FCA AML supervision reform: what law firms, accountants and TCSPs need to do now

The Government intends to replace the current fragmented AML supervisory framework with a more streamlined model under which the FCA becomes the single AML supervisor for legal service providers, accountancy service providers and TCSPs.

The changes will require amendments to primary and secondary legislation, including changes to the Money Laundering Regulations. Whilst implementation will take time, the policy decision has been made and firms should now be thinking about what direct FCA supervision may mean for their business.

The Government estimates that approximately 60,000 businesses and sole practitioners will ultimately fall within the FCA's expanded AML supervisory remit, including law firms, accountancy practices and TCSPs currently supervised by PBSs or HMRC.

This is not a niche supervisory reform. Large numbers of firms will move into a regulatory environment that many are likely to find significantly more interventionist than traditional professional body supervision. Firms should expect greater regulatory engagement, more extensive information requests and a stronger focus on demonstrating that AML controls are operating effectively in practice.

The transition depends on legislative change and will not begin immediately. Firms should continue to comply with existing AML requirements and engage with their current supervisor in the normal way.  

However, firms should not view the 2028 implementation timetable as a reason to delay. The transition period provides a valuable opportunity to assess whether existing frameworks would withstand FCA scrutiny. Areas such as enterprise-wide risk assessments, customer due diligence governance, sanctions compliance, training, management information and board oversight are likely to receive increasing attention as implementation progresses.

The FCA expects the transition to begin in late 2028, with implementation taking place in stages. The regulator anticipates that the migration of firms to FCA supervision will be completed by around 2030.

Whilst this extended timetable should help reduce operational disruption, firms should use the phased transition period as an opportunity to strengthen AML frameworks and governance arrangements rather than waiting until they become directly supervised.

Professional body supervisors will continue to perform important functions for their members outside AML supervision and will work alongside the FCA during the transition period. The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) will continue to oversee PBSs until the transition is complete, after which it is expected to be wound down.

This means firms should expect a gradual evolution rather than an immediate replacement of existing supervisory structures.

The FCA has indicated that it intends to apply a proportionate, risk-based approach to its expanded supervisory remit and will develop sector-specific expertise, including expertise relevant to legal services and accountancy sectors across the UK.

However, firms should not interpret "proportionate" as meaning "light touch". Experience from existing FCA-supervised sectors suggests that firms will still be expected to demonstrate that AML controls are tailored, effective and supported by appropriate governance, oversight and management information.

The Government intends to use Economic Crime Levy funding to establish the new supervisory function initially, after which it will be funded through fees charged to supervised firms. The FCA will consult on its proposed fee model before implementation.

Whilst the detail remains unclear, firms should factor potential changes to supervisory costs into longer-term planning and budgeting exercises.

The Government has confirmed that existing protections for legal professional privilege will continue to apply under the new framework. This means the FCA will not be able to use its information-gathering powers to compel production of legally privileged material.

For law firms, this provides an important safeguard. However, firms should continue to monitor how these protections are interpreted and applied in practice as the framework develops.

The Government's consultation response published in June 2026 outlines the intended implementation roadmap, including amendments through the Financial Services and Markets Bill and secondary legislation. Further engagement with industry stakeholders is expected as the transition progresses.

The broad direction of travel is now firmly established, even if some implementation details remain under development.

The FCA has already started engaging with businesses, professional bodies, membership organisations and other stakeholders through meetings, workshops and webinars to understand the practical implications of reform.

Firms and representative bodies should participate in these discussions wherever possible. The transition period presents an opportunity to help shape a supervisory framework that works effectively across different sectors whilst still delivering the Government's financial crime objectives.