Background
1.1 There are a number of businesses which are vulnerable to misuse by money launderers and those facilitating the movement of terrorist finance1. International standards have been developed (agreed by the 36 Member States of the Financial Action Task Force) to ensure that there are sufficient controls and procedures in place to counter the risk of abuse across a number of sectors. European Union (EU) and national legislation (EU third Money Laundering Directive2 and Money Laundering Regulations 2007) reflect these standards by placing necessary and proportionate obligations on businesses to help prevent misuse. They also ensure that businesses can be monitored to ensure compliance with their obligations. This is in line with the Government’s objectives to deter, detect and disrupt money laundering and terrorist financing3. There are 28 appointed Supervisors (full list shown in Annex A) which oversee eight broad sectors including a diverse range of businesses. These include financial institutions, legal professionals, accountants, estate agents, credit institutions and casinos4
1.2 The Supervisors are a highly diverse group including large global professional bodies, smaller professional and representative bodies and a number of public sector organisations. Some have been Supervisors for anti-money laundering and counter terrorist finance purposes (AML/CTF) since the first Money Laundering Regulations (the Regulations) were implemented in 1993; others were introduced when the Regulations were last updated in 2007. Government bodies have been appointed as Supervisors, along with professional bodies which oversee businesses such as external accountants and legal professionals, to ensure that professional standards for their industry are being met, as well as ensuring that sufficient AML/CTF procedures are in place. The Government supports self-regulation and has enabled as many businesses as possible (EU legislation permitting) to be regulated by their professional body. In each area of supervision, the Supervisor’s approach needs to be proportionate to the nature and associated risks of the businesses being supervised. .
1.3 HM Treasury is responsible for appointing Supervisors5 to effectively monitor their respective sectors and for the Regulations which set out their role6
1 For the full list of ‘relevant persons’ who are subject to the Money Laundering Regulations 2007, see Regulation 3 . In order to improve the transparency and accountability of supervision and to encourage good practice, HM Treasury has worked with Supervisors to develop this report. It is the first edition of what is intended to become an annual publication.
Methodology
1.4 Since 2009, HM Treasury has been developing a reporting framework in consultation with Supervisors. A pilot exercise was carried out in 2010, when Supervisors were asked to provide information to HM Treasury about their supervisory activities during the preceding year. This covered a range of topics, including: education and awareness raising; resources and training of staff employed by Supervisors; number of compliance visits carried out; enforcement activities; risk assessment of their respective sectors; and their strategies for developing and implementing a risk based approach to supervision7
1.5 HM Treasury analysed the returns and produced an internal report which was discussed with Supervisors. HM Treasury also gave Supervisors feedback on the information provided in their returns and on their supervisory approach. Many Supervisors commented that this was a useful process. The pilot highlighted some information gaps, which meant the questions were changed this year to improve HM Treasury’s ability to collect a range of basic data on the Supervisors’ activities e.g. resources committed to AML/CTF supervision. The full list of questions can be found in Annex B.
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Detailed report link: here
