HM Treasury has published its consultation response to the transfer of anti-money laundering (AML) supervision to the Financial Conduct Authority (FCA). Announced as part of a “blitz on pointless admin” by chancellor Rachel Reeves, the FCA is to become the single professional services supervisor (SPSS) for AML by 2029.
Much of the current expectations on firms look set to remain. The FCA’s requirement to “assess the integrity, competence and compliance history of firms and their beneficial owners, officers and managers”, which will be extended to its supervision of legal and accountancy services, mirrors many of the current requirements from the Solicitors Regulation Authority (SRA).
But according to Collette Best, director of anti-money laundering at Kingsley Napley, the new requirement goes further, “as it includes an integrity competence and compliance history test. In the transition FCA will make use of existing checks where appropriate.”
The FCA will apply a risk-based approach to supervision and assume responsibility for issuing approved AML guidance for professional services firms.
A new register of professionals services firms will be created, with firms required to register with the FCA to carry out regulated activity. Any existing regulatory investigations and enforcement will transfer to the FCA, with the regulator indicating it will work closely with the transferring supervisor as “part of the implementation process to determine how this will be carried out in practice.”
The new model will be funded by charges to firms, with the fee structure to be determined by a future consultation.
A further consultation will also review the enforcement arrangements, with the FCA acknowledging that “applying the existing enforcement process to all AML/CTF enforcement action taken by the FCA, including lower‑level or routine breaches, would be disproportionate in some future enforcement cases…
“Without a second, more streamlined process it is likely the FCA would either not be able to use sanctions in a dissuasive way, or otherwise that it will do so, but firms would then face a disproportionately complex bureaucratic process which would be time consuming and expensive for both them and the FCA.”
Transferring supervisory responsibility to the FCA has been widely criticised by membership bodies. The Law Society of England and Wales shared it concerns over unnecessary costs and additional regulatory burden, warning the move risked “greater fragmentation, not simplification…” and would “fly in the face of the government’s own growth agenda.”
Speaking in December 2025, Law Society president Mark Evans said: “The speed at which the government is consulting on the reforms is a concern, as these changes will fundamentally reshape AML/CTF oversight across all sectors.
“We remain committed to working with the Treasury to deliver effective, proportionate and sustainable reform. However, meaningful reform cannot be achieved through undue haste. Careful consideration is essential to ensure both the integrity of legal sector supervision and the smooth implementation of any changes.”
The Anti-Money Laundering and Counter-Terrorist Financing Supervision Reform: Duties, Powers, and Accountability Consultation outcome is availble on the HM Treausry webiste.
