Changes to the AML/CTF Supervisor for the legal, accountancy and professional service sector

While headlines have largely focused on the SRA, this change also impacts other professional bodies such as the Institute of Chartered Accountants in England and Wales (ICAEW), as well as firms offering services across the sectors listed above. The implications extend beyond law firms, and businesses in accountancy and Trust services should also prepare for the transition.

Background

HM Treasury’s 2022 Review of the UK’s AML/CTF regulatory and supervisory regime concluded that while iterative improvements had been made to the regime, weaknesses in supervision may need to be addressed through structural reform.

This decision followed HM Treasury’s 2023 consultation on AML reform, where four models for changes in AML supervision were detailed.

The consultation sought to address the fact that there are 22 supervisors for professional firms, which, despite best efforts, inevitably leads to inconsistencies in supervision and enforcement. 

The current supervisory system is comprised of three public sector supervisors:

1. The Financial Conduct Authority
2. Gambling Commission
3. HMRC.

And the 22 private sector professional body supervisors who supervise the legal and accountancy professionals.

The four models proposed

1. Office for Professional Body AML Supervision (OPBAS)
   This model would give increased powers to the OPBAS. This model was created in 2018 and aims to improve the consistency and effectiveness of Professional Body Supervision (PBS), including the sharing of information between the PBSs and with law enforcement agencies.
   
   
2. PBS Consolidation
   Under this model, the number of Professional Body Supervisors (PBSs) with responsibility for AML/CTF supervision would be reduced from 22 to a smaller number. Either one accountancy sector supervisor and one legal supervisor with UK-wide remits or one accountancy sector supervisor and one legal supervisor per jurisdiction (England, Wales, Scotland and Northern Ireland).
   
   
3. Single Professional Services Supervisor (SPSS)
   Under this model, a single public body would be granted responsibility for all AML/CTF supervision for the legal and accountancy sectors, Trust and company service providers, and potentially other sectors, such as estate agency and letting agency businesses, which are regulated under the Money Laundering Regulations.
   
   
4. Single AML Supervisor (SAS)
   This model would see one public body hold responsibility for all AML/CTF supervision. The FCA, Gambling Commission and the PBSs would continue to supervise relevant firms only for non-AML/CTF purposes.

The consultation received 95 responses, including 15 trade bodies. Approximately 25% of responses were from the accountancy sector and 20% from legal PBSs, with other responses received from Trust and company service providers, art market participants, estate and letting agents, casinos, law enforcement, think tanks and academics.

While the OPBAS option was supported the most by legal and accountancy sectors, the SPSS option was generally favoured by the financial sector, public sector and civil society. 

Additionally, the ICAEW responded to the consultation, emphasising the significant risks posed by all the different options proposed. Overall, supporting the OPBAS approach, noting that it would be the more favourable option in terms of expertise retention and a quick implementation.

The government concluded and announced in October 2025 that the SPSS (option three) had been selected.

This means that the FCA will now supervise firms that carry out activities within the scope of the Money Laundering Regulations as legal service providers, accountancy service providers and Trust and company service providers. Amounting to approximately 60,000 more firms for the FCA to supervise.

Timelines

The details and practicalities are unclear at present. The implementation of this policy is also unclear, as the government will need to pass primary legislation. It will also be required to confirm funding arrangements and develop a detailed transition plan. As such, the date at which the FCA will commence supervision of the professional services sector will be heavily dependent on the availability of parliamentary time and a transition period.

Next steps

• Monitor whether affected firms are required to register with the FCA for AML supervisory purposes.

   

• Ensure your firm is aware of any new fee structures and how they should be paid.

   

• Keep abreast of updates, implementation timelines and any subsequent guidance to ensure that you adjust policies, procedures and risk assessments accordingly, to meet the requirements of the new supervisor.