LONDON, July 5, 2023 – HM Treasury, in its long-anticipated consultation, has proposed a potential shift in the landscape of the United Kingdom’s anti-money laundering (AML) and counter-terrorism financing (CTF) supervision regime. Aiming to address the identified “significant weaknesses,” a new public body may supersede the current legal regulators, supervising lawyers’ AML activities more comprehensively.

As the consultation reveals, the most recent assessment by the Financial Action Task Force underscores the urgency for reform, underlining the “inconsistencies and weaknesses” of the current regime, which threaten the country’s economic stability. Of particular concern are vulnerabilities within the professional services sector.

Rudi Kesic, CEO of Verify 365 and an outspoken advocate for change in the current legal regulations framework, hailed the Treasury’s consultation as a significant step towards a stronger AML regime. “The call for reform is not new; it is a necessary evolution to better safeguard our economic integrity,” said Kesic. “This consultation shows that the Treasury is ready to consider innovative and bold options to strengthen our AML and CTF structures, and I am hopeful about the impact this will have on our legal sector.”

The consultation put forth four potential models, inviting consideration for each approach without expressing a preference. The options range from a strengthened Office for Professional Body Anti Money Laundering Supervision (OPBAS) with extended powers, through a consolidated professional body supervision structure, to the creation of an entirely new organisation. This new body, probably a public body, would supervise a broad spectrum of professionals, including lawyers, accountants, as well as trust and company service providers.

While acknowledging the complexity of the task at hand, the consultation demonstrates a willingness to examine the potential benefits and drawbacks of each model. “This demonstrates a realistic approach to a complex issue,” says Kesic. “It’s crucial we balance the need for effective AML oversight with the ability to maintain sector-specific expertise and minimise additional regulatory burdens.”

Looking ahead, the consultation emphasises the importance of a comprehensive, coordinated approach to risk and compliance across all sectors. With a specific focus on the legal sector, it proposes a single authority responsible for detecting unsupervised firms. “This is a potentially transformative move,” says Kesic. “By proactively identifying firms operating outside the scope of the Money Laundering Regulations, we can significantly reduce the risk of illicit activities.”

The Treasury’s consultation signals a forward-thinking approach to reshaping the AML and CTF supervision landscape. “This is an exciting time for all of us in the legal sector,” says Kesic. “The HM Treasury’s initiative to redefine the AML and CTF supervision regime can enhance our capacity to detect and prevent financial crimes, ushering in a new era of integrity and confidence in the UK’s professional services sector.”

The decision made as a result of this consultation will have wide-reaching implications, with potential to shape a more effective, robust, and resilient AML and CTF regime.

As the UK advances its AML/CTF supervision regime, technology will undoubtedly play a critical role in supporting compliance. Tools such as the Verify365 Risk and Compliance platform can help legal professionals adapt to changing regulations. By streamlining compliance processes and providing real-time risk assessments, these technology solutions are invaluable for meeting new AML/CTF requirements.

“The consultation signals an important shift towards a more robust and resilient AML/CTF regime,” says Kesic. “As we navigate this changing landscape, technology will be a crucial ally. Solutions like Verify 365 will not only ensure compliance but also help legal professionals focus on their core services, confident in the knowledge that their AML/CTF obligations are taken care of.”

The HM Treasury’s consultation heralds a potential new chapter in the UK’s fight against financial crime. Regardless of the selected model, it is clear that the regulatory landscape is set for significant transformation, with the promise of a more effective, robust AML/CTF supervision regime.

As these changes unfold, Verify 365 remains committed to providing industry-leading risk and compliance solutions. Backed by our team of experts and state-of-the-art technology, we are ready to guide our clients through this transition, supporting their compliance needs every step of the way.

Verify 365 Risk and Compliance platform for legal sector stands ready to support these changes, ensuring seamless transitions for our clients, and continuing to deliver comprehensive risk and compliance solutions in the face of evolving regulatory landscapes.

Recently, Verify 365 was selected as a key participant in a UK trade mission for LawTech companies in Singapore, where AML/CTF was a major theme of the event. The mission, an initiative aimed at fostering international collaboration and driving innovation in the legal technology sector, provided a platform for Verify 365 to demonstrate its capabilities in helping to revolutionise AML/CTF practices.

Azeem Rashid, Director at Verify365, who was part of the delegation to Singapore, highlighted the significance of this opportunity. He said, “Participation in the UK trade mission to Singapore was an excellent platform for Verify365 to showcase its technology and innovative solutions in AML/CTF. As legal firms across the globe are increasingly recognising the importance of advanced technology in managing regulatory compliance, our platform’s potential to revolutionise AML/CTF practices was strongly appreciated.”