After years of discussion and consultations, the Financial Conduct Authority (FCA) is set to become the single supervisor for professional services in relation to anti-money laundering and counter-terrorism financing.
The Government made the announced in October 2025, and the change is expected to be in place by 2029.
What does it mean for law firms?
How AML has been regulated up until now
Up until now, supervision of professional firms has been split between 22 private bodies including: the Solicitors Regulation Authority (SRA), the Bar Standards Board, and the Law Society.
Each body understood the nuance of the firms they regulated and they have been collecting information and adapting regulations to best serve the sector.
The SRA did submit a bid to become the sole supervisor for legal firms, but the bid was rejected.
FCA will supervise professional services firms
With the FCA taking over as sole supervisor, some businesses that were previously supervised by HMRC (such as trust and company service providers) will now be supervised by the FCA, along with legal and accountancy firms.
The FCA already supervises financial institutions in anti-money laundering. The hope is that one supervisor will unify the process and make it more consistent, transparent and effective.
In theory, the FCA is well-place to take on the role because it has the experience, and it also has enhanced powers to conduct on site and desk based reviews. When it comes to enforcement, the FCA has powers to enforce civil penalties, suspensions or criminal proceedings. However, the move is not without its criticism (more on this below).
Obligations under the Money Laundering Regulations 2017
These reforms do not change firms’ existing obligations under Money Laundering Regulations 2017 (MLRs), which include duties to:
- Carry out tailored risk assessments
- Conduct appropriate customer due diligence
- Investigate the source of funds
- Continually monitor matters for any suspicious activity
- Appoint a Money Laundering Reporting Officer (MLRO) and submit suspicious activity reports to them.
- Provide regular documented training on AML regulation, red flags, and reporting requirements to staff
- Maintain up-to-date AML policies and procedures
Criticism of the proposals
The Law Society says that it “would not have chosen this route” and identifies that there are “significant challenges” with it. The Law Society’s view is that supervision must be sector specific, as solicitors have particular ethical duties, professional training and legal professional privilege.
Similarly, the Solicitors’ Regulation Authority says that it has “made significant progress in recent years” to improve their approach to money-laundering supervision. They says they are “disappointed we won’t be able to build on that work”.
Next steps
Before the change comes into force, legislation will need to be passed to implement it.
It is expected that this process will begin in the King’s Speech in Summer 2026, in which we can expect the King to announce the new AML Supervision Bill. The plan is for the FCA to take over AML supervision for in-scope firms by 2029.
During the next few years, there will be a transition phase, which is likely to include a new registration process, and the payment of fees to the new supervisory body.
We will watch this space to see what happens, and how quickly it happens!