In a significant development, the UK government has unveiled plans to consolidate anti-money laundering (AML) responsibilities into a unified entity. These proposals, which present four possible designs, have the potential to impact the UK Gambling Commission (UKGC) and its authority over AML control.
On June 30, the UK government’s HM Treasury introduced a plan aimed at revamping the oversight of AML and counter-terrorist financing (CTF) in the country. The proposed changes primarily focus on regulating how businesses should address AML requirements rather than altering the requirements themselves. A separate review will assess the possibility of modifying the requirements in the future.
The treasury department has put forward four potential scenarios, and it is now seeking feedback and comments from stakeholders until the end of September.
Changing how AML oversight works
According to the official document, a single supervisory body could ultimately oversee AML control in the UK. This public entity would directly answer to Parliament.
The report suggests that a centralized supervisor offers various advantages over private entities. It not only streamlines oversight and increases efficiency but also ensures smoother transitions when AML regulations undergo changes.
If this recommendation is implemented, it would primarily affect how current regulatory bodies handle AML oversight, while leaving them responsible for maintaining all other aspects of their guidance.
To prepare for this proposal, HM Treasury conducted a comprehensive global analysis, examining the regulatory systems of other countries in the G7 and G20. These countries have received accolades from the Financial Action Task Force (FATF), and the UK aims to emulate their systems.
According to HM Treasury, none of the existing AML systems in use in the UK met the required criteria. Consequently, the conclusion drawn is that a new system is necessary.
The study uncovered persistent vulnerabilities in AML supervision processes within the non-financial sector of the UK. It also highlighted the absence of effective enforcement mechanisms by authorities to address these deficiencies in income-related areas.
Four scenarios are under consideration
One of the proposed models involves making minor adjustments to current policies. The Office for Professional Body Anti-Money Laundering Supervision (OPBAS), a newly established entity, could receive additional powers to enhance its oversight of existing professional body supervisors (PBS), referring to current regulators.
Another model suggests granting AML/CTF supervisory powers to a selected number of PBS regulators, potentially two or six, depending on the final structure of the model. The chosen number would determine whether there would be two supervisors for the entire UK or six to cover each jurisdiction separately.
The third model proposes a single supervisor responsible for overseeing all legal and accountancy sector firms. HM Treasury envisions this supervisor as an “independent public body with broad enforcement powers.“
The final model introduces an entirely new supervisor to handle all AML matters. However, this option poses challenges, as existing regulators like the UKGC and the Financial Conduct Authority would retain their control without AML oversight. This could lead to confusion and ambiguity regarding responsibilities.
It remains unclear which of the four options the UKGC supports. While the idea of reduced responsibilities might be appealing, relinquishing authority over potential AML violations could pose a drawback. AML violations have often served as grounds for imposing significant fines, making this option unpopular for the UKGC.
As the UK government progresses with its plans, the fate of AML control and the potential impact on the UKGC will become clearer. The outcome of this decision-making process could reshape the landscape of AML oversight in the UK gambling industry.
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