HM Treasury issue their AML supervisory powers for professional practice firms

On 18 June 2026, HM Treasury updated their consultation outcome in respect of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Supervision Reform: Duties, Powers, and Accountability Consultation.

In summary, the publication covers the following areas:

• registration and gatekeeping
• risk-based supervision
• guidance
• information and intelligence
• enforcement
• appeals
• fees and funding
• transition and supervisory co-ordination
• the role of OPBAS and professional services legislation
• accountability and independence.

Registration and gatekeeping

The FCA will be responsible for registering professional services firms carrying out AML/CTF regulated activity and for maintaining a public register of those firms, providing a single, authoritative source to confirm which firms are legally permitted to undertake in-scope activity.

All AML/CTF supervisors will be given explicit power to cancel a firm’s registration where it is no longer carrying out regulated activity, operating as an administrative function, subject to appropriate safeguards.

Regulation 58 “fit and proper” of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs17) currently subjects trust or company service providers and money service businesses to the fit and proper test, and this is being extended to professional services firms.

In general terms, the fit and proper test enables supervisors to assess the integrity, competence and compliance history of firms and their beneficial owners, officers and managers (BOOMs). It also includes a review of honesty and integrity, skills and experience, and financial soundness, including tax affairs.

It is suggested that, to ensure a smooth transition to the FCA, “the government expects the FCA to be able to make use of existing checks where appropriate and to operate processes that avoid unnecessary duplication”.

Risk-based supervision and supervisory tools

The FCA’s risk-based supervision expands its current requirements under regulations 17 and 46 of the MLRs [regulation 17 risk assessment by supervisory authorities and 46 duties of supervisory authorities], where they are required to identify and assess money laundering and terrorist financing risks, develop and maintain risk profiles and apply a risk-based approach to monitoring firms’ compliance with the MLRs17.

In undertaking its supervisory responsibilities, the FCA is able to deploy a range of supervisory tools, including information requests, inspections and thematic reviews, with the intention of supporting early and proportionate intervention where risks are identified.

The FCA will also have the power to appoint a skilled person and have the power to issue directions to firms, subject to appropriate statutory safeguards to ensure a proportionate use.

Skilled Person reviews occur where the FCA believes a firm is not sufficiently managing its processes and controls relating, under this power, to the risks of money laundering and terrorist financing. A skilled person is a subject-matter expert appointed to review a firm’s regulated activities. The skilled person will typically review the firm’s documentation, interview relevant personnel, undertake sample-based testing, leading to a report outlining recommendations to address any gaps or shortfalls in the firm's processes against legislative and industry expectations. The firm will be expected to develop an action plan to address the recommendations. The firm is responsible for the cost of the review.

Guidance

The responsibility for issuing and approving AML/CTF guidance for professional services firms would transfer to the FCA. This is intended to provide clearer and more timely communication of supervisory expectations. HM Treasury would retain a limited oversight role, including the ability to intervene where necessary to ensure guidance remains aligned with the policy intent of the MLRs17.

Information and intelligence

As outlined above, the existing information gathering, inspection and information sharing powers in the MLRs17 will be extended to the FCA’s supervision of professional services firms. This includes the requirement for the FCA to provide firms with up-to-date information on ML and TF risks and apply existing information sharing duties and gateways required under regulations 46, 50 and 52, which require supervisors to co-operate with other authorities, share relevant information, and notify law enforcement of suspected illicit activity.

HM Treasury has indicated that it will not introduce new legislative requirements at this stage to mandate the sharing of Suspicious Activity Reports directly with supervisors. They seek to improve the effectiveness of existing information-sharing mechanisms within the current framework.

Enforcement and appeals

Post-transition, the FCA will be able to exercise the existing range of enforcement powers available under the MLRs in relation to professional services firms, including civil sanctions and, where appropriate, criminal proceedings.

Decisions taken by the FCA would continue to be subject to established tribunal and judicial oversight arrangements, maintaining independent routes of appeal.

Fees and funding

The government intends for the FCA’s AML/CTF supervisory activities to be funded on a cost-recovery basis through fees charged to supervised firms, consistent with its existing funding model. The FCA would consult separately on the detailed structure and operation of these fees.

Transition

The government has recognised the need to ensure continuity of supervision and minimisation of disruptions for firms during the transition, including the requirement to preserve sector-specific expertise during this time. It acknowledges that a range of transitional arrangements will be required for a smooth and low-burden transition to the new supervisory model, which will include cooperation between HMRC, FCA and professional body supervisors.

Accountability, independence and wider legislative context

The government has recognised the requirement of the FCA to retain its operational independence while remaining accountable to HM Treasury and Parliament through its existing statutory mechanisms. During the transition period, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) will continue to oversee the performance of professional body supervision, with its function expected to cease once the FCA fully assumes its AML/CTF responsibilities.

What this means for firms

HM Treasury's reforms represent a significant change to the AML and CTF supervisory landscape for professional services firms. While the transition to FCA supervision is intended to improve consistency and oversight, firms should consider now whether their existing AML frameworks, governance arrangements and controls are sufficiently robust.

How Crowe can help

Crowe UK's Anti Money Laundering team supports firms in assessing and enhancing their AML compliance frameworks, identifying gaps and preparing for supervisory change. Whether you are reviewing your control environment or preparing for increased supervisory scrutiny, our specialists can help you navigate the transition with confidence.