The Treasury Committee has published a report looking at AML supervision and sanctions implementation, as a response to the inquiry into Economic Crime. The report covers the elements of the inquiry that addressed AML and the sanctions regime. It looked both at the scale of crime and how regulation addresses the risks.
The report makes several interesting observations, including:
- a concern that the UK ramped up its efforts in anticipation of the FATF evaluation, and may not keep up the momentum now the report has been published
- the weaknesses in AML supervision in some sectors, notably estate agency and company formation. The report concludes that, at present, Companies House presents a weakness in controls and suggests there is need for urgent reform to give it appropriate statutory duties
- that FCA has arguably not taken enough enforcement action to act as a true deterrent and should ensure it keeps up constant pressure on core financial services businesses, despite the focus on enablers and the dangers they present
- following on from this, that there is work to be done in educating enablers and facilitators on what they should be doing to help fight financial crime – and that an enforcement campaign should follow
- that the development of OPBAS is a positive step away from self-monitoring, and that it should possibly have a more important status as supervisor of supervisors
- that it would be appropriate to review HMRC’s ability and resources to continue as an AML supervisor, given concerns about how it supervises and especially its work around unregistered firms
- the continued need to drive SARs reform and the importance of making it possible properly to define and identify PEPs, suggesting a database that small firms can use
- the need to tackle the problems that derisking presents and
- the need to refocus on the corporate liability offence to ensure multi-national firms are within the scope of anti-financial crime legislation.
In terms of sanctions, the report looks at the difficulties of dealing with specific listings and entities, and discusses the powers it may, or may not, be appropriate for UK regulators to have.