As part of efforts to develop AI-powered fintech, the Financial Conduct Authority has announced its second cohort of organisations chosen to live test AI applications and “explore key questions around risk management and live monitoring to support the responsible deployment of AI for consumers and markets”.
Eight new firms, including Coadjute, Barclays, Experian, Lloyds Banking Group (Scottish Widows) and UBS, have been chosen for the initiative, which supports safe and responsible deployment of AI-powered technology. The FCA says it is working with its technical partner Advai, a London-based specialist in automated AI assurance, to provide AI Live testing.
The organisations chosen for the second cohort are testing both customer-facing and business-to-business use cases, including AI-enabled targeted support for investments, credit score insights for consumers, agentic payments, anti-money laundering detection, and Know Your Customer.
Jessica Rusu, chief data, information and intelligence officer at the FCA said: “We’re continuing to collaborate with firms to support the safe and responsible development of AI in UK financial markets. With tailored support from the FCA and Advai, the initiative reflects our commitment to supporting the pace of change in AI, whilst demonstrating how regulators and industry can work together to harness innovation responsibly.”
Governance, risk management and compliance platform Coadjute will test its AI-native AML platform, which combines automation, a risk engine optimised for the property market, and human compliance expertise. The fully managed AML service includes identity verification, source-of-funds and source-of-wealth analysis, enhanced due diligence, and audit-ready reporting. Digital assistant ‘Clara’ (pictured) guides buyers and sellers through the AML processes, ensuring completeness and accuracy.
The AI Live testing initiative will inform a forthcoming Good and Poor Practice report for AI in financial services, intended to support firms in the safe and responsible adoption of the developing technology. Coadjute has described its inclusion in the initiative as an opportunity for the company to “continue working closely with regulators and industry stakeholders to help define best practices for AI-driven AML compliance,” ahead of the transfer of responsibility for AML compliance to the FCA.
The firm added in a statement: “Under the new framework, firms can expect significantly increased scrutiny, with a stronger emphasis on proving that AML policies are effective in practice, not simply documented. Industry experts anticipate more frequent ‘skilled person’ reviews, greater enforcement activity, and rising compliance costs.
“There will also be increased focus on core risk areas such as Source of Funds and Source of Wealth, with regulators expecting firms to demonstrate a clear, evidence-based understanding of client risk-rather than relying on basic document collection alone.
“While the SRA is expected to retain AML responsibilities through 2026, the transition period introduces additional complexity, including the risk of overlapping investigations from both regulators. Conveyancing firms are therefore being urged to act now: strengthening internal controls, improving data quality and record-keeping, and ensuring senior management accountability for compliance outcomes.”
Coadjute started life collaborating on synchronised payments with the Bank of England and has since been backed by three of the UK’s largest mortgage lenders, Lloyds Banking Group, NatWest and Nationwide.
John Reynolds, co-founder and COO of Coadjute, said: “Conveyancers are entering a new era of AML regulation – one that demands demonstrable effectiveness, not just good intentions. Our acceptance into the FCA’s AI Live Testing Sandbox is a significant step forward, not just for Coadjute, but for the entire industry.
“We are working hand-in-hand with regulators and major industry participants to define how AI can be used responsibly to raise standards, reduce risk, and make compliance more robust and more efficient. Our focus is simple: to give conveyancers the tools they need to meet – and maybe even exceed – the expectations of the FCA.”
