The AML supervisors still seem in denial about money laundering, says OPBAS’s Alison Barker The accountancy sector and many smaller professional bodies are too focused on representing their members rather than looking after money laundering supervising standards, says Alison Barker, the director of specialist supervision at the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
Barker revealed the recent comprehensive review found that many bodies still don’t want to believe that there is any money laundering in their sector! And, she is concerned that the blind belief that there isn’t any money laundering in their sector means intelligence isn’t being shared. There is also a worry among the supervisors that “their membership will walk if they come under scrutiny”, and this could have a real effect on membership fees.
The OPBAS review found some supervisors did not fully understand their role, with 23% having no form of supervision and 18% having no idea who they needed to supervise. Worryingly, 90% of organisations hadn’t fully developed a risk-based approach, and had not collected all the data they needed to form a view about their riskiest members and their services.
The review discovered supervision is often under-resourced – and in some cases there were no resources. That said, Baker emphasised the larger professional body supervisors have well established supervision functions, including the use of data analytics to inform their risk-based approach.
OPBAS said that for many supervision wasn’t important. “It was only an add-on,” she said. This means it often wasn’t on the agenda, and for around half there was insufficient senior management focus. For 20% of the supervisors money laundering regulations wasn’t even overseen by the governing body. Another frustration was the fact that some of the professional bodies, where supervision had been outsourced to another provider, there was only minimal oversight of the work being done.
Where’s the enforcement?
For OPBAS there also isn’t enough enforcement action taking place. Last year, for instance, only 50% of professional bodies issued fines for AML failings. It was even less the year before (27%). This, said Barker, was hard to believe, given the high-risk activities of lawyers and accountants. OPBAS was told, particularly by the accountancy sector, that professional bodies believed their members would leave if they took robust enforcement action. However, she said without enforcement how could a professional body show it ‘means business’? How can a professional body show its members that meeting standards is a serious requirement? And, how can clients and consumers be confident in the credibility and integrity of their professional advisers?
Lack of intelligence sharing
Because many professional bodies have been slow to accept that their members could be used to launder money there has not been enough intelligence sharing. Barker stressed that criminals are covert and that supervisors and agencies are all responsible for doing their part to pool intelligence and put the picture together, As of February 2018 just 40% of professional body supervisors were members of the main intelligence sharing networks. That has risen to 48% over the year. But, Barker wants it to be 100%! The problem is some of the bodies have no resources allocated to intelligence sharing.
OPBAS also found that all but 2 professional bodies, processes for handling whistleblowing were inadequate. Over half (56%) of professional body supervisors had no whistleblowing policy in place at the time of the review. Whistleblowing is often an important source of intelligence, Barker pointed out.