FCA to Become Sole AML Supervisor for UK Lawyers Under Major Regulatory Reform

The UK government has announced that the Financial Conduct Authority (FCA) will be the sole AML/CTF supervisor for law firms, accountants, and trust or company service providers (TCSPs).

Earlier, professional service providers (PSPs) were regulated by their respective authorities. Each authority issued its own AML compliance guidelines. Under the new framework, the FCA will now issue a unified set of AML/CTF guidelines for all these professions.

Following are the four alternatives by HM Treasury’s 2023 review to reform AML supervision.

• Maintain the existing structure, with enhanced performance of professional body supervisors (PBSs).
• Reducing the number of PBSs by merging them.
• Appoint a Single Professional Services Supervisor (SPSS) for accountants, lawyers, and TCSPs.
• Create a new public body to oversee AML regulation of these sectors.

The government opted for option three, which is appointing the Financial Conduct Authority (FCA) as Single Professional Services Supervisor (SPSS). This action is actually part of a wider plan to make AML supervision more even, independent, and risk-based throughout the professional services sector.

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The Treasury has announced that a general transition plan will be released in early November 2025. Professional service providers (PSPs) would need to immediately implement these steps towards compliance readiness. This includes updating policies, training staff, reviewing risk assessment, and even recruitment of compliance and legal professionals.

The government highlighted that this new change will strengthen enforcement, reduce regulatory overlap, and enhance the UK’s overall support against money laundering and terrorist financing risks.

In a related development, the UK government plans to consolidate the payment service regulators (PSR) into the FCA. This move will streamline oversight of payment systems and create a more efficient framework for firms and stakeholders.