The FCA Is Taking Over AML Supervision — What It Means for Your Practice

General information for practice owners, accurate as at 4 August 2026. Figures and dates are as published by HM Treasury, legislation.gov.uk and the professional briefings cited below. Rules change — take your own advice before acting.

Two things happened to anti-money laundering rules this summer, and most practice owners have only noticed the smaller one. The smaller one is that the Money Laundering Regulations were amended, with most changes in force from 30 June 2026. The bigger one is that HM Treasury published its consultation response in June confirming that AML supervision of accountancy and legal firms will be taken away from the professional bodies and handed to the Financial Conduct Authority.

That second change is not a proposal any more. As the Lewis Silkin briefing on the response puts it, the direction of travel is settled. What remains open is timing, cost and detail — and one requirement that ought to make every practice owner sit up.

What HM Treasury has actually decided

Today, AML supervision of the professional services sector is fragmented. FTI Consulting's analysis of the reform puts the numbers at roughly 60,000 in-scope professional services firms supervised by 23 professional body supervisors — the accountancy institutes, the tax and bookkeeping bodies, the law societies and the bar councils — with the Office for Professional Body AML Supervision (OPBAS) sitting above them as a supervisor of supervisors. HMRC separately supervises some trust and company service providers.

Under the reform, that whole structure collapses into one. The FCA becomes the single AML and counter-terrorist-financing supervisor for legal services, accountancy practices and trust and company service providers. It will maintain a public register of supervised firms, and existing Money Laundering Regulations enforcement powers extend to it. OPBAS ceases to exist once implementation completes.

Importantly for anyone panicking about a re-registration scramble: the proposals include powers for the FCA to register or refuse to register firms, but no requirement that firms already supervised have to re-register from scratch.

The rulebook already changed on 30 June 2026

While the supervision debate runs for years, the rules themselves moved this summer. The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 were made on 9 June 2026, and most provisions came into force 21 days later on 30 June. These are amendments to the 2017 Regulations you already work to, and several of them change day-to-day practice.

Enhanced due diligence is now a judgement you have to evidence

The EDD change deserves more attention than it is getting, because it cuts both ways. For years the safe move was to escalate anything that looked odd, generate the paperwork and move on. The amended approach asks you to weigh the customer, the matter type, the sector, the value and the structure against what is normal for that kind of work, and decide.

That is a better rule. It is also a rule that transfers risk onto the person making the call. Under the old habit, over-escalation was free. Under the new one, a decision not to apply enhanced measures is a decision your supervisor can question later — and the only defence is a contemporaneous note explaining the reasoning. If your file notes currently say "standard CDD applied" and nothing else, that is the gap.

The same logic applies to the narrowing of country risk. Dropping automatic EDD for grey list jurisdictions removes a lot of pointless work, but it does not remove geographic risk from your assessment. It moves it from a checkbox into a judgement, which again means it has to be written down.

"Fit and proper" is the part practice owners should read twice

Here is the change with the longest shadow. Accountancy and legal firms have not previously been subject to a fit and proper requirement under the Money Laundering Regulations. The reform introduces regulation 58 assessments looking at integrity, competence and compliance history — and not just of the firm. The assessment is expected to reach beneficial owners, officers and managers.

Read that as an owner rather than as a compliance officer. AML competence has always been something a firm could delegate to a MLRO and a software subscription. A fit and proper test applied to beneficial owners makes it a question about you: your compliance history, and whether the regulator is satisfied you should be behind a regulated firm at all.

Consultation respondents from the legal sector pushed back that this duplicates existing suitability and probity checks by their own regulator. The government acknowledged the duplication concerns generally but has not conceded the point — instead it intends legislation establishing information-sharing and a permanent duty to cooperate between the FCA and the professional bodies.

What it will cost — and why smaller firms feel it first

The government has confirmed the FCA will operate on a full cost-recovery basis, with a separate consultation to follow on the fee structure. No numbers exist yet, so anyone quoting you a figure is guessing.

What the consultation response does record is the shape of the concern. Respondents warned of duplicative or overlapping charges, since professional body membership fees do not disappear just because AML supervision moves. They warned that sole practitioners and small firms lack the financial resilience to absorb additional regulatory overhead. And they flagged the obvious consequences: some firms reduce regulated activity, some exit it, and the rest pass the cost to clients.

The direct fee is not the whole cost, and for most small practices it will not be the biggest part. The FCA supervises to financial-services documentation standards. Evidencing what you already do, to that standard, is where the hours go.

What this does to a practice sale

If a sale or succession is anywhere on your horizon, the fit and proper requirement changes the character of AML due diligence. Today, a buyer reviewing your practice samples client files and forms a view on the state of the compliance function. That is already a real part of the process — see our guide to due diligence when selling your practice for what buyers actually open.

Once fit and proper testing reaches beneficial owners, officers and managers, the buyer has a second question: would the people transferring across pass, and does anything in the firm's compliance history follow them? That is a harder question to paper over with a warranty.

In practice, a weak AML file rarely knocks the headline number down. It does something more irritating — it slows the deal, widens the warranty and indemnity schedule, and pushes more consideration into deferred consideration while the buyer waits to get comfortable. That is the same pattern as most avoidable value leaks, which we set out in what reduces the value of your practice.

It is also worth being blunt about the direction of the profession. Between this, the phased HMRC registration regime we covered in mandatory tax adviser registration, and the 2028 Companies House filing reset, the fixed compliance overhead of running a small firm keeps rising. For some owners that is the argument for investing in the infrastructure. For others it is the argument for their next chapter. Both are legitimate — the mistake is drifting into the choice rather than making it.

Your next 90 days

Nothing here requires panic, and nothing requires a consultant. It requires four sittings with your MLRO between now and Christmas.

• Update your procedures for 30 June 2026. Sterling thresholds, the narrowed high-risk country list, the revised EDD trigger, pooled client account record-keeping. This part is already law.
• Fix the "why we didn't escalate" note. Add a mandatory reasoning field to your client risk assessment template so the judgement is captured at the time, not reconstructed later.
• Date-stamp your firm-wide risk assessment. If it has not been genuinely reviewed in the last twelve months, that is the first thing any supervisor or buyer will notice.
• Review the governance picture. List your beneficial owners, officers and managers, and ask honestly whether their compliance history stands up to an integrity, competence and compliance-history assessment.
• Check your TCSP scope. If you sell off-the-shelf companies, confirm your registration covers what is now in scope.
• Put a line in the budget. Not a figure — a named line and a person responsible for it, so the fee consultation does not arrive as a surprise.

The firms that will find this transition painless are the ones whose AML file already reflects what they actually do. The ones that will find it expensive are the ones where the manual says one thing and the files say another. That gap is entirely fixable, and it is cheapest to fix while nobody is asking.

Frequently asked questions

When will the FCA actually take over AML supervision of accountancy firms?

There is no fixed go-live date. HM Treasury's June 2026 consultation response confirms the policy but accepts that implementation will take several years, because it depends on primary legislation that has not yet been scheduled and on the FCA building sector expertise from scratch. Until the handover completes, your existing professional body supervisor keeps supervising you and OPBAS keeps overseeing them. The practical read for a practice owner is that nothing changes in your day-to-day supervision this year, but the destination is settled rather than under debate, so preparation done now is not wasted. Treat it as a two-to-four year runway, not a deadline.

What is the regulation 58 fit and proper test and who does it apply to?

Regulation 58 of the Money Laundering Regulations allows a supervisor to assess whether a firm and the individuals behind it are fit and proper, looking at integrity, competence and compliance history. It already applies to some HMRC-supervised sectors, but accountancy and legal firms have not previously faced it under the MLRs. Under the reform it is expected to reach the firm itself plus its beneficial owners, officers and managers. That is the genuinely new part for practice owners: AML competence stops being purely a compliance-department matter and becomes a question about the people who own and run the firm.

What will FCA AML supervision cost my practice?

No fee figures have been published. The government has confirmed the FCA will operate on a full cost-recovery basis, and the FCA will consult separately on the fee structure. Consultation respondents raised two specific worries: that firms could face duplicative charges while professional body membership fees continue alongside a new FCA levy, and that sole practitioners and small firms have the least financial resilience to absorb the overhead. Budget for the direct fee being only part of it. The larger cost for most small firms is internal time spent evidencing procedures to a supervisor that works to financial-services documentation standards.

Does an AML weakness affect what my practice is worth?

It affects deal certainty more than headline price. A buyer reviewing your practice will sample client files, and gaps in client due diligence, missing risk assessments or an out-of-date firm-wide risk assessment are found quickly. The consequence is rarely a lower multiple. It is usually a slower deal, a wider set of warranties and indemnities, or more consideration deferred until the buyer is comfortable the file is clean. With fit and proper testing arriving for owners and managers, a buyer also has to care whether the people transferring across would pass. Fixing the file before you go to market is cheaper than negotiating around it.

What changed in the Money Laundering Regulations on 30 June 2026?

The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 were made on 9 June 2026 and most provisions came into force 21 days later, on 30 June 2026. Euro thresholds were converted to sterling, largely on a one-for-one basis so that ten thousand euros becomes ten thousand pounds. Mandatory country-based enhanced due diligence was narrowed to FATF call-for-action jurisdictions rather than the wider grey list. Pooled client account rules were rewritten, selling off-the-shelf companies was brought within trust or company service provider activity, and a de minimis exemption was introduced for low-value low-risk trusts. Cryptoasset provisions follow in 2027.