The below Parliamentary question was asked by Charles Walker on 2016-01-12.
To ask Mr Chancellor of the Exchequer, what estimate his Department has made of the annual cost to the financial services sector of compliance with money laundering regulations in each of the last five years.
Harriett Baldwin
The Government’s Anti-Money Laundering regime has a clear aim: to make the UK financial system a hostile environment for illicit finances, while minimising the burden on legitimate businesses and reducing the overall burden of regulation.
The government conducts an impact assessment when updating the Money Laundering Regulations, which were last amended in 2012, and will shortly publish an impact assessment alongside a consultation on the transposition of the EU’s Fourth Anti-Money Laundering Directive. However, the government does not make annual assessments of the cost of compliance and the FCA, as the supervisor of the financial services sector, also does not undertake such assessments on the basis that regulated firms are generally unable to provide costs specifically for compliance with the money laundering regulations given that these costs accrue in relation to systems and controls that manage a variety of operational risks, both relating to financial crime and for other conduct and prudential reasons.
Bearing in mind to objective of minimizing burdens on legitimate businesses, the Government has launched a review of the impact of the current Anti-Money laundering and terrorist finance regime as part of the Cutting Red Tape Review programme. The Review is specifically seeking evidence on the role of supervisors in that regime, so that regulatory activity can be made as efficient as possible. A report is expected in the coming months and this will inform the work that the government is doing to reform the regime as part of the Action Plan to address weaknesses identified by last year’s National Risk Assessment of Money Laundering and Terrorist Financing risks.