The UK took a significant step toward reshaping anti-money laundering and counter-terrorist financing supervision on 21 October 2025. HM Treasury confirmed its decision to make the Financial Conduct Authority the single professional-services supervisor for legal, accountancy, and trust and company service providers. The reform is intended to simplify oversight and improve consistency across sectors previously supervised through a fragmented model.
Status update — July 2026: HM Treasury has since completed its consultation on the FCA’s proposed duties, powers, and accountability. The government published its response on 18 June 2026, but legislation and a phased transition are still required. Firms remain subject to their existing supervisory arrangements until formal changes take effect.
What Led to the UK AML Supervision Reform?
The UK’s AML supervisory landscape has long involved numerous professional body supervisors overseeing law firms, accountants, and company service providers. This structure offered sector-specific expertise, but it also created concerns about duplication, inconsistent supervision, and gaps between different parts of the regulated sector.
In 2023, HM Treasury consulted on possible reforms. Its response, published on 21 October 2025, selected a single professional-services supervisor model with the FCA taking on the new role. Read HM Treasury’s consultation response.
The FCA welcomed the decision and said the new regime should support more consistent oversight, closer collaboration, and stronger efforts to identify and disrupt financial crime. Read the FCA statement.
What Is Changing Under the Planned FCA Model?
Under the planned model, the FCA will become the AML/CTF supervisor for professional-services firms within the scope of the Money Laundering Regulations. The reform covers:
- legal service providers;
- accountancy service providers; and
- trust and company service providers.
Professional body supervisors and HMRC continue to have responsibilities under the present framework during the transition. The transfer is not yet complete and depends on legislation, implementation arrangements, funding, and a phased movement of firms into FCA supervision.
Scope of the FCA’s Planned Oversight
| Sector | Businesses potentially affected | Main change |
|---|---|---|
| Legal services | Law firms and other regulated legal service providers | AML supervision is planned to move to the FCA |
| Accountancy services | Accountancy firms, auditors, tax advisers, and related providers where the regulations apply | Firms are expected to move into a single public-sector supervisory framework |
| Trust and company services | Regulated company formation, registered-office, nominee, and trust service providers | The FCA is planned to become the relevant AML supervisor |
The exact application depends on a firm’s activities and the scope of the Money Laundering Regulations. Businesses should confirm their current position with their existing supervisor and official guidance.
What Does the Reform Mean for Professional-Services Firms?
The change is intended to replace multiple supervisory arrangements with one public-sector regulator. Firms can expect more consistent supervisory methods, information requirements, and enforcement expectations once the new framework becomes operational.
For smaller practices, the transition may also create practical challenges involving registration, fees, data submissions, policies, staff training, and regulatory engagement. The final requirements and implementation timetable must come from legislation and official FCA or HM Treasury materials.
The reform also gives compliance teams a reason to review whether their financial crime compliance framework clearly demonstrates governance, risk assessment, monitoring, escalation, and remediation.
What Happened After the Original 2025 Announcement?
When the original Financial Crime Lab article was published in November 2025, HM Treasury’s consultation on the FCA’s proposed powers was still expected. That consultation ran from 6 November to 24 December 2025.
The government published its response on 18 June 2026, covering:
- registration and gatekeeping;
- supervisory duties and powers;
- guidance and information sharing;
- investigation and enforcement;
- funding;
- transition arrangements; and
- governance and accountability.
Review the June 2026 consultation outcome.
These developments provide more detail, but they do not mean that every affected firm is already supervised directly by the FCA.
What Should Compliance Teams Do Next?
- Assign responsibility. Give a named owner responsibility for monitoring the transition and reporting material developments internally.
- Confirm the current supervisor. Continue meeting existing registration, reporting, fee, and supervisory requirements until an authoritative transition notice applies.
- Review AML/CTF policies and governance. Check whether the control framework reflects the firm’s services, customers, delivery channels, and geographic exposure.
- Track open findings. Record owners, deadlines, progress, escalation, and evidence of closure for unresolved weaknesses.
- Review monitoring and escalation. Test whether suspicious indicators move reliably from detection to investigation and decision-making. See Financial Crime Lab’s guidance on AML transaction monitoring and AML case management.
- Monitor official updates. Follow HM Treasury, the FCA, OPBAS, HMRC, and the relevant current supervisor for legislation and transition dates.
Financial Crime Lab Perspective
The October 2025 decision marked an important change in the direction of UK AML supervision. A single supervisor could reduce fragmentation and support more consistent standards, but the outcome will depend on legislation, implementation, resourcing, and cooperation during the transition.
Professional-services firms should prepare without assuming that the transfer has already happened. The immediate priority is to maintain compliance with the current framework while strengthening the evidence that AML controls operate effectively.
For continuing coverage, visit the latest AML and financial crime news.
Adapted from a Financial Crime Lab LinkedIn article originally published on 1 November 2025. A limited status update was added on 27 July 2026.
This publication is for informational purposes only and does not constitute legal, regulatory, or compliance advice. Firms should consult current legislation, official regulatory materials, and qualified advisers before making compliance or operational decisions.