FCA AML Supervision: What the Reform Means for Accountants, Law Firms and TCSPs
The Financial Conduct Authority (FCA) will become the single anti-money laundering (AML) and counter-terrorist financing (CTF) supervisor for legal service providers, accountancy service providers and trust and company service providers (TCSPs), taking over from the professional body supervisors (PBSs) and HM Revenue and Customs (HMRC), which supervise these firms today. Nothing changes yet. The reform depends on legislation, the FCA does not expect to begin supervising these firms until late 2028, and it has said that affected businesses do not need to take any action now.
The FCA set out its plans on 22 September 2026 in a new webpage, Anti-money laundering supervisory reform. It explains who is affected, how a phased transition completing around 2030 should work and what remains to be decided. It follows the Government's October 2025 decision and HM Treasury's June 2026 consultation response on the FCA's duties, powers and accountability. Current obligations are unchanged, but firms now have a clear indication of what FCA supervision is likely to involve, and time to prepare proportionately.
Which Firms Will Move to FCA AML Supervision?
The change covers three groups of business that are currently supervised for AML purposes by a PBS or by HMRC: legal service providers, accountancy service providers and TCSPs. The FCA estimates that around 60,000 businesses and sole practitioners will be affected, made up of approximately:
34,000 accountancy businesses supervised by PBSs;
7,500 law businesses supervised by PBSs; and
18,000 accountancy businesses and TCSPs supervised by HMRC.
The FCA stresses that these figures are estimates and may change. Firms can check the list of PBSs overseen by OPBAS.
Two limits on scope are worth noting. First, firms that the FCA already supervises under the Money Laundering Regulations (MLRs) are not affected and should continue to follow the FCA's existing money laundering guidance. Second, the reform covers AML and CTF supervision only. PBSs will keep their existing functions for non-AML/CTF conduct matters, so firms will still answer to their professional body or regulator on wider professional standards, with the FCA and PBSs sharing information on AML matters.
When Will the FCA Take Over AML Supervision?
The FCA expects a phased transition, and its indicative timeline has four stages:
2026: the FCA works with stakeholders on its plans for taking on AML supervision.
2027: following the expected Government legislation, the FCA completes its operating model review.
Late 2028: the phased transition starts and new supervision launches, with initial systems built, tested and ready.
2030: the remaining PBSs move over to FCA supervision, and the FCA monitors and improves the system.
This timetable depends on legislation that has not yet been passed. Some of the key legal changes are included in the Financial Services and Markets Bill, which is currently before Parliament, and many more will be made through secondary legislation amending the MLRs. The FCA's current plans assume a late 2028 start, and firms should treat these dates as planning assumptions rather than fixed deadlines.
What the Government and the FCA Have Confirmed So Far
The FCA's page is high level. The detail sits in HM Treasury's June 2026 response, which confirms the Government's intended approach. These positions take effect only once the legislation is made, so they are settled policy rather than current legal requirements.
Registration and a Single Public Register
HM Treasury will amend the MLRs so that the FCA maintains a register of the legal, accountancy and TCSP firms it supervises, and firms will need to be registered with the FCA to carry out regulated activity lawfully. How existing firms will move across is not yet known, although HM Treasury records the FCA's commitment to minimising burdens, including on re-registration. The FCA will provide updates on registration arrangements as its plans develop.
Wider Fit and Proper Testing
The change most likely to affect how firms are run is the extension of the regulation 58 fit and proper test to legal and accountancy service providers, aligning them with TCSPs, which are already in scope. The current regulation 26 approval focuses mainly on relevant criminal convictions of beneficial owners, officers and managers. Regulation 58 goes further, allowing the supervisor to consider integrity, competence and compliance history. This will not apply to legal and accountancy firms before the transfer to the FCA, and the FCA is expected to rely on existing checks where appropriate to avoid duplication.
Supervisory Powers and Enforcement
The FCA will apply the existing risk-based supervision duties and information-gathering and inspection powers in the MLRs. HM Treasury also intends to add two tools, the power to appoint a skilled person and the power to issue directions, subject to a reasonableness safeguard. Enforcement will use the existing MLR powers, with a separate consultation to come on a simpler process for minor fines, such as for failing to register. The FCA says it will build sector-specific expertise, including in the Scottish and Northern Irish legal sectors.
Legal Professional Privilege
The FCA and HM Treasury both confirm that existing protections for legal professional privilege will remain. The FCA will not be able to use its information-gathering powers to obtain privileged material, and regulation 72 of the MLRs is unchanged. HM Treasury expects the FCA to publish guidance on the documents it will require during supervisory visits and how it will handle privilege when issues arise.
Guidance, Fees and the Role of OPBAS
Approval of sector AML guidance will move to the FCA, with guidance for legal and accountancy firms still drafted by practitioners and HM Treasury keeping a right of veto. The Government will provide initial funding through the Economic Crime Levy, after which the function will be funded by fees on supervised firms; the FCA will consult on fees before taking on the role. The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) will continue to oversee PBSs during the transition and will then close.
Key Themes for Affected Firms
Three broader messages emerge. The first is consistency. The stated aims of the reform are to simplify the supervisory landscape, improve consistency and strengthen the UK's approach to tackling financial crime. Firms whose arrangements reflect one professional body's expectations should anticipate a single standard over time.
The second is proportionality. The FCA already supervises many smaller firms and has committed to a proportionate, risk-based approach. How that works in practice will become clear only once the FCA consults on registration, fees and its supervisory model, and open points such as the forum for appeals are settled.
The third concerns evidence. In Compliance Angle's view, firms moving to FCA supervision should expect close attention to whether AML controls work in practice and can be demonstrated, rather than simply whether written policies exist.
What Should Firms Do Now
The FCA is clear that legal, accountancy and trust and company service providers do not need to take any action now. They should continue to follow their existing AML processes and raise questions with their current PBS. There is no new requirement to implement, but the lead time is a sensible opportunity to confirm that existing MLR compliance is sound and well evidenced. Proportionate steps include:
confirming which services fall within the MLRs, who supervises the firm today, and whether any part of the group is already supervised by the FCA;
refreshing the firm-wide risk assessment under regulation 18 of the MLRs and checking that policies, controls and procedures under regulation 19 reflect it and are applied in practice;
sampling client due diligence files, monitoring and training records to check they would satisfy an external reviewer;
mapping beneficial owners, officers and managers, and considering how they would present against a test of integrity, competence and compliance history, while recognising that regulation 58 will not apply to legal and accountancy firms until the transfer;
giving one partner, director or the money laundering reporting officer responsibility for tracking the reform and briefing the partners or board; and
recording the conclusions reached, including any decision that no changes are needed.
Most firms with established AML frameworks will need a targeted review rather than a rebuild, although firms relying heavily on professional body templates may benefit from starting earlier.
Frequently Asked Questions About FCA AML Supervision
When will the FCA start supervising accountants, law firms and TCSPs for AML?
The FCA does not expect to begin until late 2028. The transition is expected to be phased and to complete around 2030, subject to the Government passing the necessary legislation.
Do accountancy firms, law firms and TCSPs need to take action now?
No. The FCA has said affected businesses do not need to take any action now and should continue to follow their existing AML processes. Many firms may still use the lead time to review their existing compliance with the Money Laundering Regulations.
Are firms already supervised by the FCA under the Money Laundering Regulations affected?
No. The FCA has confirmed that firms it already supervises under the Money Laundering Regulations will not be affected by the reform and should continue to follow its existing guidance.
Will the FCA be able to access legally privileged material?
No. The Government has confirmed that existing protections for legal professional privilege will remain in place, so the FCA will not be able to use its information-gathering powers to obtain legally privileged material. HM Treasury expects the FCA to issue guidance on how privilege will be handled during supervision.
Who will pay for FCA AML supervision of professional services firms?
Initial funding will come from the Economic Crime Levy. After that, the function will be funded through fees charged to supervised firms, and the FCA will consult on its approach to fees before taking on the role.
How Compliance Angle Can Help
Compliance Angle provides practical AML and financial crime compliance support, proportionate to each firm's business model, services, size and regulatory risk. For firms preparing for FCA supervision, relevant support includes:
reviewing and updating firm-wide and financial crime risk assessments, policies and procedures;
independent compliance and regulatory health checks that test how AML controls operate in practice;
scenario-based AML and financial crime training for partners, directors and staff;
governance and oversight support, including reporting on AML matters to partners or the board; and
ongoing compliance support as FCA consultations and transition milestones are published.
If you would like to discuss what the reform may mean for your firm, please contact us at info@complianceangle.co.uk.
Source: Financial Conduct Authority, Anti-money laundering supervisory reform, first published 22 September 2026; HM Treasury, AML/CTF Supervision Reform: Duties, Powers, and Accountability Consultation Response, June 2026.
