundering (AML) supervision in legal services from the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
Legal regulators, such as the Bar Standards Board (BSB) and Institute of Chartered Accountants in England and Wales (ICAEW) argued instead that the answer is to give more powers to OPBAS, which currently oversees the AML activities of the legal and accountancy regulators.
Under the current regime OPBAS oversees nine legal and 13 accountancy AML supervisors, including the law societies and bar councils of the three UK jurisdictions.
In a consultation launched this summer [1], HM Treasury put forward four potential models for reform, without stating a preference.
The first is a beefed-up OPBAS with greater powers, including to levy fines, the second consolidated professional body supervision under a single legal sector supervisor.
The third is to create a new organisation, probably a public body, to undertake the task for both lawyers and accountants, and the four would expand this body to include financial services, gambling, estate agency and other regulated sectors.
In its response to the consultation, the LSB noted that the Economic Crime and Corporate Transparency Bill, currently passing through its final stages in Parliament, introduced a new regulatory objective to the Legal Services Act of detecting and preventing economic crime.
“In our view, this development puts beyond doubt the requirement for legal services regulators to actively take steps to ensure the prevention and detection of economic crime.
“It also puts beyond doubt that it is the LSB’s role to ensure that they do this. In light of this, the government would be acting entirely consistently with its broader economic crime policy if it were to bring AML supervision for legal services within the auspices of the LSB.”
Given the complexities of the way the Act and the regulation of the legal sector worked, the LSB said the Treasury “may wish to consider the legal services sector separately”.
While it “supports OPBAS and the role it plays”, elements of the additional powers proposed for it were incompatible with the legal regulatory regime and the LSB said an alternative was to transfer its supervisory role.
“The LSB has considerable powers and the responsibility to oversee the performance of the legal services regulators and could bring greater consistency to AML supervision across legal services.”
In their responses, the BSB, ICAEW, Society of Trust and Estate Practitioners (STEP) and Law Society for Scotland all argued that a beefed-up role for OPBAS was the best way forward.
The BSB said it was “essential that a priority consideration should be to not put at risk the good work that has already been done” in terms of AML supervision.
“The evidence for change therefore needs to be very strong. In the case of the BSB, OPBAS assessments do not provide evidence that supports the need for radical change.”
The BSB described so-called OPBAS+ as providing the “best scenario for continuity of the progress made so far because it is the most feasible to implement”.
The ICAEW said OPBAS+ would “preserve and build on the significant investment already made in OPBAS, maintain the UK’s alignment with AML work in Europe, and reduce the risk of uncertainty posed by the upheaval which would be caused by the other options proposed”.
It was also “the option that could be implemented swiftly, building on the current system and requiring only minor changes to legislation”.
STEP commented: “The option must be feasible as significant resources would be dedicated into implementing the supervisory model selected.
“Given that taxpayers’ and professional’s money would be used in implementing this policy, any change in AML supervision should continue to deliver effective supervision while not proving an overly costly use of public funds.”
STEP added that granting additional powers through OPBAS+, such as fining and assessment powers, would improve the effectiveness of the current regime.
The Law Society of Society of Scotland rejected the option of a single UK-wide AML supervisor, describing a one-size-fits-all approach as a “regressive step” in efforts to combat economic crime.
The society said it had expressed support for further powers to be given to OPBAS, “if those powers would lead to increased effectiveness, and does not oppose reform consolidating anti-money laundering supervision on a devolved basis”.