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The FCA Steps in as the Single AML Watchdog for Professional Services in the UK

Practical Steps to Get Ahead of the Emerging Single AML Supervision Regime

From 6 November 2025 until 24 December 2025, HM Treasury is consulting on the supervisory and enforcement powers and responsibilities the Financial Conduct Authority (“FCA”) will need to act as the new Anti-Money Laundering (“AML”) and Counter-Terrorist Financing (“CTF”) supervisor for professional services businesses, as well as the legislative changes required to make this happen.¹ One big question on firms minds is what should leadership teams do during this consultation period to prepare?

The consultation appears technical, focusing on matters such as registration gateways, fit and proper tests for senior management and information-sharing arrangements. Look more closely though and it signals a reshaped standard for how professional services firms are expected to own, govern and evidence financial crime risk management, particularly those in the legal, accountancy and trust and corporate service provider (“TCSP”) sectors.

Although the final rules are not yet known, the trajectory is clear. Leadership teams can use the consultation window to start considering what this could mean for their firms and to take practical preparatory steps to get ahead of these incoming changes.

The Background

The government is seeking to address long-standing criticisms of inconsistencies and weaknesses in AML/CTF supervision across professional body supervisors. The last UK’s mutual evaluation from the Financial Action Task Force (“FATF”) highlighted this as a significant vulnerability in the UK’s AML framework.² Just this month, the FCA imposed its first enforcement action against a professional body supervisor for AML failings.³

Under the single professional services supervisor model, the FCA will assume AML/CTF supervision of around 60,000 in-scope professional services firms, stepping into a space currently occupied by 23 professional body supervisors. Campaign groups such as Transparency International UK and Spotlight on Corruption have broadly welcomed the move, describing it as a long-overdue step that could shake up sectors accustomed to relatively soft supervision.⁴

At the same time, industry bodies for accountants and lawyers have been vocal about the potential downsides including higher regulatory fees, duplication of effort during the transition period, loss of sector-specific expertise in supervision and questions about whether the FCA can absorb such a large additional population without its own effectiveness suffering.⁵

Regardless, it appears that for many law, accountancy and TCSP firms, a step change is on the horizon. Data from HM Treasury’s latest annual AML/CTF supervision report already shows that a tougher AML/CTF supervisory landscape is in motion for professional services.⁶ Supervisors issued 338 fines totalling over £2 million in 2024–25, more than tripling the total value of penalties since 2022 and extending a clear three-year upward trend in enforcement, yet there is limited immediate improvement in overall compliance rates. Among professional services firms assessed in 2024–25, only 24% of accountancy firms and 29% of legal firms were fully compliant, while 17% and 26% respectively were non-compliant — rising to 28% for the highest-risk legal firms. This combination of escalating enforcement and persistent weaknesses sends a clear signal that firms cannot afford to wait for the FCA’s new regime to crystallise. Instead, leadership teams should be proactively using this window to assess, strengthen and evidence their AML/CTF frameworks to avoid being caught on the wrong side of this shifting supervisory baseline.

What Might Be Changing Under the Proposals?

The following are key proposals currently subject to consultation and feedback.⁷ While the detail may evolve, there is a clear sense of the direction of travel and what firms can begin to prepare for.

Registration and perimeter policing: The FCA would register all in-scope firms, with powers to accept, deny, suspend or cancel registrations. It would maintain a public register to improve transparency and make it harder for bad actors to operate outside supervision.
Risk-based supervision and intervention tools: The FCA would apply a consistent risk-based approach across sectors, maintaining risk profiles for in-scope firms. The full existing AML supervisory toolkit of the FCA will apply, including conducting targeted on-site and desk-based reviews, requiring information, carrying out inspections, issuing directions and requiring firms to appoint skilled persons where needed.
Guidance, intelligence-sharing and enforcement: The FCA would provide AML/CTF guidance and improve intelligence-sharing, including with the National Crime Agency (“NCA”). This would support whistleblowing and give powers to impose civil penalties, suspensions, prohibitions, public censures and bring criminal proceedings, with its use of powers subject to court appeal.

What is Really at Stake?

As firm’s consider their response and feedback to shape the proposals, it is important to bear in mind these proposals are built on an expectation that professional services firms behave as active gatekeepers. That means understanding the risks they face, making conscious choices about which risks they are prepared to take and being able to demonstrate how those choices are made in practice. The consultation is as much about leadership, culture and judgement as it is about technical rules.

Practical Actions for Leadership Teams During the Consultation Period

The proposals so far point to more structured governance expectations, more data-led AML/CTF supervision and a sharper focus on culture and escalation. Against that backdrop, there are three practical areas where firms can start to get ahead.

Map Governance and Accountability
Start by being explicit about who owns AML/CTF risk in the firm. Which committee is accountable? Which individuals hold key responsibilities? How do these roles sit alongside existing risk, compliance and governance structures? Once this map is clear, test it against what actual occurs in practice. Do those individuals genuinely have the authority, information and support they need to discharge their responsibilities? Does the actual approval process for higher-risk clients, matters and transactions match what your governance documentation says?
Interrogate Your Data
The consultation leans heavily into data and intelligence-sharing, including proposals for the NCA to share SARs where reports are filed by, or about, supervised firms. This is a timely moment to look closely at your own data. What do your SARs, client and geography profiles, internal audit findings, near-misses and logged issues say about your risk profile and control effectiveness? The aim is to move the dial on internal conversation from “do we have a policy in place?” towards “does our behaviour align with our policy and could we demonstrate that to a new supervisor?” The quality and coherence of your data will matter as much as the quality of your written procedures.
Assess Culture and the Speak-up Environment
Controls sit within a culture, as enforcement actions have repeatedly shown. They may be well designed and show no obvious deficiencies on paper, but how they perform when commercial pressure and risk appetite collide is the real test of the culture in place. Do colleagues feel they can push back on client decisions or escalate concerns without fearing negative consequences, particularly in parts of the business where commercial pressures are high?

Final Thoughts

It’s essential to engage constructively with the consultation by treating it as more than a technical exercise. Use the process to open up a broader internal conversation across the business leadership, Risk, Compliance and Audit teams about the firm’s long-term posture towards financial crime risk and the role it needs to play as a gatekeeper in the professional services ecosystem.

As the FCA’s new role shapes up, it will undoubtedly bring more consistency, scrutiny and, in time, more visible enforcement. For professional services firms, the challenge and opportunity is to use the consultation period to get ahead, go beyond a narrow AML compliance upgrade and instead to align governance, data and culture with the values the firm claims to stand for.

Footnotes:

1: “Anti-Money Laundering and Counter-Terrorist Financing Supervision Reform: Duties, Powers, and Accountability Consultation,” HM Treasury (6 November 2025)

2: “Anti-Money Laundering and Counter-Terrorist Financing Measures – United Kingdom Mutual Evaluation Report,” FATF (18 December 2018)

3: “FCA censures Institute of Certified Bookkeepers for failings in anti-money laundering supervision,” FCA 5 December 2025

4: “Lawyers and accountants push back against UK anti-money laundering reforms,” Financial Times (21 October 2025)

5: Ibid

6: “Anti-Money Laundering and Counter-Terrorist Financing: Supervision Report 2024–25,” HM Treasury (8 December 2025)

7: Supra 1 at page 6 for the full list of key proposals