The accounting body says it is fully committed to making the government’s preferred model of AML supervision work as well as possible, but it warns the switch will lead to a potential increase in economic crime; undermine growth in the accountancy sector – which was highlighted as one of a handful of industries seen as key to UK overall economic success in the government’s industrial strategy – and create an increased regulatory burden for accountancy firms.

Under the plan AML supervision will move from Professional Body Supervisors (PBS), including ACCA, and will be under the auspices of the Financial Conduct Authority acting as the UK’s Single Professional Services Supervisor (SPSS).

Stefan Pegram, director – regulation and conduct, ACCA, said: “We believe there are a number of risks to the SPSS model, including increased economic crime and a greater regulatory burden.

“Whilst ACCA does not agree that transferring AML responsibilities to the FCA is the right approach, we are proactively working with HMT to implement this policy decision to best effect.”

ACCA is concerned that the increased cost and complexity of supervision will see less firms maintain membership with professional bodies. While remaining under the FCA regime for AML, this lack of professional competence oversight as well as regulatory and ethical oversight could lead to a hike in economic crime as well as falling professional standards. It could also lead to business and individual confusion over the regulatory status of their accountant with the public also thinking that FCA oversight for AML supervision will also ensure oversight of the firms’ competence and ethical standards when it does not.

ACCA believes that the strength of the current AML supervisory regime in the UK is that firms are overseen by those with expertise of the sector and this is a strong deterrent of economic crime. This expertise will be lost and take many years for a new supervisor to develop. It will also take the FCA a number of years to develop their capability to conduct the same volume of reviews currently undertaken by professional bodies. During this period there is a risk that criminals seeking to exploit the services of the sector will take advantage of this.

ACCA does support some of the proposals including the register of all professional services firms, fit and proper tests, access to suspicious activity reports (SAR), extended information gathering and inspection powers, and an information-sharing regime.

However, ACCA has concerns that the duties, powers, and accountability mechanisms will not be practical or proportionate to the risk posed by accountancy firms and will impose unnecessary bureaucracy and costs. This will particularly impact sole practitioners and small practices who will likely see a significant rise in fees.

Wesley Walsh, Head of AML & Operations, ACCA, said: “Under the SPSS model, ACCA firms will face the prospect of dual supervision and dual fees for AML supervision and their professional body.

“Also, the length of time it will take to implement a single AML supervisor could cause considerable disruption in supervision. In a challenging economic climate, these increased costs to businesses, large and small, cannot be justified.”

ACCA is calling on the government to engage with the UK’s professional accountancy organisations on the proposals to avoid ambiguities, public confusion and unintended consequences.

Read ACCA’s response Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) Supervision Reform: Duties, Powers, and Accountability | ACCA Global.