£100 Million AML Levy Will Impact Property Sector
Chancellor Rishi Sunak announced a £100 million levy on companies subject to money laundering regulations, including law firms and estate agents.
The levy will be used to supplement public sector funding and will equip law enforcement agencies with the funds to hire additional financial investigators and supply them with new technology and will help the National Crime Agency enforce the Economic Crime Plan.
Whilst the investment in AML measures highlights the government’s intent to crack down on economic crime, the additional expense for law firms could be an added expense at an already difficult time.
John Dobson, CEO of AML specialist SmartSearch, said:
“The Government is right to want to step up the fight against money-laundering but firms covered by any new levy are entitled to ask what it will pay for. The Government needs to explain why additional resources are needed and how they will have an impact on financial crime.
“When the Treasury consulted last year on the latest money-laundering regulations, it specifically asked what more the Government could do to promote the uptake of electronic ID verification and acknowledged that this could in fact reduce the costs associated with compliance.
“Incentivising the use of technology to combat the increasingly sophisticated criminal methods being used, would be a good place to start.
“Any new levy should be risk-based, on a sector-by-sector and firm-by-firm basis. Businesses already using reliable, modern AML solutions should not be asked to pay more because others stick with outdated processes that are not up to the job.”
Simon Davis, President of the Law Society, commented:
“Solicitors play an important role in the battle against money laundering and the Law Society – as the named supervisory body – shares the government’s objectives in having a robust regime in place. Our sector already devotes substantial resources to fighting financial crime. Now plans for a levy, to be paid by firms subject to the Money Laundering Regulations, have been announced I would urge ministers to ensure that any plans are evidence based, and do not inadvertently distract resources from the fight against economic crime.”
George Stark, Veriphy Managing Director, said
“It’s vitally important that the UK continues to be seen as a bastion of AML best practice. For that, its regulators need real teeth and added resources, so that money launderers know that the UK is not a safe haven for their activities.”
“No-one could say that today’s economic climate is an easy one for UK businesses.”
“The pressing Brexit-related changes this year, the recent stock market upheavals, and the added stress of coronavirus uncertainty, all add up to increased burdens on the shoulders of those responsible for compliance, CDD and KYC.
“The good news though is that online eID platforms – which have gained even more authority following endorsement within the now-implemented 5th Directive – allow their clients the flexibility to continue their compliance function from any base, be it home, hot desk or office.
“We congratulate the new Chancellor on his first budget and look forward to a continuance of UK excellence in the compliance and regtech space.”