FCA Censures Bookkeepers’ Body for AML Supervision Failings

The Financial Conduct Authority has delivered its first-ever enforcement action against a professional body supervisor, publicly censuring the Institute of Certified Bookkeepers for significant and prolonged failings in its anti money laundering supervision. As the body responsible for overseeing the AML compliance of more than 3,000 bookkeepers under the Money Laundering Regulations 2017, the Institute’s shortcomings created heightened risks of money laundering exposure across the sector.

Between January 2022 and July 2023, the Institute breached core statutory obligations governing the supervision of regulated professionals. The most serious failings stemmed from the organisation’s decision to halt all inspections for nine months, including both on site and virtual assessments. This suspension effectively removed the scrutiny required to ensure members were complying with their AML duties, leaving gaps that criminals could exploit to move illicit funds through UK businesses.

The FCA found that the Institute failed to implement an adequate risk based approach and did not effectively monitor member firms’ compliance. These weaknesses undermined confidence in the wider AML framework and heightened the threat of financial crime at a time when UK regulators are intensifying their focus on professional gatekeepers.

Therese Chambers, joint executive director of enforcement and market oversight, emphasised the significance of robust supervision, noting that anti money laundering rules are essential to preventing criminals from abusing the financial system. She underlined that the Authority will take action where supervisory standards fall short of expectations.

The Government has recently committed to structural reform, designating the FCA as the future Single Professional Services Supervisor to deliver a more coherent and effective approach to combating illicit finance. While these changes will take time to implement, the Office for Professional Body Anti Money Laundering Supervision, which currently oversees the Institute, will continue to work with professional body supervisors to drive improvements and ensure compliance with the Regulations.

The FCA concluded that a public censure was the appropriate sanction, noting that it has no power to issue a financial penalty under the relevant legislation. The case reinforces the regulator’s message that professional bodies must maintain high standards of oversight to protect the integrity of the UK’s financial system.

Read the press release here.