The UK is preparing for one of the biggest regulatory shifts in recent years as the Financial Conduct Authority (FCA) is expected to take over as the sole supervisor for anti-money laundering and counter-terrorist financing across professional services firms. This change will significantly affect law firms, accountancy practices, and trust and company service providers that were previously overseen by multiple professional bodies and HMRC. The government’s decision follows a long consultation by HM Treasury, which concluded that the current system is too fragmented and inconsistent, making it harder to maintain high standards of AML compliance.
Until now, supervision has been split among more than 20 Professional Body Supervisors, such as legal societies and accounting institutes. Under the new model, these bodies will no longer handle AML oversight. Their members will instead fall directly under the FCA’s authority. They will continue to regulate other professional standards, but AML supervision will sit exclusively with the FCA. Some trust and company service providers that were overseen by HMRC will also shift to the FCA, although businesses like art dealers and high-value goods traders will remain with HMRC.
While the supervisor is changing, firms’ responsibilities under the Money Laundering Regulations remain the same. They will still be expected to maintain thorough risk assessments, strong customer due diligence processes, effective transaction monitoring, and well-documented internal controls. Firms must ensure they have a nominated officer, properly trained staff, clear reporting lines, and comprehensive record-keeping that covers client identification, training logs, internal policies, and risk documentation. The difference is that these obligations will now be enforced by a regulator known for stricter, more intrusive supervision.
HM Treasury explored several alternatives before choosing this model. One option was strengthening the existing oversight office, OPBAS, but stakeholders felt this would not remove the structural weaknesses caused by having too many supervisors. Another proposal involved merging the professional bodies into fewer entities, but that raised concerns about losing sector-specific expertise. A more radical proposal to create one supervisor across every industry was also dismissed because it would be too broad and heavy-handed. Ultimately, the government concluded that consolidating AML oversight for professional services under the FCA would offer the clearest and most effective solution.
To prepare for the transition, HM Treasury is currently consulting on the new powers the FCA will need. These include the ability to register, refuse, or remove firms; run fit-and-proper tests; issue civil penalties; initiate criminal proceedings; and commission specialist reviews. The FCA also plans to introduce a public register of supervised firms to increase transparency. Existing firms will not have to re-register immediately, but they may be asked to confirm details or undergo checks during the handover. A phased rollout is expected, giving firms time to adjust as legislation passes through Parliament.
Professional services firms should begin preparing now. The FCA’s supervisory approach is typically more rigorous than that of professional bodies, meaning firms may face deeper inspections, more detailed reporting, and stronger expectations around governance and documentation. They should review their AML frameworks, strengthen risk assessments, update internal controls, and ensure senior managers understand their responsibilities. Firms are also encouraged to participate in the consultation process, as the new framework will shape their future regulatory environment.
