The UK’s anti-money laundering supervision regime for professional services is heading towards consolidation under the Financial Conduct Authority, after HM Treasury published the outcome of its consultation on duties, powers, and accountability arrangements for reform.
The consultation covered subsidiary considerations linked to the FCA taking over anti-money laundering and counter-terrorist financing supervision for legal, accountancy, and trust and company service providers. The reform would create a Single Professional Services Supervisor, with the FCA responsible for oversight of those sectors’ compliance with the Money Laundering Regulations.
The change would not make the FCA responsible for wider professional standards in law or accountancy. Its role would focus on AML and CTF supervision, including the powers and accountability mechanisms needed to regulate professional services businesses effectively.
The Treasury process follows longstanding concerns that the current fragmented regime has produced inconsistent supervision. Professional body supervisors oversee different sectors and membership groups, while HMRC also has responsibilities in parts of the regime. Consolidation under the FCA is intended to create a more consistent and proportionate supervisory model.
Accountancy practices, law firms, trust and company service providers, compliance officers, partners, and finance leaders will need to follow the transition closely. AML controls affect client onboarding, beneficial ownership checks, source-of-funds reviews, suspicious activity reporting, staff training, file monitoring, risk assessment, and decisions over higher-risk matters.
Smaller professional services businesses may face the sharpest practical burden. Many operate with limited compliance resource, manual systems, and partner-led decision-making. A consolidated supervisor could bring clearer expectations, but also more consistent enforcement and a higher standard of evidence.
Professional services businesses are already handling greater exposure to sanctions risk, complex ownership structures, politically exposed persons, cross-border transactions, crypto-related clients, property transactions, and international corporate structuring. Weak AML controls can create regulatory, criminal, financial, and reputational risk.
The wider compliance environment is becoming more structured. In HMRC phases benefits payrolling rollout, tax and payroll compliance was pulled into clearer timetables and systems requirements. AML supervision reform points in a similar direction for advisers, where informal or lightly documented processes are becoming harder to defend.
The transition design will be critical. The FCA already supervises financial services companies and is familiar with risk-based regulation, enforcement, and data-led supervision. Extending that model into legal and accountancy services could alter the tone of supervision, particularly if businesses are expected to provide more granular evidence of how client risk is assessed and escalated.
Overlap will also need careful handling. Legal and accountancy bodies retain responsibilities for professional standards, conduct, training, and disciplinary matters. The new model will need clear boundaries so that AML enforcement does not create duplication, delay, or uncertainty around which regulator acts first where misconduct overlaps with money laundering control failures.
Accountancy practices may need to strengthen client risk processes before the regime changes. That includes documenting firm-wide risk assessments, updating client due diligence policies, testing files, training staff, reviewing high-risk sectors, and ensuring suspicious activity reporting routes are understood. Technology may help with screening and monitoring, but it cannot replace professional judgement.
Law firms face a similar test, particularly in property, corporate, private client, trust, and international work. Partners may need clearer procedures for declining instructions, pausing transactions, evidencing source of funds, and managing client pressure where commercial incentives conflict with compliance caution.
The reform could also alter competition. Businesses that have invested heavily in AML systems may welcome a more consistent regime if it reduces the advantage of weaker competitors. Others may face higher compliance costs, more supervision fees, and greater administrative pressure.
HM Treasury’s consultation outcome does not complete the transition by itself, but it confirms that AML supervision of professional services is heading towards a more centralised structure. The practical effect will depend on the detailed powers given to the FCA, the implementation timetable, and how proportionately the new supervisor applies its approach across businesses of very different size and risk.
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