In a recent assessment, the UK’s Financial Conduct Authority (FCA) issued a concerning report on the legal and accounting industries, highlighting a widespread failure to meet critical Anti-Money Laundering (AML) standards. The regulator’s review revealed that none of the 25 Professional Body Supervisors (PBSs)—organizations that establish standards within their respective fields, such as the Law Society of Scotland—were found to be “fully effective” in implementing AML measures.
The FCA, through its Office for Professional Body Anti-Money Laundering Supervision (OPBAS), identified significant “weaknesses” in how these supervisory bodies use their enforcement powers to monitor and regulate their members. A particular concern was the declining number and value of fines issued for AML breaches, with OPBAS reporting a notable drop in enforcement actions across the board.
For instance, legal industry bodies imposed only 33 fines in the 2022–2023 financial year, a decrease from 38 in the prior year. Accountancy groups saw an even sharper decline, issuing 178 fines in 2022–2023, down from a staggering 278 fines in 2021–2022. These declining figures raise questions about the effectiveness of current supervisory measures in deterring non-compliance.
Andrea Bowe, Director of the FCA’s Specialist Directorate, expressed her concerns at the International Anti-Financial Crime Summit 2024 in London, where she emphasized the need for PBSs to enhance their AML frameworks. “While we have intervened through OPBAS to address failings where identified, we are not seeing the consistent and effective improvements required,” Bowe stated.
The FCA’s findings also pointed to more specific lapses in governance within PBSs. One supervisory body, which remained unnamed, was flagged for using an AML technology platform with “links to senior management” of the organization. Though OPBAS found no direct evidence of misconduct, the arrangement was not adequately disclosed within the organization’s conflict of interest processes. The PBS has since agreed to update its AML software to address this concern.
Looking ahead, Bowe stressed that the regulator’s primary focus will be on boosting the consistency and overall effectiveness of PBSs in their AML efforts. This renewed push by the FCA aims to drive stronger compliance within the UK’s legal and accounting sectors to prevent financial crimes.
The FCA’s report underscores a critical need for industry-wide reform and heightened vigilance as the UK grapples with the ongoing risks of money laundering in key professional sectors.
