New Authority Might Take Over AML Control from UK Gambling Commission

Posted on: July 7, 2023, 08:55h. 

Last updated on: July 7, 2023, 09:04h.

The UK government has released plans that propose consolidating anti-money laundering (AML) responsibilities into a unified entity in the country. The plans present four possible designs, and the final decision could affect the UK Gambling Commission (UKGC).

The sign and logo of HM Treasury on its building in London
The sign and logo of HM Treasury on its building in London. The treasury is presenting four options for revamping the UK’s approach to AML protocols. (Image: Pinterest)

The UK government’s HM Treasury recently revealed a new plan on June 30 that aims to overhaul the oversight of AML and counter-terrorist financing (CTF) in the country. The proposed changes primarily focus on regulating how businesses should address requirements, rather than modifying the requirements themselves. A separate review is scheduled to assess that possibility.

There are four possibilities that the treasury department has put on the table. It will now open the floor to feedback and comments, allowing input until the end of September.

Rewriting AML Oversight

According to the official document, a single body could ultimately manage the UK’s AML oversight. The entity would be public, but would answer directly to Parliament.

The report suggests that this singular supervisor offers advantages over private bodies. Not only does it centralize oversight and create efficiency, but it makes it easier to maintain continuity if AML regulations change.

The change, if implemented, would only impact how current regulatory entities approach AML oversight. They would still be responsible for maintaining all other aspects of their guidance.

To prepare for this recommendation, HM Treasury conducted a comprehensive global analysis that examined the regulatory systems of other countries in the G7 and G20. These countries, it explained, have received praise from the Financial Action Task Force (FATF), and the UK wants to mirror their systems.

According to HM Treasury’s perspective, none of the AML systems currently in use in the UK meet the criteria. Therefore, the only conclusion is that a new system is necessary.

The study revealed a persistent occurrence of vulnerabilities in the AML supervision processes related to the nonfinancial sector in the UK. Additionally, it highlighted the absence of effective enforcement mechanisms by the authorities to address these shortcomings in the income section.

Four Scenarios on the Table

One of the models HM Treasury presented would require only a little tweaking to current policies. The newly-created Office for Professional Body Anti-Money Laundering Supervision (OPBAS) could receive additional powers that would allow it to more effectively oversee the UK’s existing professional body supervisors (PBS), a reference to the current regulators.

Another model would take a few of the PBS regulators, perhaps two or six, and give them AML/CTF supervisory powers. The number chosen would depend on the final makeup of the model – there could be two overseeing all of the UK or six to cover each of its jurisdictions.

The third model suggests a single supervisor overseeing all legal and accountancy sector firms. HM Treasury explains that this would likely be an “independent public body with broad enforcement powers.”

The last model would introduce an entirely new supervisor to control all things AML. However, this is also the most problematic option as existing regulators, such as the UKGC and the Financial Conduct Authority, would retain the control they have now, absent AML oversight. As a result, there could be confusion and blurry lines regarding who is actually responsible for what.

It’s unclear which of the four options the UKGC supports. It might like the idea of not having so much on its plate, but would also have to relinquish its authority of potential AML violations. Because that’s one of its constant go-to reasons for issuing huge fines, that’s probably not a popular option.

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