Last month, HM Treasury published its consultation response on the transfer of AML and counter-terrorist financing supervision to the Financial Conduct Authority. The policy position is now settled. The FCA will become the single professional services supervisor for AML with full implementation expected by 2029. The question now is not if, but what it means in practice for your firm.
How We Got Here
The UK’s AML supervision regime has long been criticised for fragmentation. With three statutory supervisors and 22 professional body supervisors overseeing legal and accountancy firms, the system created inconsistency, duplication, and gaps that bad actors could exploit by operating at the margins of different supervisors’ remits.
What the Recent Consultation Response Confirms
The FCA will take over AML supervision of all firms currently supervised by a professional body supervisor, including all SRA-regulated law firms and licensed conveyancers. The FCA’s existing enforcement powers under the Money Laundering Regulations 2017 will be extended to cover its supervision of professional services firms.
A public register of supervised firms will be created and maintained by the FCA. HM Treasury has indicated that transitional arrangements will rely on existing data and approvals where appropriate to avoid duplication for firms. The precise mechanics of how firms will move onto the FCA register — including whether existing SRA authorisation data will be passported across — will be developed during the transition period.
Fit and proper tests will be extended to legal and accountancy service providers, enabling the FCA to assess the integrity, competence and compliance history of firms and their beneficial owners, officers and managers. This goes further than the SRA currently requires.
The new regime will be funded by charges to firms on a cost-recovery basis. The FCA will consult separately on the detailed structure and operation of those fees, but firms should be aware of an as yet unquantified cost of AML supervision.
Responsibility for issuing AML guidance will transfer from professional body supervisors to the FCA. The guidance that law firms have relied on — produced by the Law Society and others with sector-specific expertise — will in time be superseded by FCA-authored guidance, with HM Treasury retaining a limited oversight role. Industry input will continue to play a role in developing that guidance.
The Timeline
The consultation response does not give a fixed go-live date. Based on current legislative timelines, the transfer of supervisory responsibility is unlikely to begin before 2028, with full implementation expected by 2029.
During the transition period, OPBAS will continue to operate, and existing supervisors including the SRA will retain their AML functions until the FCA formally assumes responsibility.
What This Means in Practice
The consultation response makes clear that the FCA’s approach to supervision will be risk-based, data-led, and outcomes-focused. Firms will be assessed not just on whether their policies exist, but on whether their AML controls are genuinely working. Documented reasoning on files reflecting genuine risk-based thinking.
For law firms that have operated under SRA supervision where the primary question has broadly been whether policies conform to the regulations — that is a meaningful shift. The FCA brings a supervisory culture built around evidence, accountability, and the ability of firms to demonstrate that their controls work in practice.
Understandably, the Law Society has expressed concerns about dual regulation, proportionality, and the risk of FCA oversight that does not adequately reflect the realities of legal practice. Those concerns are noted in the response and HM Treasury has committed to working with professional bodies to manage them.
Shannon Grinnell
AML & Compliance Operations
shannon@haloaml.ai
Quadrant Court 49 Calthorpe Road, Edgbaston, Birmingham, England, B15 1TH